China Is Digging Gold with Its Foreign Investments in the Mining Sector

China has ramped up its investment in the mining sector over the past decade. With a farsighted approach, China is clearly looking into the digitized future and taking steps today to ensure a dominant place in it. The digitized economy of the future will require a number of metals and minerals as raw materials, one of which is gold.

Chinese investments all over the globe in gold mining are largely based on strategic reasons. The Made in China 2025 initiative envisioned by the ambitious President Xi aims to push China to become a leading force in manufacturing and technology in the near future. The sectors that the initiative has specifically targeted include robotics, communication technology, and healthcare. Gold is needed to make electronic substrates which will be required across all of these sectors. The surge in gold mining investments is essentially an attempt to secure supplies for the future. Therefore, these investments tie perfectly into China’s long-term strategic goals.

However, there is more to this recent gold rush than just strategic reasons. China happens to be the largest consumer of gold in the world. Jewelry consumption within the Chinese economy was more than jewelry purchases elsewhere in the world. China, therefore, wants to be able to set the prices of the commodity that it consumes more than anyone else. To be able to do that in the near future, it has ramped up investment into gold mining across the globe. China has put stringent laws in place that restrict taking gold out of the economy.

Another economic reason is the fact that the OBOR will connect some of the markets which consume the most gold to China. Economies such as Kazakhstan, India, and the Eurasian markets have high gold demand and they will be connected to China through OBOR. Therefore, an increase in gold reserves makes economic sense.

Both private and public Chinese companies are investing in gold mining and are readily joining hands with foreign partners who are established in the business. Shandong Gold Group, a Chinese gold mining and manufacturing company, recently partnered with Canada’s Barrick Gold which happens to be the largest bullion producer in the world.