SHANGHAI, Nov 23: The Shanghai Gold Exchange will open its doors on a trial basis next week, marking the end of a state monopoly in China on the trading of the precious metal, state press reported on Friday.

The exchange, opening for the trial on Thursday next week, is expected to go into formal operation next January and will mark the full opening of the country’s gold market, the People’s Daily reported on its website.

A number of state-owned commercial banks, including the Industrial and Commercial Bank of China, Bank of China and the China Construction Bank, will be responsible for settlements on the exchange, the paper said.

The establishment of the gold exchange is part of a broader effort to deregulate the gold industry, which has been dominated by a state monopoly since the communists came to power 51 years ago.

Under the current system, the People’s Bank of China, China’s central bank, controls the gold market, buying all gold production and allocating it to users.

Provided the trial operations are smooth, the formal gold exchange will open in January and is expected to develop similarly to China’s silver exchange, which opened in Shanghai in January 2000 and brought to end the state monopoly on silver.

China produced 173 tons of gold last year and is expecting production in 2001 to top 175 tons.

Meanwhile gold consumption is expected to grow from about 200 tons to 500 tonnes a year, with 96 per cent of China’s consumption coming in the form of jewelry, the People’s Daily said.—AFP