A new report from the China Gold Association, first examined by China Daily, said gold consumption in China reached 523.54 metric tons in 1H19, down 3.27% YoY, due mostly to offlining of production facilities, the demise of zombie company producers, and readjusting the industrial structure to a period of lower demand.

Gold bar consumption declined 17.29% YoY to 110.51 tons in 1H19, while gold coins plunged 29.27% YoY to 2.9 tons. Gold for industrial purposes fell 0.6% YoY in 1H to 51.36 tons, the report said, outlining how some of gold's lackluster demand in 2019 is the result of soaring spot prices.

"China's total gold output decreased as the industry is upgrading the production techniques and cleaning up some mining rights issues," said Zhu Yi, senior analyst of metals and mining at Bloomberg Intelligence.

Demand for domestic gold jewelry bucked the trend, came in at 358.77 tons in 1H19, up 1.97% YoY.

"China's increasing demand for gold jewelry is due to consumers' rising needs and falling demand for gold bars and coins due to the decreasing investment needs."

The association said, "domestic companies in the gold sector have been pushing forward high-quality development, to close down outdated production facilities, optimize the industrial structure, integrate high-quality gold resources, against a background of global macroeconomic weakness and domestic economic restructuring."

China National Gold Group, a state-owned gold corporation, has "rooted out" 31 zombie company producers that rely on government bailouts to survive.

Zijin Mining Group Co saw stellar YoY growth of its overseas gold output in the 1H19. The miner has been focusing its efforts on expanding projects in countries with rich deposits of gold and copper.

Chen Jinghe, Chairman of Zijin Mining Group Co, told China Daily that its overseas mines are the main focus at the moment.

Zhu believes gold production and consumption in the country will remain depressed through the early 2020s. China's gold industry is slowing, the days of super growth are over.

"Large-scale gold producers are increasing capacity and output to ride on the price hike. Going overseas for mining assets is one of the quickest ways to add reserves and output."

Gold prices are likely to remain elevated due to its safe-haven function amid central banks shifting global policy rates towards zero as a worldwide recession could be imminent.

Spot prices broke above a 22 quarter neckline in June, prices have moved up 26% in 11 months.

The association said China's gold output fell 9.6 tons to 180.68 tons in 1H19, down 5.05% YoY, as miners cut production, suspension of production due to environmental and technical issues, and modernization efforts of facilities in Henan and Inner Mongolia.

However, gold reserves in China were up for the seventh consecutive month in June, with reserves reaching 1,926.55 tons.

China added 74.03 tons of gold in 1H19, as, along with many other global nations, it attempts to de-dollarize and reduce dependency on the US hegemon.

Which is notable since it appears China is "allowing" yuan to devalue against gold...