THE establishment of a gold market in Shanghai is designed to meet rising demand and combat black-market trading, according to an academic.
A top official of the People's Bank of China (Shanghai branch) told the pro-Beijing Ta Kung Pao that Shanghai would create the country's first gold market.
The paper also said the city would continue to open up its insurance and foreign exchange markets.
The news comes at a time when there are market rumours that, as Western central banks dump gold, China is buying it in large quantities.
''These rumours, where no satisfactory explanation could be found, can now be explained by the mainland's plan to set up a gold market,'' said Professor Richard Ho Yan-ki, head of the department of economics and finance at the City Polytechnic of Hongkong.
''I think China intends to open a gold exchange due to increasing demand, which comes with rising living standards.'' The richer mainlanders now buy more gold in the form of jewellery, and it is increasingly in demand for use in China's expanding industrial sector.
