The more likely reason for China to buy gold is a lot less exciting. Like any smart investor, China is simply diversifying its holdings. Viewed as a percentage of all foreign exchange reserves, China’s gold reserves remain tiny – about 1.6 percent, as shown above. Compare that with 73 percent for the U.S., 67 percent for Germany and 65 percent for France and Italy. Given the size of China’s economy it should own more gold, just like the other big players in the global economy.