China has launched a gold sector fund for the exclusive use of the countries found along the ancient Silk Road. The latter is one of the world’s oldest and most historically important trade routes that traversed through China, Central Asia and the West.
A report by the Shanghai Daily over the weekend said the international gold fund could reach $16.4 billion in total value. Xinhua News says it will be set-up in northwest China’s Xi’an City and will be led by the Shanghai Gold Exchange (SGE).
About 60 of the 65 total nations along the Silk Road Economic Belt and 21st-Century Maritime Silk Road have invested in the fund. Many of the countries found along this route were identified as important reserve bases and consumers of gold. The fund will enable member states’ central banks to have greater and easier access to increase their gold reserves.
“The Belt and Road initiative is China’s idea and everyone’s opportunity. China intends to use its strength in infrastructure construction and financial resources to promote this project,” The Financial Times says.
China, albeit being the world’s largest gold producer, major importer and consumer of gold, does not have a big say in gold pricing because, Xinhua News quoted Tang Xisheng of the Industrial Fund Management Co. Despite the labels, China accounts for only a small share of international gold trade. “Therefore, the Chinese government seeks to increase the influence of RMB in gold pricing by opening the domestic gold market to international investors.”
Among the major projects the fund is eyeing to accomplish is to invest in gold mining in countries along the Silk Road. As such, this will boost the gold mining explorations in countries like Afghanistan and Kazakhstan.