China’s demand for investment-grade gold is going up. The first quarter of 2017 saw a 60.2% rise in demand for physical gold bars, compared to 22.4% growth for the year-earlier period.

Recovering from a 14.4% decline during the same period last year, demand for gold jewelry rose just 1.4%, which is to be expected when demand for gold bars and bullion is high. This year, total Chinese gold imports through Hong Kong are set to breach 1,000 tonnes, compared to 771 tonnes imported in 2016.

The rise comes as no surprise. China has long been interested in accumulating gold to diversify its assets and reduce its dependency on the US dollar. In addition, a larger gold reserve strengthens the renminbi as an IMF reserve currency. In a time of economic slowdown, renminbi depreciation and concern over equity and property markets, however, citizens and businesses also view gold as a safe haven investment.

It is hard to pinpoint the exact amount of gold in China’s reserves, because the state considers gold a “strategic asset.” The government does not publish gold trade data, and the central bank has a record of making deceptive statements regarding the country’s gold stockpile.

Nonetheless, the World Gold Council estimates China’s 2016 gold holdings to be 1,843 tonnes — a figure that could very well be higher. More than 1,300 tonnes of gold were imported in 2016 and domestic production was 453 tonnes. Consumer demand was estimated to be 975 tonnes and institutional demand 778 tonnes.

Currently, China is buying gold at a limited monthly accrual in order to avoid upsetting the market. Although its ultimate goal is to surpass the United States’ gold reserve of 8133.46 tonnes, at the current purchase rate this process will take years.

While China has substantial gold deposits – of some 11563.46 tonnes (2015) – domestic production faces difficulties because Chinese gold mines are small, scattered, and often costly to explore. More than half of China’s gold consumption is therefore made up of imports.

Gold mining overseas is already well underway. China’s gold mining giants are taking advantage of One Belt One Road (Obor) to explore additional sources. While primarily an infrastructure project, Obor also seeks to remove trade barriers and expand free trade zones. This will allow greater opportunities for Chinese gold mining companies.

Zijin’s total overseas cumulative investment is US$1.97 billion. The company owns the rights to explore 758 tonnes of gold in countries other than China. Growth potential is great

According to the China Gold Association, Obor countries have total gold reserves of 23,600 tonnes, constituting 42% of the world’s sum total. Obor countries produce 1,150 tonnes of gold annually, or 36% of the total. Seven out of the world’s 30 largest gold mines are located in Obor countries. Under the 12th Five Year Plan, from 2011 to 2015, Chinese gold corporations invested US$2.5 billion in overseas operations and mined more than 1,000 tonnes of gold. This number will expand as Obor moves forward and more Chinese gold mining companies “go out.”

Zijin Mining Group (SHA: 601899) is the most successful flagbearer in China’s global gold quest. The most profitable company among China’s “big three” gold mining corporations, Zijin’s 2016 net income was US$270.71 million, more than its two chief competitors combined.

As of 2015, Zijin had 12 overseas mining projects – in Tajikstan, Kyrgyzstan, Russia’s Tuva Republic, South Africa, the Democratic Republic of Congo, Australia, Papua New Guinea, and Peru. Zijin’s total overseas cumulative investment is US$1.97 billion.

The company owns the rights to explore 758 tonnes of gold in countries other than China. Growth potential is great, as overseas gold mining currently only constitutes 10% of the company’s profit.

With growing domestic demand, Chinese gold mining corporations are prepared to catch Obor’s wind to puff up their sails. Reduced trade barriers under Obor will also surely contribute favorably to China’s ultimate goal of catching up with the US in terms of gold reserves.

Zi Yang is a researcher and consultant on China affairs. He covers Chinese politics, security, and emerging markets. Zi holds an MA from Georgetown University and a BA from George Mason University. Follow him on Twitter @MrZiYang.