(Yicai Global) Feb. 1 -- China's gold output fell by 27.3 tons, or 6.03 percent, annually to 426.14 tons last year, the first substantial decline since 2000. However, the country remained as the largest gold producer in the world for the 11th straight year.

The introduction of environmental protection and resource taxes seriously affected production activities of Chinese gold producers, and the government shut all gold mines in "ecological function areas," financial daily The Economic Observer reported on its website, citing a market report issued by the China Gold Association yesterday.

However, consumer demand for gold as a hedge against property and stock market volatility has remained strong. Furthermore, gold jewelry sales rose sharply driven by continuous increase in people's spending power. Gold consumption grew by 9.41 percent on the year to 1,089 tons, ranking China the number one market in the world. China also surpassed South Africa as the world's largest gold producer in 2007. It overtook India as the number one gold consumer six years later in 2013.

On the global market, political instability resulting from the inquiry into US President Donald Trump's election campaign activities and the North Korea nuclear crisis led to a rally of gold prices, despite the three rate hikes by the Fed last year. The global gold price rose from USD1,154.614 per ounce in early 2017 to USD1,302.67 at year-end, and the full-year average price came in at USD1,255.18.