China launches Hong Kong gold clearing system to curb dollar reliance

China is establishing a new gold‑clearing and settlement system in Hong Kong that will operate in coordination with the Shanghai Gold Exchange. The platform, with a capacity of more than 2,000 tonnes, is designed to create a transparent, physically‑backed price for gold in Asia and to support the internationalisation of the yuan.

From 24 July, major Chinese banks such as the Industrial and Commercial Bank of China (ICBC) and Postal Savings Bank will cease offering retail gold‑certificate (paper gold) services, limiting private investors to physical gold. The move follows a sharp surge in gold prices earlier this year that led thousands of small investors to suffer losses, prompting authorities to view gold speculation as a source of social instability.

China’s central bank holds roughly 2,300 tonnes of gold, and the government has been steadily increasing its reserves to reduce dependence on the US dollar and mitigate exposure to sanctions and dollar‑linked debt. The new system is part of a broader strategy to provide a stable gold backing for the yuan and to limit speculative trading in gold certificates.