China is pushing to position itself as a custodian of foreign sovereign gold reserves, a move aimed at strengthening its role in the global bullion market and reducing reliance on Western financial hubs, Bloomberg reported, citing people familiar with the matter.
According to the report, the People’s Bank of China (PBOC) has been using the Shanghai Gold Exchange (SGE) to approach central banks in allied nations, offering to store newly purchased bullion within China’s borders. The initiative, which has been underway for several months, has already drawn interest from at least one Southeast Asian country.
Analysts say the strategy would help Beijing expand its influence in global finance by providing a safe haven for gold — an asset that has gained prominence as central banks worldwide boost reserves amid geopolitical tensions. China’s own central bank has been buying gold for ten straight months, underscoring the precious metal’s growing importance as a buffer against economic shocks.
While the plan could boost China’s stature, it still lags behind established custodians such as the Bank of England, whose London vaults safeguard over 5,000 tons of reserves worth nearly $600 billion. By comparison, China’s holdings rank fifth globally, according to the World Gold Council.
Bloomberg noted that the reserves under Beijing’s proposal would be held in warehouses tied to the SGE’s International Board, rather than relocated from existing stockpiles. This would allow foreign central banks to build new reserves while deepening their ties with China’s gold market.
The push comes as bullion prices have nearly doubled in the past two years, recently topping $3,700 an ounce. Goldman Sachs has forecast that prices could reach $5,000 if just 1% of private Treasury holdings shift into gold.
Beijing has already taken steps to open up its market, including launching the SGE’s first offshore vault in Hong Kong and easing restrictions on imports. For prospective clients, Chinese vaults may provide not only convenience but also a shield against potential sanctions or restrictions in the Western-led financial system, a risk highlighted when the US and its allies froze Russia’s foreign exchange reserves in 2022.
The PBOC and SGE declined to comment, Bloomberg said.
