Diamond World reports that China’s trading volume on the Shanghai Diamond Exchange (SDE), which includes total import, export and intermember transactions during the first six months of 2009, is valued at $692 million. This represents a 6.9% increase in the volume of diamond trading year-on-year.

Polished diamond imports into China increased by 12.7% to $300 million, in comparison to the corresponding period last year, making China the world’s third-largest diamond consuming country. During the months of January to May 2009, the import of polished diamonds for jewelry manufacturing came to $238 million.

The Chinese diamond trade has been given a major boost by the Chinese government in recent years through various incentives including the reduction of VAT from 17% to 4% three years ago.