Market Update
A review of China’s gold market in 2020
2020: a bumpy year for China’s economy
2020 was a bumpy year for China’s economy. Shocked by the COVID-19 pandemic, GDP in Q1 experienced the largest y-o-y decline in 29 years. But as China implemented strict social activity restrictions, the spread of epidemic was reduced, leading to a continuous rebound in the economy from Q2. In Q4, China’s y-o-y GDP growth reached 6.5%, higher than the previous quarter.
The economic revival following the Q1 slump has partly contributed to improvements in the nation’s consumption (Chart1). This, in turn, might have also supported the recovery of local gold demand from the significant contraction it experienced during Q1.
China’s economy is expected to remain stable in 2021. At the annual Central Economic Work Conference in late December, Chinese policy makers stated that fiscal and monetary policies will remain reasonably supportive in order to secure the economic recovery. And domestic consumption stimulation was positioned as a key task for the coming years, potentially boosting China’s retail gold demand.
Reference: WGC
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