China lifted restrictive regulations on high-purity sliver imports that were in place for the last eight years on 19 November this year, the People's Bank of China, China's central bank, and the General Administration of Customs announced last Thursday.

The silver import regulation, which originally came into effect on 1 January 2000, prohibited all unlicensed silver imports into China except those intended for tolling. Under the regulation, companies were required to obtain a licence from the central bank before importing silver for sale in the Chinese market.

Tolling is a common trade practice whereby companies import raw materials and process them into finished products for re-export.

"The cancellation of this policy means that companies are now free to import silver and sell it in the domestic market without having to apply for a licence from the central bank. However, companies will still have to pay 17% VAT on the imports," an official surnamed Liang, from the Huatong Platinum and Silver Exchange, China's largest silver spot trade platform, told Interfax on Friday.

"The 2000 silver import regulation was released in order to alleviate silver oversupply in China, as at the time, China produced more silver than it could consume," Ye Linfeng, an analyst from Chengdu Gaosai'er Gold & Silver Co. Ltd., a leading precious metals dealer and member of the Shanghai Gold Exchange, said.

China's rapid economic growth is driving silver consumption towards overtaking domestic production, and the country is gradually moving from an oversupply situation into a supply and demand balance, making import restrictions unnecessary, Ye said.

China is the world's fourth largest silver producer, after Peru, Mexico and Australia.

However, both Liang and Ye said that the policy cancellation will not significantly impact China's sliver market.