China's Diamond Import Sustains Growth Momentum in First Three Quarters of 2021

Market Analysis
29/10/2021 10:18

China’s diamond imports have maintained a sustained growth momentum in the first three quarters of 2021 thanks to the rapid recovery of the country’s retail jewelry market.

According to the Shanghai Diamond Exchange (SDE), diamond transactions via the SDE from January through September 2021 reached USD 5.718 billion, representing an 81.2% increase over the same period of 2019, and approaching the all-time high of USD 5.784 billion in 2018 (January - December).

Net import of polished diamonds through the SDE from January through September, which reflects the value of polished diamonds imported for consumption in China, reached USD 2.316 billion, a year-on-year increase of 206.3%, and one of 59.3% compared to 2019 and already well above the year amount of 2019 and 2020. With the current growth momentum, the annual net polished import in 2021 is projected to approach USD 3 billion to set a new record high since the SDE was founded in 2000, exceeding the existing milestone of USD 2.74 billion in 2018. The SDE is the only portal in China to import polished diamonds under the favorable tax policy of 0% tariff and 4% Value Added Tax (VAT).

Import of rough diamonds under normal trade category from January through September 2021 reached USD 49.962 million, an increase of 123.7% compared to the same period in pre-pandemic 2019.

The growth of diamond imports reflected the pace of rapid recovery of China’s jewelry market. From January through September 2021, China’s jewelry retail of the key sampling jewelers registered a 41.6% increase year on year over 2020, which ranked top among all the retail categories in terms of growth rate, according to the data by the National Bureau of Statistics of China.

“The Mid-Autumn Festival and National Day Golden Week holidays are traditional sales seasons. Meanwhile, due to the impact of the pandemic on international travel, a large part of overseas jewelry consumption by Chinese tourists has shifted back to the domestic market. Furthermore, the Chinese government has been strengthening its anti-smuggling and anti-money laundering efforts this year, which has played a positive role in promoting the entry of diamonds into the Chinese market through the legal import channel of SDE. I believe this year's diamond imports through the Shanghai Diamond Exchange are more reflective of the actual demand in the Chinese diamond market.“ concluded Mr. Lin Qiang, Vice Chairman of the World Federation of Diamond Bourses (WFDB) and President of the SDE.

According to statistics from the Gems & Jewelry Trade Association of China (GAC), diamond jewelry retail accounts for approximately 13% of China's RMB 600 billion (USD 92.74 billion) jewelry retail market.

The overall recovery of the jewelry market in 2021 has driven the development of the diamond market. However, the wedding market - the backbone of diamond consumption - still needs further recovery. In the first half of 2021, 4.166 million couples registered to marry in China, an increase of 287,000 couples compared to the same period in 2020, but a decrease of 814,000 couples compared to 2019. It is believed that with the gradual improvement of the pandemic, the wedding market will usher in a round of growth in the future.