Editor’s Note
This article discusses a significant shift in the diamond market, highlighting a reported 40% price drop over two years. Key factors include the rise of lab-grown alternatives and shifting demand in major markets like China.
Diamond prices have plummeted in China, a country where diamonds are considered a symbol of wealth. The South China Morning Post (SCMP) reported on the 23rd, citing a Bank of America Global Research survey, that diamond prices have fallen by about 40% over the past two years. The background cited includes the emergence of lab-grown diamonds and a sharp drop in demand in China, the world’s second-largest diamond market.
Lab-grown diamonds, also known as synthetic diamonds, are now so advanced that without certification, even experts struggle to distinguish them from natural diamonds. Their price is about 20% that of natural diamonds, causing a major shift in the market. Last year, the global lab-grown diamond market was worth $15.3 billion, with China producing about 95% of the total, making it the world’s largest producer.
Economist Rajiv Biswas, author of ‘Asian Megatrends,’ explained in an interview with SCMP:
Beyond the rise of lab-grown diamonds, China’s declining marriage rate and economic slowdown are also key factors. Biswas diagnosed:
China’s marriage registrations are expected to fall below 6.6 million this year, less than half the 2013 figure, attributed to rising youth unemployment, economic stagnation, and changing values toward marriage.
As China’s real estate crisis enters its fifth year next year, there are growing signs it could spread to Hong Kong. Bloomberg reported on the 22nd that the continued slump in China’s property market is intensifying pressure on developers to repay debts. Country Garden, China’s fourth-largest property developer, is facing a default risk.
Hong Kong’s major developers are also in trouble. New World Development has requested extensions on some loan maturities and recorded its first annual loss in 20 years, carrying debt of about $28 billion. Hong Kong developers face the dual challenges of the mainland market slump and adjustments in the Hong Kong market.
Chinese Premier Li Qiang acknowledged these economic difficulties. According to state-run Xinhua News Agency, Li said at a constitutional oath-taking ceremony for department heads at the State Council on the 23rd:
While China set an economic growth target of around 5% this year, similar to last year, it faces difficulties in recovery due to the property market downturn, weak domestic demand, and problems with local small and medium-sized financial institutions. The IMF forecasts China’s growth rate this year at 4.8%, falling to 4.5% next year. Fu Linghui, spokesperson for the National Bureau of Statistics, stated:
The OECD and World Bank also forecast declining growth rates. In response, Reuters reported on the 24th that Chinese authorities plan to issue a record 3 trillion yuan ($410.6 billion) in special treasury bonds next year to stimulate the economy. This plan, equivalent to 2.4% of last year’s GDP, is seen as a move to counter deflationary pressures and prepare for potential tariff increases by U.S. President-elect Donald Trump.
