Diamond imports in China have registered a hefty bounce in the first half of the year, after the gloomy market situation in the first half of 2020, followed by the recovery period in the second half. The sudden increase in trading indicates China’s diamond market is walking out of the haze of the pandemic and returning to a growth track. According to the Shanghai Diamond Exchange (SDE), From January thru June, the diamond transactions in SDE reached US$3.821 billion, an 86.39% increase over the same period in 2019. Polished Imports reached US$1.576 billion, exceeding the total annual imports of 2020, and up 49.24% from the first half of 2019. With the current growth pattern, annual diamond imports in 2021 appear to outperform figures from 2019, as well as the previous record high of 2018 (US$2.78 billion).
Since the establishment of the SDE in 2000, China’s diamond imports have maintained an upward growth track, with an annual compound growth rate of 26% on average. Due to the impact of gloomy market sentiment and the Covid-19 pandemic, China’s diamond imports had dropped by nearly 50% in the past two years. In the first quarter of 2021, China’s GDP has grown by 18.3%, a record high quarterly GPD growth rate. As income increases and the domestic market gains further maturity, the driving force of China’s economy has shifted from export and investment to consumption. Despite the pandemic in 2020, consumption still contributed 54.3% of the total GDP growth of the year.
“The strong rebound of diamond import not only benefits from the quick recovery of China’s economy, specifically the release of consumption power restrained by pandemic and appreciation of the RMB which offset the increase of diamond price in USD but also results from the strategic move of anti-smuggle and anti-money laundering initiated by the Chinese government. With the support of the country’s special policies, Shanghai Diamond Exchange has provided a regularized channel for the diamonds imported into China and a platform to assist the government to improve the supervision, which essentially safeguarded a healthy and sustainable growth of China’s diamond market in the past two decades. “President of SDE and Vice-Chairman of WFDB - Mr. Lin Qiang commented.
Chinese Customs authorities spearheaded a nationwide campaign to crack down 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. SDE is China’s only gateway for importing diamonds under a favorable tax policy. The SDE has also posted a nearly 100% growth in rough diamond import under the normal trade category from January to June 2021.
With regards 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 recovers more rapidly than others. The bridal market has also achieved a quick recovery since the beginning of 2021. Over 2.1 million couples registered for a marriage license in Q1, 37% more than the same period of 2020. Based on the relevant data, China’s diamond retail market has essentially returned to the pre-pandemic level.