The consumption of gold across China will top 350 tons this year, a record high, according to Cheng Fumin, chairman of China Gold Association.

Addressing an ongoing forum on gold and precious metals held in Shanghai, Cheng said rising gold prices since the beginning of the year had restrained sales of gold jewellery, which accounts for the bulk of gold consumption, but gold bullion -- seen as a way of preserving value -- has been selling like hot cakes.

The country produced 169.28 tons of gold in the first three quarters of the year, a rise of 12.62 tons on the same period last year, and raked in 3.9 billion yuan (about 487 million U.S. dollars) in pre-tax profits, up 52 percent on comparable figures from last year.

Cheng predicted the country's gold output would exceed 240 tons this year, with gold sector profits topping 5.5 billion yuan, a record high.

China now ranks third in the world in terms of gold consumption, after India and the United States.

Gold consumption exceeded 300 tons in China last year, 80 percent of which went to the jewellery-making sector.

At the forum that ended Tuesday, Cheng also invited overseas investors to participate in upgrading the state-owned gold mining enterprises across the country.

"During the 11th five-year-plan period (2006-2010), China's conventional practice of operating gold mining entities will undergo major changes," said Cheng.

"The state will no longer play the role of sole investor in the country's gold mining industry and the urgent task for the country's gold industry will be to diversify its operations," Cheng said.

China now has 1,200 gold mining enterprises, of which 739 only have a daily ore processing capability of 50 tons or below.

"We hope the introduction of overseas funds, advanced technologies and management expertise can help restructure the gold sector," said Cheng.

Source: Xinhua