Cambodia sets to become first country to store gold with China

Cambodia has reached a milestone in global finance by becoming one of the first countries to accept China’s offer to repatriate its foreign gold reserves, marking an early victory in Beijing’s campaign to establish itself as a key center in the world bullion market.

Experts stated that the Southeast Asian country will deposit part of its reserves in a vault registered at the Shanghai Gold Exchange, located in a bonded zone in Shenzhen. 

As reported by Bloomberg, other countries have also shown interest in this initiative.

The move is a strategic one towards China, aiming to rival the dominance of the past by traditional gold storage centres such as London and New York. 

This step of attracting foreign sovereign gold will enable China to increase the liquidity and international credibility of its financial markets and facilitate the adoption of the yuan as a medium of trade and reserve in the world markets.

In the case of Cambodia or other countries that might be partners, the relocation is an opportunity to diversify their assets of value. 

The hoarding of gold in China would be seen as a means of developing warmer economic relations with the world’s second-largest economy and an influential regional power.

Although the actual volume of gold that Cambodia will send has not been announced, the deal is a significant stamp of approval of the Chinese financial system. 

Over the past few years, the Shanghai Gold Exchange has expanded rapidly to become the largest physical gold market in the world.

It will most likely be closely followed by the central banks and finance ministries of other countries, as it might prompt them, especially in Asia and China’s Belt and Road Initiative (BRI) partners, to consider similar arrangements. 

This change, though slow, is an indication of a gradual, progressive geographical rebalancing of financial power around the world.