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Three months after China declared Hainan the world’s largest free-trade port, the tropical island, better known for palm trees and beach resorts, has become the unlikely epicenter of a gold rush. Beneath the tourist buzz lies a far more consequential shift: Beijing is not only encouraging its citizens to buy gold, but it is also methodically reshaping the global gold market to expand China’s pricing power and financial influence. At a time when trade is increasingly weaponized, and tariffs are once again central to US economic policy, China is responding not by retreating from globalization, but by selectively redesigning it.
When Hainan launched island-wide customs-free operations in December, it was promoted as proof of President Xi Jinping’s commitment to “opening up.” Beijing wants to counter the perception that China is merely an export machine sitting on a record $1.2 trillion trade surplus. The message: China welcomes imports on its own terms.
The early data are striking. During the nine-day Spring Festival holiday, offshore duty-free sales reached 2.72 billion yuan ($390 million), up more than 30% year-on-year. January sales rose nearly 47% from a year earlier to 4.86 billion yuan. Jewelry and watches ranked among the top-selling categories, with gold leading the charge.
The price advantage is significant. Gold jewelry in Hainan can cost around 1,250 yuan per gram compared with roughly 1,430 yuan on the mainland. A 40-gram bracelet can generate savings of up to 14,000 yuan when government subsidies are included. Major brands such as Chow Tai Fook and Laopu Gold have leaned into the opportunity by offering aggressive promotions and waiving craftsmanship fees.
But this isn’t simply a tourism boom. It’s a window into how China’s middle class is thinking about money. Given tax breaks, Chinese consumers are not rushing to buy handbags or cosmetics. They are buying bullion. That shift says much about the state of the domestic economy. The property sector, long the primary store of household wealth, remains fragile. Bank deposit rates have been compressed by monetary easing. Equity markets remain volatile. For households facing limited overseas investment channels, gold offers something tangible and politically neutral: preservation of value.
Even January’s sharp selloff failed to dent that conviction. Gold fell 9% in a single day, silver plunged 26%, leveraged traders were wiped out, and exchange-traded funds saw nearly $1 billion in outflows. Yet physical demand in China barely wavered. Premiums on the Shanghai Gold Exchange widened to as much as $30 above London spot prices during the turmoil.
Gold currently accounts for about 1% of Chinese household assets. If that allocation were to approach 5%, the structural demand from the world’s largest gold-consuming nation would be enormous. This is not speculative froth. It is a steady, systemic bid.
While retail buyers flock to Hainan, Beijing is executing a broader institutional strategy through Hong Kong.
Authorities have announced plans to expand the city’s gold storage capacity to more than 2,000 metric tons within three years. A fully state-owned gold clearing system is expected to begin trial operations later this year. Integration between Hong Kong and the Shanghai Gold Exchange is deepening, strengthening the link between onshore and offshore markets.
The objective is clear: increase China’s influence over international gold pricing, a domain historically dominated by Western financial centers such as London and New York. This effort is also regional. Several Asian countries have expressed interest in using Shanghai Gold Exchange offshore vaults to store sovereign reserves. Cambodia, for instance, may store part of its 54 tons of gold in Shenzhen’s bonded zone. Each additional participant strengthens China’s financial ecosystem from vaulting to clearing to price discovery.
The global backdrop makes these moves more consequential. In an era where tariffs are imposed on both rivals and allies, traditional trade relationships are under strain. The US push toward economic nationalism risks alienating partners whose cooperation would otherwise amplify its leverage.
China, by contrast, is embedding itself deeper into regional financial infrastructure. Rather than simply retaliating against tariffs, it is building parallel systems that encourage domestic gold accumulation, expand vault capacity, and offer alternative clearing mechanisms. Gold is not just a commodity. It is a monetary asset, a hedge against geopolitical uncertainty and a symbol of financial sovereignty. Pricing power in gold markets carries strategic weight.
What looks like a retail boom in Hainan is in fact part of a larger strategy. Beijing is strengthening domestic demand while constructing the institutional architecture to play a greater role in global price formation. In a more fragmented world, where trust in existing systems is tested, tangible assets and trusted infrastructure matter more. By anchoring its strategy in gold the oldest store of value China is positioning itself for that reality. The rush in Hainan is not just about jewelry. It is about who shapes the next chapter of global finance.