"Wait a moment, the gold price has changed again." This phrase has become a frequent response from shop assistants to customer inquiries in Shuibei's gold market in Shenzhen. The price quoted from the real-time trading system one second ago may lose its reference value the next due to market fluctuations. Before calculations on fingertips are completed, a new price has already appeared. Known as "China's First Gold Street," Shuibei has long been a hub for gold trading, leveraging its flexible pricing system and massive circulation scale to become a national "barometer" for gold transactions.

However, over the past month, this usually bustling gold trading hub seems to have entered its own "off-season." Starting November 1, the Ministry of Finance and the State Taxation Administration implemented the "Announcement on Tax Policies Related to Gold," reducing the tax deduction ratio for non-investment gold from 13% to 6%. This directly increased the procurement costs for jewelry gold, leading to a cooling in gold sales.

A recent visit to Shuibei's gold market revealed a steady stream of customers inquiring about prices, but few finalizing transactions, especially large-scale purchases. Some small and medium-sized vendors have quietly posted "For Transfer" signs at their stalls. Amid the overall sluggish market, some merchants have turned to live streaming to expand sales channels, explaining gold price trends and showcasing jewelry craftsmanship to attract online customers. Others have introduced niche designs or limited-edition holiday products to counter rising costs and declining foot traffic. The impact of the tax policy adjustment is evident in every transaction in Shuibei.

**Is Shuibei Gold Losing Its Appeal?** At "Shuibei One" in the afternoon, the usual crowds were noticeably absent. In previous years, counters would be packed with retail buyers and wholesalers, but now, shop assistants gather in small groups to pass the time.

"These days, even price inquiries are rare, let alone actual sales," said Mr. Zhang, a long-time gold jewelry store owner in Shuibei. "The 'gold tax' reform, coupled with rising gold prices, has made business much quieter."

This is the most direct reflection of the new policy's impact on Shuibei's market. The increased costs have been passed on to retail prices. For example, on November 27, Shuibei's jewelry gold was priced at 1,095 yuan per gram, while the domestic gold price was only about 942 yuan per gram. The price surge has significantly eroded Shuibei's traditional advantage of offering gold at wholesale prices—previously, the price difference between Shuibei and branded gold stores could be hundreds of yuan per gram. Now, with invoices required, the gap has narrowed to less than 200 yuan, with some styles showing no clear advantage.

The recycling market has further exacerbated the downturn. Before the tax reform, the difference between retail and recycling prices in Shuibei was around 30 yuan per gram; now, it has widened to over 160 yuan. "We’re hesitant to recycle now—too high a price means losses, too low and customers won’t accept it. Plus, reselling recycled gold incurs additional taxes," admitted a recycling shop owner. Several major recycling companies have suspended operations, leaving smaller recyclers in a dilemma.

Song Xiangqing, Vice President of the China Business Economics Association, noted that the current price disparities and reduced trading activity in the gold recycling market are typical adaptive responses to a major tax reform. Short-term disruptions in pricing mechanisms and trading activity are inevitable costs as the industry transitions from old to new models. However, this adjustment period also presents an opportunity for the industry to move toward standardization and healthier development.

Yu Jiayi, Chief Metals Analyst at Orient Securities, pointed out that the tax reform aims to curb off-market speculative trading and standardize market pricing. For the chaotic "wholesale market," standardizing sourcing channels and pricing mechanisms is imperative. Considering short-term pressures on jewelry and long-term gold price trends, the tax reform's impact may be limited, with the market expected to stabilize within one to two months as attention shifts back to gold price trends.

Song Xiangqing suggested that industry associations should take the lead in establishing unified gold recycling pricing rules, clarifying pricing logic and accounting standards. Additionally, tax authorities should provide precise compliance guidance to market participants, forming a three-dimensional governance system of "self-regulation + government oversight + consumer guidance" to help the industry navigate the transition smoothly.

**The Entire Chain Seeks Survival Strategies** While passively accepting higher costs and a cooling market, every segment of the gold supply chain is actively exploring solutions—upstream suppliers are holding back shipments to observe pricing, midstream manufacturers are switching settlement models to reduce costs, and downstream retailers are expanding online channels and differentiating products. The entire industry is adapting to the tax reform's "adjustment period."

Upstream, gold suppliers in Shuibei have largely halted shipments. "We’ve barely moved any stock this month—everyone is waiting," said a supplier with over a decade of experience. The core challenge lies in pricing: adding a 7% tax discourages buyers, while absorbing the cost risks losses if policies change further.

Midstream, manufacturers have quickly adopted the "material settlement" model, where only processing fees are charged, and payment is made in gold rather than cash, avoiding tax impacts. During a visit, multiple merchants expressed interest in collaborating when presented with standardized gold materials.

Downstream, retailers have diverged in their responses. Major brands have passed costs to consumers through price hikes, while smaller merchants have diversified strategies—some focusing on wholesale for regular clients, others turning to live streaming or launching unique designs to boost sales. A few have even adopted dual pricing (online and offline) to clear inventory.

These survival tactics reflect the industry's adaptive exploration under tax reform. As the market digests the new rules and supply chains restructure toward compliance, the gold industry will shift from short-term cost struggles to sustainable development—the core intent of the tax reform.

Zhang Yiqun, Director of the Jilin Provincial Institute of Fiscal Science, emphasized that the tax reform aims to strengthen national control over gold production and pricing while encouraging innovation in jewelry demand. By optimizing tax rates, the policy pushes the industry from price competition to value enhancement, fostering high-quality development.

**Industry Accelerates Toward Standardization** Shuibei's current challenges—whether cooling sales or adaptive changes—are not just short-term "growing pains" from the tax reform but part of the gold industry's inevitable shift from extensive growth to standardized, high-quality development.

Zhang Yiqun highlighted three key aspects of the reform: strengthening national control over gold production and pricing, improving gold quality to eliminate cutthroat competition, and fostering innovation to enhance gold's dual role as a consumer good and financial asset. "The tax adjustment helps create a良性互动格局 (virtuous cycle) where upstream production is nationally regulated, midstream processing encourages innovation, and downstream consumption diversifies, guiding China's gold market toward standardization."

The World Gold Council noted differing impacts on investment and jewelry demand. Investment gold (bars, coins, ETFs) remains unaffected, with exchange members likely gaining dominance. Jewelry demand may face pressure due to higher prices, but with gold at historic highs, elasticity is reduced, limiting negative effects. The retail sector may consolidate, with competition shifting to design and craftsmanship.

Standardization won’t happen overnight. Song Xiangqing urged regulators to refine supporting measures and provide transition support for small businesses. Associations should lead in setting standards and fostering collaboration, while companies must accelerate转型 (transformation)—large firms boosting innovation and branding, smaller ones focusing on niche markets and services.

As "China's First Gold Street," Shuibei's fluctuations mirror the broader industry's转型 (transformation). In the short term, the market must adapt to cost, price, and trading model changes. Long-term, however, the reform is steering the gold industry from "scale-driven" to "value-driven" growth, creating a良性互动格局 (virtuous cycle) of upstream control, midstream innovation, and downstream diversification. Once过渡期 (transitional) volatility subsides, the benefits of standardization will emerge, unleashing sustained vitality in China's gold market on its path to high-quality development.