China Opens First Offshore Gold Vault to Attract Global Investors
By Zhang Yuzhe and Han Wei
The Shanghai Gold Exchange (SGE) has opened its first offshore physical gold delivery vault in Hong Kong, in a strategic move to broaden international participation and amplify China’s expanding role in the global bullion trade.
Operated by Bank of China (Hong Kong) Ltd., the facility represents a significant move toward integrating China’s gold market with the international financial system. By offering physical settlement in a globally connected financial center, the exchange aims to increase the appeal of its yuan-denominated contracts and bolster cross-border liquidity.
Coinciding with the launch, the exchange unveiled two new yuan-denominated gold contracts that can be physically delivered in Hong Kong. To entice traders, the exchange is waiving all storage, deposit and withdrawal fees at the Hong Kong vault through the end of the year.
The initiative addresses long-standing logistical and regulatory bottlenecks that have limited foreign investor participation. Until now, international investors trading on the SGE’s International Board — established in 2014 — could only take physical delivery at three designated mainland vaults located in Shanghai and Shenzhen.
“Both regulators and international investors are likely to view this as a favorable development,” said one gold market analyst. Unlike the Chinese mainland, Hong Kong imposes no customs restrictions on the import or export of gold, removing a major friction point for global traders.
While discussions about establishing an offshore vault have circulated for years, momentum accelerated after recent directives from the People’s Bank of China and other top financial authorities. These calls to expand the global reach of SGE products and develop overseas delivery centers are part of broader efforts to elevate Shanghai’s role as an international financial hub.
Despite London and New York continuing to dominate global gold pricing and trading volumes — together accounting for more than 90% — Shanghai has made notable gains. Trading volume on the International Board surged from 45.5 billion yuan ($7 billion) in 2014 to 2.52 trillion yuan in 2023. The number of international members has risen to 106, spanning 16 countries and regions.
Contact reporter Han Wei (weihan@caixin.com)
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