Hong Kong is positioning itself to become a major international gold trading hub by leveraging its established retail market and integrating closely with Shenzhen’s expanding wholesale and manufacturing sector. This dual approach aims to tap into China’s substantial gold consumption and further develop a comprehensive gold trading ecosystem spanning finance, fabrication, and retail.
Hong Kong has long been central to China’s gold market, serving as the primary purchaser for the country’s consumers. Since the 1970s, the city has set purity standards—such as the 999.9 fineness benchmark initiated by jeweller Chow Tai Fook Enterprises—that have influenced gold consumption across the region. The city’s status as a tax-free port with no import duties or sales tax has facilitated its rise as a leading gold retail centre, housing over 1,300 shops by 1998 and remaining among the world’s foremost markets today.
However, Hong Kong’s future gold strategy increasingly depends on its collaboration with Shenzhen, a city better known for its technology industry but rapidly developing into Asia’s largest jewellery wholesale hub. The Shuibei market in Shenzhen, occupying a relatively small area yet hosting more than 7,000 merchants, now accounts for about half of China’s gold trading by volume, with an annual turnover of approximately 100 billion yuan (HK$117 billion). The city has prioritized gold and jewellery as key industries in its current five-year plan, aligning closely with Hong Kong’s ambitions.
Hong Kong plans to expand its physical gold storage capacity markedly—from current levels to 2,000 tonnes by 2028—to support the internationalization of the yuan and the needs of central banks and institutions, including those involved in the Belt and Road Initiative. Yet, officials note that simply increasing vault capacity is insufficient without stimulating active trading and manufacturing activities.
A significant part of the gold processed in Shenzhen’s foundries—estimated at 20 to 30 percent—originates from Hong Kong. The integration allows manufacturers in Shuibei to lease gold through Hong Kong banks, which mitigates the risks from price volatility common in the jewellery fabrication industry. This is facilitated through gold leasing and hedging mechanisms where foundries borrow gold upon confirmed orders and repay it with interest after delivery, reducing required capital and exposure.
The cross-border manufacturing model further benefits from Shenzhen’s bonded zones, enabling the seamless transport and export of fabricated gold products without customs duties, increasing cost efficiency. Hong Kong's relatively lower gold leasing rates compared to onshore mainland China provide additional financial incentives for firms operating in this market.
In July, Hong Kong launched Delivery Connect, a platform offering a direct, regulated channel for the transfer and settlement of physical gold between Hong Kong and the Shanghai Gold Exchange, which maintains vaults in Shenzhen. This initiative, inspired by previous successful financial connectivity programs such as Stock Connect, aims to enhance access to yuan-denominated gold products and support more effective hedging and risk management.
Together, the close cooperation between Hong Kong and Shenzhen is creating a unique gold trading ecosystem that combines fabrication, wholesale trading, retail, and advanced financial services. This comprehensive value chain distinguishes the region from other global gold centres like London, New York, and Zurich, potentially positioning Hong Kong as a pivotal node in the international gold market.