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Hong Kong is the major conduit for China’s gold imports, as gold shipped to depositaries at Hong Kong Airport can be exported to China directly without paying Hong Kong’s 3% import duty. “What we find in Hong Kong is that in a particular month when Chinese demand is low, then that surplus comes to the market here. Hong Kong takes care of (China’s) demand and supply gaps,” he said.

Gold demand was boosted in 2008 by the spectacular collapse of the Shanghai stock market, which tumbled more than 60% over the year, she said. Many investors look to gold as a safe way to preserve the value of their capital. Lately, Chinese mines have not been able to keep up with the increased demand for gold bullion.

This increased demand means high profits for companies such as China Mineral Company, who have boasted incredible results for the past fiscal year. And this growth is slated to continue into the end of this year and the next. Demand growth in 2009 would not match 2008 levels, partly because of the recovery in the stock market seen this year, but the long term trend is still upward, explains an analyst from China Mineral Company.