Editor’s Note
This article reports on the immediate market reaction to China’s new gold tax policy, highlighting a downturn in gold prices and related stocks. The policy details and its longer-term implications for investors and the jewelry industry will require further monitoring as the situation develops.
Following the announcement of China’s new gold tax policy, the capital market reacted swiftly. Gold prices retreated, and jewelry stocks in mainland China and Hong Kong markets suffered heavy losses, with a strong wait-and-see sentiment prevailing in the domestic gold trading market.
On Saturday, November 1, the “Announcement on Tax Policies Related to Gold” jointly issued by the Ministry of Finance and the State Taxation Administration clarified the boundaries between “investment gold” and “non-investment gold.”
Previously, Beijing’s VAT exemption policy for gold helped maintain the competitiveness of domestic gold prices, allowing retailers to reduce their tax burden when selling gold purchased from the Shanghai Gold Exchange. However, Beijing has now announced the termination of VAT rebate benefits for some gold retailers.
On November 3, at the opening of A-share trading, retail gold brand stocks collectively fell. By the close, Chaohongji (潮宏基) dropped 9.9%, while Chow Tai Seng (周大生) and Lao Feng Xiang (老凤祥) both fell over 3%.
The Hong Kong stock market’s gold and jewelry sector saw a comprehensive decline. Chow Tai Fook (周大福) plunged 12% during the session, Chow Sang Sang (周生生) fell over 8%, and Laopu Gold (老铺黄金) tumbled more than 9%.
Citigroup analysts estimate that Beijing’s sudden adjustment to the gold tax policy will reduce the VAT deduction rate for jewelers’ gold purchases from 13% to 6%. This move could substantially increase gold procurement costs by about 7%. If companies cannot fully pass on these costs and retail prices remain unchanged, it could lead to a potential 15% to 26% shrinkage in the net profit of industry leader Chow Tai Fook for the 2026 fiscal year.
Citigroup analyst Tiffany Feng told Bloomberg. In practice, the per-gram price of pure gold has generally increased across brands.
On November 3, brands like Chow Tai Fook, Chow Sang Sang, Luk Fook Jewelry, and Lao Feng Xiang raised their pure gold prices, with increases of around 60 yuan (RMB) per gram. Among them, Caibai Jewelry saw the largest increase, rising 70 yuan per gram.
At Tianya Jewelry City, the guided gold price on November 3 was 1,066 yuan per gram, 142 yuan higher than the market price (924 yuan per gram). A salesperson stated, “Each gram includes 70 yuan in tax.”
A salesperson from “Shenzhen Shuibei” said that due to the new policy, gold prices in various markets have been adjusted upwards. The prices announced now are all post-tax prices, mainly because the raw material cost includes taxes.
At Tianya Jewelry City in “Beijing Shuibei,” a gold shop salesperson said,
“Shuibei” is a term synonymous with wholesale-style retail in gold sales, and “Shenzhen Shuibei” is one of the largest gold wholesale markets in the country.
Under the new gold tax policy, “gold at market price” will become history.
A salesperson at Tianya Jewelry City said that affected by the price hikes, market wait-and-see sentiment is strong. Despite many consumers buying gold this year, shops generally do not want to sell their stock.
Gold recyclers have also become more cautious. Staff at a recycling store said they suspended recycling today due to concerns about subsequent impacts from the new tax policy and rising costs.
Staff at stores that have not yet suspended gold recycling also indicated,
Morgan Stanley stated that Beijing’s policy changes will affect the entire industry chain’s upstream and downstream landscape. The new regulations will force small and medium-sized retailers to change their procurement models, turning to direct purchases from exchanges to reduce tax pressure. This may accelerate industry consolidation but benefit listed leaders with scale advantages.
