Why is China buying up huge amounts of gold?

First of all - let’s see what is the gold standard.
In order to exchange goods and avoid barter (exchange goods for goods without currencies - like oil for milk, cola for beer), there was created the currency - which should have a precise value that everyone would accept. So, with a currency, I would exchange cola which I produce for the currency unit and then I will give my currency for you beer (if I choose) - so my cola does not meet your beer directly. The great thing about the currency is that I can hold it, and buy your beer after 1 day, 1 month or 10 years - if I choose.

In order to have a precise currency, it has to be a durable one, it has to resist in time, and it has to be impossible for it to be created out of nothing. For thousands of years - gold was such a currency: it is durable, it has the same volume, and it cannot be created (only mined if found). Because gold was harder to transport and keep, there were created the paper money (it came out in form of a bank bill confirming that you possess gold in that particular bank). So, this paper money should have been backed by gold - which means if a country has 10 tons of gold, it should print paper money that equal the gold volume. If all the people would give their dollars (in the case of the USA) - the banks should physically have that gold in exchange (because that is the real value).

This was the situation in the US until a moment, when it said “we’ll no longer give gold for your papers, these papers have value on their own” - so this is when the gold standard was ceased in the US, and the US private bank started to print way too much money, which exceeded in value the gold volume.

If there is too much money, then there is inflation and the paper automatically devalues because of their huge number. But, once the US dollar was accepted as a global currency, this inflation could be exported - which means “the too much money” divided to more and more people will maintain their demand/attractiveness. However, the time passes, the Fed prints more and more money, and the paper volume is enough even for the whole world - these are simple papers that are not backed by gold - which means no one gives gold for your dollar savings. All of the fiat money (money that are not backed by gold or silver) collapsed during the history.

Why China is buying so much gold?

In the past, the US dollar was a global currency backed by gold. But, when the gold standard at international level was stopped (Nixon Shock) the US had to convince the world that their papers have value - so they made a deal with the Saudi Arabia and later with the OPEC countries to sell their oil ONLY in exchange for the US dollar, so that the USD demand could be maintained. China, a big country, needed much oil to help its infrastructure, so when they asked the Arabs for oil, the latter said they sell only in the USD. So, China had to address the US in order to take $ so that it could buy oil. How can they take $ from the USA? In exchange for their goods - so, China produced many many goods, exported to the USA, got its dollars, payed the Arabs for the oil, and build its country.

At some point, China realized it has too many US papers (dollars and debt) that have no real value, and decided to increased its gold reserve (a commodity with value), so that maybe in the future it can end the USD status as a global currency. China, having much wealth, does want to keep it in form of papers, which can be ruined sooner or later, but in something durable and with a real price. So, it buys much gold to maintain its reserves and to have a strong national currency that may replace the USD as a world reserve.

It is a very simple and basic explanation why China is buying so much gold.