China is on the verge of overtaking the United States to become the biggest market for Belgian diamonds. This is a result of a surge in domestic diamond consumption and investment in China, which correlates to a rising middle class. Also, because of Chinese demand, prices of rare diamonds have increased by more than 50% over the past five years.

In 2011, the US was the biggest consumer of polished diamonds, followed by China. But according to Antwerp World Diamond Center chief executive officer Ari Epstein, China will become the biggest destination for diamond exports by 2016. Diamond exports from Antwerp to China in 2011  were up 25% from 2010 figures.

“More and more Chinese want to invest in products that have long-lasting value,” said Epstein.

China is participating in more gemstone trading activity in Antwerp. The Antwerp World Diamond Center is planning on setting up operations China to sell diamonds to jewelry companies.  In 2011, the Center came to a cooperative agreement with the Commercial Bank of China Ltd—China’s biggest lending make which is currently exploring opening up a branch in Antwerp. 

The Chinese interest in diamonds is a relatively new trend, as the Chinese have traditionally favored gold as an inflation hedge and for its aesthetic value. Diamonds rings are increasingly becoming more commonplace and expected for Chinese wedding proposals and global diamond giants such as DeBeers and Tiffany & Co. are marketing heavily in China.

One problem facing the diamond export industry is that gems are considered luxury items in China and incur high luxury taxes. As a result, the diamond industry is encouraging China’s banks to set up diamond trading desks. It is believed that China will become a jewelry manufacturing center down the line.

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