Chinese demand for gold bars and coins as private investments could push bullion imports above 400 tonnes in 2011, leading global consultancy GFMS said on Friday. Increased appetite for silver investment products too, combined with a forecast 16 percent annual growth in industrial demand, means China's total silver consumption could outstrip domestic supply this year, said Philip Kalpwijk, executive chairman of GFMS.
"There is a widening demand for silver as investment in China because of its lower entry point. It is also being increasingly recognised as an physical investment asset, which will support demand," Kalpwijk told a conference in Shanghai.
The Chinese government does not publish official statistics on gold imports but the World Gold Council said China produced 340 tonnes of gold in 2010. Total consumption was about 700 tonnes, leaving a gap of around 300 tonnes made up by either imports or sales of existing stocks last year.
The surge in imports, which jumped fivefold last year, has turned China, already the largest bullion miner, into a major overseas buyer. GFMS' forecasts imply imports will continue to grow at a robust pace despite high gold prices. The explosive demand has been stoked by concerns about inflation and poor returns in the stocks and property sectors. It also been aided by Beijing's encouragement to retail consumption, such as expanding the number of banks allowed to import bullion.
GFMS said China's investment demand for gold could hit 300 tonnes this year, up from 200 tonnes in 2009. Investment demand for silver stood at around 260 million tonnes in 2010, the group said, without giving a forecast for 2011. Forecasts by state-owned miner China National Gold Group Corp were more conservative.
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