"...China has proposed to broaden trading of precious metals in its local market
in order to help China become a "major gold trading centre" (see News).
The Wall Street Journal was briefed about China's plans by "a person involved
with the matter." The paper reports that "the move could increase liquidity and
help Beijing gain stronger pricing power for key commodities like gold".
China is the largest consumer and now the largest producer of gold in the
world and has aspirations to become a major gold trading center on a par with
London and New York. China is also the fifth largest holder of gold reserves in
the world after the U.S., Germany, France, Italy (see table).
Chinese officials have spoken of China’s aspirations to have gold reserves as
large as the U.S. in order to help position the yuan or renminbi as a global
reserve currency. Indeed, it would be only natural for China to aspire to have
their currency become the global reserve currency in the long term.
In the longer term, being a major gold trading center would make China a more
powerful financial and economic player and indeed could allow them to influence
commodity and other important market prices. Indeed, Reuters reported that
becoming a major gold trading center "would boost the country's clout in
setting global prices"
at http://www.zerohedge.com/news/china-aims-be-major-gold-trading-center-interbank-gold-trading
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