Consumers, gold jewellers in China adapting to VAT reforms, says WGC
This story was originally published at 14:46 IST on 16 January 2026
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MUMBAI – Consumers and jewellers in China have started to adapt to the changing environment after the announcement of value-added tax reforms in the country in November created an initial panic, according to Ray Jia, head of research, Asia Pacific, excluding India, and deputy head of trade engagement (China) at the World Gold Council.
On Nov. 1, China's finance ministry and the state taxation administration announced adjustments to the value-added tax policy for the gold market, effective till Dec. 31, 2027.
Wholesale demand for gold jewellery in China picked up pace in the second half of December as retailers prepared for year-end sales, a seasonal factor that usually lifts demand in December, Jia said. However, there was still a 6% on-year decline in wholesale gold demand last month, due to pressure from the rocketing price of gold as well as the VAT reform.
"Global gold prices carried their strength into the last month of 2025, ending the year with performances unseen for decades," Jia said. Heightened geopolitical tensions, strong activity in the options market, and robust inflows into exchange-traded funds supported the precious metal's prices. "The RMB (renminbi) gold price registered its strongest annual performance since 2002 – when the SGE (Shanghai Gold Exchange) was established – surging 58%. Meanwhile its USD peer rocketed 67%, its best year since 1979," Jia said.
Chinese gold ETFs saw strong inflows in December, adding $545 million. Chinese investors bought $15.5 billion worth of gold ETFs in 2025, marking the strongest annual inflow ever. The record inflows and rally in gold prices resulted in a 243% on-year rise in the total assets under management of Chinese gold ETFs to $34.6 billion at the end of 2025. Gold holdings more than doubled to 248 tonnes, both reaching record levels, Jia said.
The People's Bank of China added another 900 kg of gold to its reserves in December, marking the 14th straight month of purchases. The country's official gold holdings reached 2,306 tonnes by the end of 2025, accounting for 8.5% of its total foreign exchange reserves. "Notably, gold purchase announcements were made every month, totalling 27t (tonnes) during the year. We believe such announcements have encouraged retail investors to buy gold, contributing to the strength in bullion sales and to gold ETF demand," Jia said.
China's net gold imports reached 47 tonnes in November, up 12 tonnes from the previous month. More working days in the month may have contributed to the month-on-month improvement in imports, Jia said. However, "...the recent VAT change dented China's wholesale gold demand, leading to considerable monthly weakness compared to previous years," Jia added. End
US$1 = INR 90.77
Reported by Ashutosh Pati
Edited by Ashish Shirke
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