China sees brisk gold investment, rising imports

By Niu Shuping

BEIJING, July 3 (Reuters) - Ordinary Chinese are investing more actively in gold as an alternative hedge against decade-high inflation, a senior gold industry executive said on Thursday.

Physical trading at the Shanghai Gold Exchange rose 187 percent in the first half of the year, which will spur China to import more of the safe-heaven metal this year, Shen Xiangrong, the exchange's chairman, told a gold conference in Beijing.

Trading volume at the exchange reached 1,960 tonnes in the first six months, exceeding the total of 1,828 tonnes for the whole of last year, Shen said.

"The number of private investors has grown rapidly and reached nearly 260,000," he said.

Turnover by individual investors totalled 25 tonnes in the first half, 16 times more than a year earlier, he said.

Shen said he expected domestic consumption to continue to grow despite high prices, spurring an increase in imports. The Shanghai exchange's member banks imported nearly 29 tonnes of gold last year.

"Small gold bars are popular among investors and are selling very well in banks and stores as they can keep their value against inflation," Shen told reporters after his speech.

China's inflation averaged 8.1 percent in the first five months of the year, the highest rate since the mid-1990s, making gold an attractive alternative for investors who typically concentrate on stocks and property.