In the opening half of this year, China’s appetite for gold has reached astonishing heights, with consumption soaring to nearly 555 tons—a remarkable 16 per cent surge compared to the previous year. This trend has ignited what some describe as a ‘domestic gold frenzy’. However, an interesting contrast emerges as diamonds, once the epitome of luxury, seem to have lost their allure. The diamond market in China experienced a contraction, with its size dwindling to $11.4 billion in 2022, a drop of $2.5 billion from the preceding year.
From the vibrant heart of Shenzhen, China’s prime distribution hub for wholesale jewellery, Xu Hua delves into this intriguing narrative.
Xu Hua reports from Shenzhen’s Shuibei Jewelry Market, a colossal wholesale haven revered across China. The market has witnessed an influx of consumers from every corner of the nation, drawn by the upward trajectory of international gold prices. The appeal of Shuibei lies not only in the diversity of designs and styles but also in the budget-friendly price tags, facilitating brisk deals that materialize within seconds.
In the words of Shenzhen residents:
Yu Wanling, Shenzhen Resident: “Shuibei is renowned for its gold sales. The quality of gold here is more trustworthy than elsewhere.”
Zheng Ce, Shenzhen Resident: “As we are on the verge of marriage, we find it more prudent to invest in gold for its potential as an heirloom or everyday adornment.”
The allure of gold for the first half of 2023 has resulted in a staggering 555 tons of gold jewellery being consumed domestically. Within this gold consumption landscape, gold bar purchases have skyrocketed by 30 per cent year-on-year, culminating in 146 tons. Simultaneously, gold jewellery sales witnessed an impressive 15 per cent increase from the same period the previous year, with a total of 368 tons sold.
Hao Runsong, General Manager of Lidu Gold, affirms this trend:
“In 2023, our gold sales have surged by 20-30 per cent compared to last year.”
However, juxtaposing this golden fervour, the entrances to neighbouring diamond emporiums appear somewhat solitary, as these coveted gemstones have faced a depreciation in value over recent months.
Liu Jingli, Manager of Yishidai Jewelry, laments the downturn in diamond inlays: “The retail transaction volume for diamond inlays has waned, and wholesale sales have also seen a decline.”
Zhao Li, Director of The Gold Plaza Operation Center, sheds light on the challenges faced by the diamond jewellery sector:
“Sales of diamond jewellery have experienced a minor decline, attributed to decreased prices, fewer marriages, the emergence of cultivated diamonds, and evolving buyer preferences.”
In response to daily adornment needs, some consumers are turning to art jewellery as an intriguing alternative to traditional diamond jewellery.
Huang Weijun, Brand Director of Shenzhen REIEN Jewelry, shares the resounding success of art jewellery:
“Our sales of art jewellery for the first half of this year have surged by about 300 per cent compared to the entirety of last year.”
Economists speculate that the surging gold sales reflect a growing unease with the economic outlook. Wu Haifeng, Executive Director of the Shenzhen Institute of Data Economy, suggests that during times of uncertainty—particularly surrounding economic growth and income prospects—individuals often seek to diversify their investment portfolios. This often entails shifting towards tangible assets such as gold and real estate.
Nonetheless, Wu acknowledges that the real estate market has been lacklustre since the previous year’s onset. In response, Chinese consumers and investors are venturing into other avenues. Wu emphasizes the necessity of well-crafted stimulative policies to ensure market vitality and a robust economic revival.
Reporting from Shenzhen, Guangdong Province, this is Xu Hua for CGTN.
Source: cgtn
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