China: Gold Output up by 5.9 Percent in 2011, Imports Touch Record High

China's gold output reached 360.96 tons in 2011, up 5.9 percent year-on-year, according to the latest statistics from the China Gold Association.

China's gold output surpassed South Africa in 2007 for the first time. As of 2011, China has maintained its number one position as the gold output country of the world for five consecutive years.

It is interesting to note that China is not only the world’s largest gold producer but also the largest consumer. Transactions on the Shanghai Gold Exchange totaled 7,438.43 tons in 2011, an increase of 23.03 percent from 2010.

The country has been importing record amounts of gold as well with the volumes coming in through Hong Kong. As reported by the Hong Kong Census and Statistics Department, China imported 102,779 kilograms of gold from Hong Kong in November 2011, an increase from October’s 86,299 kilograms.

Also export of gold is not allowed. So there is thus a strong suggestion that Chinese gold production is, in fact, all going into the country's gold reserves. Since it follows the policy of not reporting its official gold reserves, the actual figure is not known.

In addition, the Chinese are faced with negative real interest rates, a troubled real estate market and the risk of inflation eroding their savings. These factors, along with the fact that gold has become more accessible due to growing incomes, make it an even more attractive store of wealth.