China produced 403.05 tons of gold in 2012, setting a record for annual production and retaining the title of world's top gold producer for a sixth year, an industry association said Thursday.

Production of the precious metal rose 11.66 percent last year, compared to 2011, thanks to government policies that "have favored" the industry in recent years, the Chinese Gold Association said in a statement.

China's 10 largest gold companies, located in the central provinces of Shandong, Henan and Jiangxi, accounted for 82.71 percent of total production of the precious metal in 2012.

The Asian giant overtook South Africa in 2007 as the world's No. 1 producer of gold.

China's gold production, however, is insufficient to cover domestic demand, which has soared in recent years.

Chinese citizens bought 761.05 tons of gold in 2011, making them the world's No. 2 consumers of the precious metal, trailing only India.

China will soon become the top buyer of gold in the world, analysts said.

Chinese citizens have been buying gold ingots as a hedge against rising inflation in Asia and asset protection amid global macroeconomic uncertainty. EFE