Dama helped China be come the biggest consumer of gold

Even though the international gold price kept dropping last year， the gold consumption in China， assisted by the gold-loving Dama （old ladies）， for the first time surpassed the level of 1000 tons. Meanwhile， the output of gold in China hit the historical high again， taking the first place for the seventh time in a row.

From April 2013， the gold price began to dive. With the impact， the gold price in China dropped from 400 yuan per gram at the start of last year to below 200 yuan per gram in the Spring Festival of 2014. But Chinese consumers， represented by Dama， never stopped spending on gold in spite of the dropping price. The consumption of gold bars and golden ornaments increased very well.

The Chinese Association of Gold announced on February 10 that the consumption of gold in China reached 1176.4 tons in 2013， up 41.36% year on year. Of them， the gold bars sold weighed 375. 73 tons， up 56.57% while the ornaments increased by 42.52% to 716.5 tons. The amout used for gold coins and industry dropped respectively.

In 2012， the consumption of gold in China was 832.18 tons， up 9.35% over a year before. Compared with 2012， the increase in 2013 was much larger. As estimated by the World Gold Council， since India applies strict limitation over the importation of gold， China will replace India as the largest gold consumer in 2014. Meanwhile， the output of gold increased by 6.23% to 328.16 tons in 2013. In spite of this， the gap between supply and demand still reached 746.24 tons in that year.

Apart from Chinese Dama， who spent generously on gold， the sovereign gold reserves of Peoples Bank of China also attracted the worlds attention. The Chinese government is likely to announce the dramatic increase in the gold reserves， which used to be an important reason for investors to regard highly of the gold-related stock prices.

However， the recent statistical data let those investors down. The data from Peoples Bank of China showed that the sovereign gold reserves of China are still 1054 tons at the end of 2013， unchanged from a year before. The reported dramatic increase did not happen. In the past five years， the sovereign gold reserves in China remained at 1054 tons， only accounting for 1% of the massive foreign exchange reserves of China.

According to the estimation of World Gold Council， the total reserves of China ranked No. 6 as of January 2014， but the proportion of gold reserves in the foreign exchange reserves is much lower than the U.S.， Germany， Italy， France and other countries. The top five countries/organizations in the gold reserves are the U.S. （8133.5 tons）， Germany （3387.1 tons）， IMF （2814 tons）， Italy （2451.8 tons） and France （2435.4 tons）.

CAA： removing the cap of foreigners shares in auto companies might be disastrous

On February 13， China Automotive Association （CAA） announced its opposition to the proposal about removing the cap of foreign investors shares in the Sino-foreign joint ventures of vehicle production and assembly in China.

“If the cap is removed now， it will be a disaster for the Chinese self-owned auto brands. The 30-year efforts will be ruined and wasted，” said Dong Yang， secretary-general of CAA. The CAA held several forums and seminars to talk about this matter and their conclusion was to say no to the proposal of removing the cap.

The proposal has become a hot topic in China. The pros believe that the auto industry should be considered to be a kind of manufacturing. The cons say that the removal of the cap will be the bane for the auto industry in China， while others hold the opinion that this could force self-owned brands to be more devoted to the innovation and competition.

Presently， foreign investors are only allowed to have at most 50% shares of a joint venture in China. It was said the new business report of VolkswagenFAW Auto Company， a joint venture be-tween Volkswagen and First Automotive Works， is going to be calculated based on the new shareholding structure. Though this matter has not yet been confirmed， the changes， if true， will increase Volkswagens shares of the joint venture from 40% to 49%， meaning a weaker voice of the Chinese company.

Dong Yang pointed out that the auto industry is not like the general manufacturing. It is a strategic industry that supports the transformation and upgrade of the national economy. The self-developed auto industry and the auto industry dependent on foreign force have different roles in that matter.

“If we give up the dominance in the development， our auto industry is going to be the assembly factory for foreign brands. Now it is the key period for Chinas transformation and upgrade of economic structure. So the cap should not be removed at this moment，” Dong Yang said.

He also cited the example of Latin America. Some of the countries there have been trapped in the medium income trap. One of the important reasons is that their auto industry， as well as other pillar industries， was controlled by foreign countries. So they are unable to push the upgrade of the national economic structure with the auto industry， rendering their countries powerless to improve.

“Though we have no advantages in the control of joint ventures， the contribution and voice of Chinese companies are increasing gradually， and the spontaneous development of joint ventures is taking the upward trend. If the cap is removed， the efforts will lead to nothing，”Dong Yang said.

Commercial banks in China had NPLR increase to 1%

China Banking Regulatory Commission （CBRC） published a new group of data， showing that the balance of nonperforming loans of commercial banks had increased by 99.3 billion yuan to 592.1 billion yuna by the end of Decem- ber 2013. The non-performing loan rate（NPLR） was 1%， 0.03 percent higher than the one at the start of last year.

As the statistical data shows， commercial banks in China totally saw the net profits of 1.42 trillion yuan in 2012， up 14.5% compared with a year before. The average profit margin of assets and profit margin of capital dropped simultaneously. The former dropped 0.01% to 1.3% while the later dropped 0.7 percent to 19.2%.

The statistical data from CBRC also showed that the total assets of home and foreign currencies in and outside of China held by Chinese commercial banks amounted to 151.4 trillion yuan， up 13.3% year on year.

Among them， the big commercial banks had the total assets of 65.6 trillion yuan， up 9.3% and accounting for 43.3% of the total figure. The shareholding commercial banks assets totaled 26.9 trillion yuan， taking 17.8% while increasing by 14.5%.

And the commercial banks loans in home and foreign currencies totaled 141.2 trillion yuan， up 13% year on year.

Ma Jun to be chief economist of central banks research institute

Ma Jun， the current chief economist of Deutsche Bank Greater China， is said to be appointed chief economist of the Research Institute of Peoples Bank of China， or the central bank. Ma Jun is one of the few executives recruited by the central bank from the other.

The research institute works as an advisor for decision-makers. Its main responsibilities include the analysis and forecast of economic growth based on monetary policies， studying into financial laws， regulations， systems and following the implementation， tracking up and studying the economic situations of different industries of China， the significant policies and their effect in the credit， interest rate， exchange rate and so on.

Presently， the Research Institute was administrated by Pan Gongsheng， vice president of the central bank. In recent years， the organization held several academic events， bringing about topics fitting the current economic situation. Ma Juns joining is definitely going to bring about more international viewpoints to the institute.

Ma Jun once worked in the World Bank and IMF as the senior economist to provide the consultancy service of economic policies for China and many other countries.

Different from many chief economists of foreign banks who think lowly of the outlook of Chinese economy， Ma Jun always holds optimistic opinions towards Chinas economy. He said that the international investors were wrong to compare China to Turkey or Argentina. Since Chinas economic fundamentals are much healthier than other emerging countries and thus China is the least likely emerging country to be influenced by the U.S. policy changes.