China is showing the most promise in the global diamond industry both in terms of consumption and manufacturing, the Shanghai Diamond Summit was told yesterday.

"If there is any place in the world where we can speak optimistically about the diamond industry, it is China," said Shmuel Schnitzer, president of the World Federation of Diamond Bourses.

He said the relatively inexpensive labour costs and the skill of Chinese workers will undoubtedly make the country a leading manufacturing centre in the near future.

According to Guo Zhiyue, chairman of the China Diamond Manufacturers' Association, over 20,000 workers in China manufacture 3 million karats of diamonds every year, making it the second biggest diamond manufacturing centre in the world, next to India.

However, Schnitzer pointed out that most diamonds processed in China are small and sold cheaply, meaning it is less profitable than processing the bigger gems. In terms of the revenue gained from diamond manufacturing, China still lags behind India, Israel, South Africa and Belgium.

Schnitzer estimated China will become the second largest diamond manufacturing centre measured in US dollars in five years.

Shanghai is the fourth city in the world to be both home to a diamond bourse and manufacturing base, together with Antwerp in Belgium, Bangkok in Thailand and Israel's Tel Aviv.

Trade on the three-year-old Shanghai Diamond Exchange Co Ltd (SDE) received a boost last year when the government announced a substantial tax cut within the exchange.

The trade volume has amounted to US$370,000 since last June, according to Kang Huijun, chairman of the board of SDE.

He said the SDE aims to achieve a trade volume of up to US$5 billion by 2010 and became a major trading centre in Asia by 2015.

The SDE also plans to join the World Federation of Diamond Bourses.

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