china gold imports soar almost fivefold

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By Bloomberg News - Dec 1, 2010 11:28 PM PT
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Business ExchangeBuzz up!DiggPrint Email . Shen Xiangrong, chairman of the Shanghai Gold Exchange. Photographer: Qilai Shen/Bloomberg
Chinas gold imports jumped almost fivefold in the first 10 months from the entire amount shipped in last year as concern about rising inflation increased its appeal as a store of value, said the Shanghai Gold Exchange.

Imports have gained to 209 metric tons compared with 45 tons for all of 2009, Shen Xiangrong, chairman of the bourse, told a conference in Shanghai today. The country is the worlds largest producer and second-biggest user.

Bullion soared 27 percent this year and is set for a 10th annual gain as the dollar dropped and investors sought a store of value on concern that the trillions of dollars governments are pumping into the global economy may debase the value of currencies. China has pledged to use price controls and may raise interest rates a second time this year to slow inflation that rose in October to the highest level since 2008.

People there need to buy gold to hedge against inflation as the countrys tightening monetary policy drives investors from stocks and properties to gold, said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo. Chinas demand will continue to grow, making the country one of the top importers together with India, he said.

Gold demand in China gained in the first half as government measures to cool the property market and falling equities spurred investment, the Shanghai Gold Exchange said July 7. About 70 percent to 80 percent the imports in the first 10 months were made into mini-gold bars, which Chinese investors like to hold, Shen said.

Inflation Expectations