Chinese gold imports tipped to drop in loan deals fallout

Chinese gold imports could fall by up to 400 tonnes this year as the central government tightens controls on gold financing deals and domestic demand softens, a leading precious metals consultant said yesterday.

Philip Klapwijk, a director of Hong Kong-based Precious Metals Insights, said the Chinese authorities were once again moving to rein in abuse of gold lending, after a crackdown on commodity financing last year.

He said weaker import volumes in recent months - the mainland's gold imports from Hong Kong dropped in May to the lowest level since January last year - suggested the gold lending business was already being partly wound down.

In the full year, imports could fall by 300 to 400 tonnes, or as much as 22 per cent, he said.

"[Gold imports] will probably decline for the full year given the impact of firstly, weaker real demand in China compared to its outstanding level in 2013 and secondly, measures to restrict the abuse of gold lending and other financial plays using the yellow metal," he said.

"Total imports into China may have reached nearly 1,800 tonnes in 2013, taking into account unofficial and direct shipments.