Diamond imports to China rebounded significantly in first half of 2021

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Diamond imports to China rose significantly in the first half of 2021, after the gloomy market situation in the first half of 2020 followed by a recovery in the second half of last year, according to data from Shanghai Diamond Exchange (SDE.)

From January until June, diamond transactions on the SDE reached USD3.821 billion,  an 86.39% increase over the same period of 2019.

Net polished imports stood at USD1.576 billion, exceeding the annual imports during the whole of 2020, and were up 49.24% from 1H 2019.

With the current momentum of growth, annual diamond imports to China in 2021 are on their way to significantly outperform 2019 and are highly likely to surpass the previous record high level in 2018 (USD2.78 billion).

Since the SDE was established in 2000, China’s diamond imports have maintained an upward growth track, with an annual compound growth rate of 26% on average up to the historical high point in 2018.

Shanghai Diamond ExchangeShanghai Diamond Exchange

Due to the double impact of gloomy market sentiment and the Covid-19 pandemic in 2019 and 2020, China’s diamond imports dropped by nearly 50% in the past two years.

The recent strong bounce indicates that China’s diamond market is still on a solid footing to maintain a long-term growth trajectory as the macroeconomy remains stable.

China’s GDP grew by 18.3% in the first quarter of 2021, compared to the same quarter last year. As incomes increased and the domestic market gained maturity, the driving force of China’s economy has shifted from export and investment to consumption.

“The strong rebound of diamond imports not only benefits from the quick recovery of China’s economy, specifically the release of consumption power restrained by the pandemic and the appreciation of the RMB which offset the increase of diamond prices in USD, but also results from the strategic move of anti-smuggling and anti-money laundering initiated by the Chinese government,” said Mr. Lin Qiang, President of SDE and Vice-Chairman of the World Federation of Diamond Bourses (WFDB.)

“With the support of the country’s policies, the Shanghai Diamond Exchange has provided a regularized channel for diamonds imported into China and a platform to assist the government to improve supervision, which essentially safeguarded a healthy and sustainable growth of China’s diamond market in the past two decades.“

Chinese customs authorities spearheaded a nationwide campaign to crack down on diamond smuggling in September 2020, involving RMB5.9 billion (USD855 million) worth of goods. As a result, the carat weight and amount of diamonds imported through SDE and new membership applications surged, as it is China’s only gateway for importing diamonds under a favourable tax policy. The SDE has posted a nearly 100% growth in rough diamond imports under the normal trade category from January to June 2021. The total number of SDE members increased to 382, of which 210 are foreign-funded companies.

With regard to the retail market, China’s diamond consumption has shown a localization trend due to the limitations of international travel. According to Bain’s report, China’s diamond retail market is estimated to drop 6% in 2020 but has recovered more rapidly than others.

In the fourth quarter of 2020, China’s diamond retail market achieved 15 to 20% growth as compared to 2019. From Jan to May 2021, China’s jewelry retail reached RMB128.3 billion, 68.4% up year-on-year over 2019, according to data of the China Statistics Bureau.

The wedding market, once seriously affected by the pandemic, has achieved a quick recovery since the beginning of 2021.

Over 2.1 million new couples registered for marriage certificates in the first quarter, 37% more than the same period of 2020.