China increases rare earth exports | Business| Economy and finance news from a German perspective | DW | 22.08.2012
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China increases rare earth exports

China has raised its export quotas for small rare earth minerals as the country remains at odds with foreign trading partners over the limits. Analysts say the small increase does not necessarily herald a policy change.

The Chinese Ministry of Commerce said on Wednesday it had granted a slight increase in its export quota for rare earth minerals - a group of 17 elements which are crucial for the manufacture of electronic, automotive, energy and medical equipment.

Beijing announced an additional volume of 9,770 tons for the export of rare minerals, with the full-year total now standing at 30,996 tons, up from last year's 30,184 tons. The 2.7 percent increase appears marginal, but is the first since 2009.

The announcement comes on the back of massive complaints by China's main trading partners, who have accused the Asian giant of unfairly choking off exports of the commodities to benefit domestic industries. The World Trade Organization (WTO) upheld an international complaint on the matter prior to Wednesday's decision, saying China's export restrictions violated its binding trade rules.

Widespread smuggling distorts picture

But China has kept defending its policies, stating that they're aimed at rationalizing the industry and protecting the environment after decades of overexploitation and low-priced shipments abroad.

The country controls over 90 percent of global rare earths production.

However, while prices have surged, foreign demand has slumped. This decline led to less than 62 percent of China's quota actually being used in 2011.

Smuggling also played a role in the decline of demand. The Shanghai Daily on Wednesday quoted the Rare Earth Industry Association as saying that the estimated total of rare minerals smuggled out of the country last year was 1.2 times the volume of legal exports.

hg/kms (AFP, dpa)