- China is setting up a new gold fund, expected to raise about $16 billion for investment into activities and business related to the precious metal, which may help to boost trade across Asia.
The creation of such fund, state-owned CCTV reported, is part of a scheme known as the ‘Silk Road’ initiative, will be run by a new company to be established by gold producers and financial institutions.
Two top local gold producers, Shandong Gold Group, the parent of Shandong Gold Mining, and Shaanxi Gold Group will own 35% and 25% of the new financing source respectively. The fund may also include an exchange-traded fund for gold and investments in miners of the precious metal, according to the report.
China is the largest gold producer and consumer of the precious metal, and plays a key role in determining the overall direction of the gold market. According to the World Gold Council’s latest market analysis, jewellery demand in China dropped 10% in the first three months of the year, as slowing economic growth hit consumer sentiment in the world’s second-largest economy.
The “Silk Road” project, also known as the “One Belt, One Road” plan, was officially launched in March by President Xi Jinping, with the goal of help the country’ economy double over the next decade.
The ambitious vision is to resurrect the ancient Silk Road as a modern transit, trade, and economic corridor that runs from Shanghai to Berlin. The 'Road' will traverse China, Mongolia, Russia, Belarus, Poland, and Germany, extending more than 8,000 miles, creating an economic zone that extends over one third the circumference of the earth.
Xi Jinping has said that the creation of the new “Silk Road” would result in around $2.5 trillion of additional trade for all those involved over the next 10 years. However, the plan – which includes investment in transport and energy infrastructure – comes amid growing concern over China’s slowing economic growth and decline appetite for commodities and gold.