Beijing promises no 'significant' cuts in rare-earth export quotas

PUBLISHED : Tuesday, 02 November, 2010, 12:00am
UPDATED : Tuesday, 02 November, 2010, 12:00am

The mainland has promised that its rare-earth export quotas for 2011 will not be cut 'significantly' from recent levels, amid growing global concerns that Beijing might use its domination of the resources as a bargaining tool to gain political leverage over trading partners.

Ministry of Commerce Vice-Minister Chen Jian made the comments yesterday following weeks of international jitters about whether Beijing will cut the 97 per cent of global rare earths production it commands to shore up prices or gain political leverage with countries it is at odds with.

Mainland officials admitted the government had cut exports of rare-earth minerals, which are used in hi-tech products from iPods to hybrid cars, but said this was to reduce waste and pollution. In July, Beijing imposed a 72 per cent cut on rare-earth exports for the second half of 2010, a move that sparked complaints from the United States, German and Japanese governments.

Last month, with tensions raging between China and Japan over the disputed Diaoyu Islands in the East China Sea, Japanese importers reported a severe shortfall in shipments of rare-earth minerals from China.

'I don't think there will be a big cut in export quotas,' Chen said, when asked whether Beijing would slash quotas on rare-earth exports next year. 'We have had a regulatory mechanism, but have not imposed embargoes. However, this does not mean you can buy freely. There will be a quota system - the quota system is a way of management.'

In her meetings with senior mainland officials over the weekend, US Secretary of State Hillary Rodham Clinton called on Beijing to clarify its policy on rare earths, saying she hoped trade in the hi-tech minerals would continue 'unabated and without any interference'.

Chen said the recent appreciation of the yuan did not indicate any changes in the central government's policy on trade and investment. Trade will grow 25 per cent to US$2.8 trillion this year despite yuan appreciation and the weak recovery in the US and Europe, the Ministry of Commerce has forecast.

However, Chen said a stronger yuan would be conducive to and positive for mainland firms investing abroad while it would affect the country's exports.

He refuted the allegation that the mainland's state-owned enterprises 'going global' had received subsidies from the government as 'entirely groundless'.

'Some have taken it for granted that China's SOEs are enjoying the support of the government. In fact, the SOEs are operating independently and are responsible for their own profits or losses.'

Export economy

China, though now the world's second-largest economy, ranks in this place in terms of outbound investment: 15th