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China scraps rare earths caps

January 5, 2015

The Chinese government has begun the new year by scrapping export limits on minerals used in mobile phones and other high-tech products. This comes after the WTO sided with outraged trading partners.

Rare earths production in China
Image: picture alliance / dpa

China has lifted export caps on so-called rare earths, state media reported on Monday, complying with a World Trade Organization (WTO) ruling that such quotas violated Beijing's free trade commitments.

However, the new trade guidelines, issued by China's Ministry of Commerce, still require an export license for the minerals, which are used in everything from mobile phones to hybrid cars and weapons.

The decision is sure to be welcomed by international trading partners, which had complained that restrictions on access to raw materials hurt competition. In 2012, the US filed a lawsuit against China with the WTO, which was later joined by other governments, including the EU and Japan.

Trade wars

China introduced the quotas in 2009, defending the move as an effort to conserve declining resources and to curb environmental damage from mining. But international competitors complained that the restrictions only applied to producers outside China, accusing Beijing of propping up domestic manufacturers and pushing more foreign companies to move production to the country.

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The limits triggered a spike in rare earth prices, amid fears of supply shortages, as many Western countries relied on high-tech goods sales to boost exports in the wake of the 2008 financial crisis.

Some 30 percent of global rare earth deposits are based in China, which controls more than 90 percent of worldwide production. China exported 22,493 tons of rare earths in 2013 and 22,224 tons in the first ten months of 2014.

pad/hg (AP, Reuters)

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