China has granted ten major insurance companies, including PICC Property & Casualty and China Life Insurance, approval to invest in gold for the first time, a move that could inject up to CNY 200bn ($27.4bn) into the market and drive-up prices.
Under a new investment program that took effect on Friday, insurers can allocate up to 1% of their assets to gold, Bloomberg reported.
This policy shift comes as authorities seek alternative investment options amid a slowing real estate market and economic downturn.
Gold prices have surged about 40% since late 2023, driven by economic and geopolitical risks during US President Donald Trump’s second term. While demand for the precious metal remains strong, its current high valuation could make it less accessible to Chinese investors.
Analysts at Guotai Junan Securities, said that Chinese insurers face challenges in finding medium- and long-term investment options with stable returns. The strong sales of savings products have increased insurers' liability costs, making it harder to find suitable investment opportunities that match their financial obligations.
The new program marks a significant shift in China’s insurance investment policies, as gold becomes the first commodity insurers are permitted to invest in. Historically, Chinese regulators have imposed strict limits on insurers’ asset allocations, favouring stable cash-flow investments such as bonds and stocks.
This development underscores the growing demand for alternative assets in China’s insurance sector and may signal further policy changes to expand investment options in the future.