In line with increasingly strong trade ties between Dubai and China, the emirate and the People's Republic are actively exploring opportunities to enhance cooperation in the gold trade, according to senior executives at DMCC. Following DMCC's participation at the Asia Gold Focus 2009 Conference in Guangzhou, China, where investment strategies for the Dubai gold market was highlighted, it was observed that Chinese gold and jewelry manufacturers are increasingly eager to work closely with Dubai-based companies. The conference highlighted several important aspects of the potential role of China in the international gold market - for example, in 2008 China was the world's largest gold producer, second-largest consumer and fifth-largest holder of gold reserves. During the same period, Chinese per capita gold consumption grew by eight percent - at a time when few international markets registered any increase at all. Yet per capita gold consumption among Chinese consumers remains extremely low by global standards at just 0.2 grams per person. This compares to the world average of 1.3 grams per person and 19.6 grams per person in the UAE, one of the most vibrant international markets for the precious metal. “Chinese gold and jewelry companies increasingly see Dubai as a global benchmark,” said Dr. David Rutledge, chief executive officer of DMCC. “Likewise, here in the emirate, we recognize the importance of the Chinese market at a time of increased volatility in the global economy, including in the commodities sector. Further strengthening ties between these two growth regions will clearly benefit both sides - and the opportunities in the gold trade are especially compelling.” He added that Chinese trade sees specific opportunities to partner with Dubai- based companies. This includes a cost effective manufacturing base for jewelry manufacturing in China; providing a one-stop-shop for imports, customs clearance and secure transportation from and to Panyu to other parts of China; as well as extending reciprocal arrangements between DMCC registered companies and companies registered with the key Gold Associations of China. Following his visit to Guangzhou, Harendra Kailath, director for Gold at DMCC, highlighted that his discussions with many Chinese companies have been encouraging. “Several Chinese gold refineries have expressed interest in applying for the Dubai Good Delivery standard. This standard, specifically designed for small gold bars fully and complements the London Good delivery standard for large 400 ounce bars,” he added. At the Asia Gold Focus 2009, speakers also referred to the vision articulated by Zhou Xianchuan, governor of the People's Bank of China, who said that “the aim of the Chinese gold market was to develop from a commodity market to a financial market, from a spot market to a derivative market, and from a domestic market to an international market.” This vision set out by the government has proved to be a driving factor in the country's outreach for partnerships with major commodity hubs of the world. Also at the conference, participants expressed interest in exploring opportunities for futures trading in gold, building on the memorandum of understanding signed between Dubai Gold and Commodities Exchange and Shanghai Financial Futures Exchange in April 2008. Earlier this year, DMCC hosted a high-profile government and trade delegation from Shenzen, China, to examine bilateral trade opportunities in a range of commodities. In November 2008, DMCC hosted the first Middle East-China Diamond & Jewelry Summit, which focused on further growing business ties between the two regions.
