China to enable overseas gold delivery to boost Yuan's role
3 Min Read
According to analyst Shen Meng warned that, should the US-China dispute escalate into a full-scale trade war, the United States could "impose an embargo on gold."
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In this Aug. 7, 2003, file photo, a Chinese bank worker displays Chinese yuan at a bank in Beijing (AP)
The South China Morning Post on Wednesday reported that China is advancing plans to enable overseas delivery of certain commodities traded on the Shanghai Gold Exchange, a step aimed at boosting the global profile of the yuan and limiting dependency on US-controlled financial systems.
This move is outlined in a newly released action plan by top Chinese regulators, including the People's Bank of China, the National Administration of Financial Regulation, the State Administration of Foreign Exchange, and the Shanghai Municipal Government. The blueprint aims to reinforce Shanghai's role in cross-border financial services, particularly in support of outbound investments and the Belt and Road Initiative.
"We will support the Shanghai Gold Exchange and other institutions in cooperating with overseas exchanges through product licensing, and expand the use of renminbi-denominated benchmark prices in major international markets," the agencies stated.
A core element of the plan involves exploring how physical delivery of certain products on the Shanghai Gold Exchange can be facilitated internationally by setting up offshore delivery and storage hubs. Altogether, 18 measures have been proposed to help Chinese businesses grow their global competitiveness, including the expansion of yuan usage, enhanced foreign exchange services, and broader reinsurance coverage tied to Belt and Road projects.
Gold Diplomacy
The strategy arrives amid escalating economic friction with Washington. Following a recent announcement from the White House signaling potential tariffs as high as 245 percent on Chinese imports, Beijing is intensifying support for domestic sectors. As international partners reconfigure trade terms with the US during a 90-day tariff truce, China is focusing on deepening economic integration with Belt and Road nations.
According to Shen Meng, director at Beijing-based investment bank Chanson & Co, "the goal is to reduce the global risk of gold reserves being too heavily concentrated in the US." He noted that the Belt and Road Initiative is once again being leaned on as a key alliance for China in the face of the ongoing trade conflict.
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Currently, the Federal Reserve Bank of New York houses the largest global reserve of gold on behalf of governments, central banks, and international institutions. Shen warned that, should the US-China dispute escalate into a full-scale trade war, the United States could "impose an embargo on gold."
Dan Wang, China director at Eurasia Group, noted that the new initiative also intends to expand the yuan's reach beyond trade. "As China builds gold vaults abroad, you can now use the yuan to buy gold directly from these overseas vaults," he said.
