THE forecast for China's imports and exports of diamonds this year was revised upward due to a strong domestic demand, an industry forum was told yesterday in Shanghai.

The value is expected to rise to US$2.8 billion this year, up 90 percent from a year ago, said Li Mu, vice director of the Diamond Administration of China, yesterday at the 2010 China Diamond Conference.

Yan Nanhai, vice president of China's sole diamond bourse - Shanghai Diamond Exchange - said earlier in November that the annual figure was set to grow to US$2.5 billion.

China's imports and exports of diamonds jumped 78 percent to US$2.2 billion in the first 10 months of this year, boosted by strong economic growth and domestic demand.

"China's appetite for the glittering stone is set to maintain a rapid growth, backed by more weddings, government support and economic growth," said Li at the two-day conference which ends today.

The domestic diamond market has been growing at 20 percent in recent years. China is trailing the United States as the world's second biggest market for diamonds after passing Japan in 2009.

To encourage legal diamond trading, China cut the value-added tax on imported polished diamonds from 17 percent to 4 percent from July 1, 2006, while imported rough diamonds are exempt from VAT. Since 2002, Customs duty has been waived on rough and polished stones traded on the exchange.

China, the second biggest diamond processing country after India, is shifting its processing base from Guangdong Province and Shanghai to central and western areas of the country to cut labor costs and tap resources, said Lin Qiang, president of the Shanghai Diamond Exchange.