According to new data from Hong Kong Census and Statistics Department mainland China’s net imports of gold totaled 109.2 tonnes in February.
That’s up more than 30% over the 83.6 tonnes in January and up a whopping 79.3% compared to the same month last year when Chinese imported 60.9 tonnes from the financial and trading hub.
As is the case with copper and increasingly iron ore, much of the imported bullion is being used as collateral for loans, mostly short-term facilities and trade credit, amid a worsening credit crunch inside the country.
Bloomberg quotes Liu Xu, precious metals analyst at Capital Futures Co. in Beijing as saying: “Policy makers are seeking to discourage the accumulation of debt in China, leading to tight money conditions and fueling such deals.”
China overtook India to become the world’s top importer of gold bars, coins and jewelry last year with 2013 imports soaring to 1,065 tonnes, up from 807 tonnes the year before.
Despite stringent import and trading curbs Indian consumption rose by more than 100 tonnes to 975 tonnes last year while according to some estimates “unofficial imports” almost doubled to triple digits.
Together the two giants are responsible for more than half of the world’s demand.
The price of gold has shown double digit gains this year after 2013’s 28% fall, the worst performance in more than three decades.