China is holding on to an estimated 19,500 metric tons of gold, including private and government stock, much of which has been amassed since 2000 as part of its ambitions to make its own rules for the international monetary system, say analysts.
But, the estimate seems too conservative for an obscure market like China as real gold stocks with the country could be even higher.
As things stand, there are no realistic estimates of the amount of gold with the Chinese people and its government as officials there are not ready to part with numbers. This could be gross underestimate in a country which annually imports over 1,300 tonnes of gold.
China's gold imports for 2016 totalled about 1,300 tons, down 17 per cent year-over-year. Shanghai Gold Exchange (or SGE) gold withdrawals were also at their lowest in four years.
China is believed to have restricted gold imports through quotas allotted to banks, in a bid to stem the fall of Chinese yuan against the US dollar. This move has weakened the ability to purchase gold in the country.
Koos Jansen, an analyst with Singapore bullion dealer Bullion Star, who has studied the Chinese gold market for years, has recently come up with an estimate of total Chinese gold holdings at 19,500 metric tons (or 21,495 US tons), at the end of January 2017.
''They have promoted gold ownership as a store of value since at least 2002, but more so when they introduced the 'storing gold with the people' concept in 2004,'' says Jansen, a campaign encouraging private citizens to buy gold.
According to Jansen's estimates, total private holdings, including those of individuals and firms, are 15,500 metric tons. The official reserves of the People's Bank of China (PBOC) are around 4,000 metric tons.
This would make Chinese the second biggest holders of gold after India, where citizens are estimated to hold 20,000 metric tons of gold in jewelry and other forms. Private sector holdings for the United States are unknown, but the Treasury still holds 8,134 tons in official reserves.
However, considering that China had only a total of 4,000 tons of gold in combined private and government holdings in 2000, it is quite an achievement to amass over 15,000 tonnes gold in so short a period.
''In the 1970s when China needed foreign exchange, that's when they started their mining industry. They were supposed to start exploration and the people were incentivized to mine gold. That's why there are so many gold mines in China,'' says Jansen, who estimates the number of Chinese gold mines at around 600.
Those 600 mines produced 490 tons of gold in 2015, making China the biggest producer ahead of Australia with 300 tons.
Much of the gold in China is imported and these have come via Hong Kong and also directly from Switzerland and the United Kingdom. The gold that gets into China, is sold through the Shanghai Gold Exchange (SGE), which also handles scrap supply and domestic mining.
However, Jansen points out, none of this supply is going to the central bank but rather to consumers and companies.
As for the central bank, Jansen says that purchases don't show up in official import statistics and are kept a tight secret.
According to Jansen, China also uses a special division of its army to pick up gold directly from the London Bullion Association. The central bank also uses commercial banks who buy in Switzerland or South Africa and secretly ship the gold to China.
Jansen cites the example of the total gold holdings of the London Bullion Market Association dropping by 2,750 tons from 2011 to 2015 while net exports were only 1,000 tons. Thus, those 1,750 tons are unaccounted for and most likely ended up in official Chinese reserves.