China has the richest rare earth reserves in the world. It shoulders 95 percent of global rare earth output, at the cost of polluting its environment.

Growing awareness of the dangers of mining rare earths has galvanized the Central Government to act. Nevertheless, China's regulation on rare earth triggered groundless opposition from the United States, the European Union and Japan

Rare Earth Resolution
China will never loosen its consolidation efforts in rare earth regulation
Full Story
China has emphasized that its export management measures are designed for environmental protection and sustainable development. It will continue its rare earth supply to the world when intensifying efforts in resource and environmental protection.
The U.S., EU and Japan
The United States, the European Union and Japan accuse China of breaking WTO rules on rare earth exports. They said China's exports controls, including export quotas and export tariffs, unfairly favor China's domestic manufacturers.
  Environmental Factors    
Damage of Rare Earth Extraction to the Environment
The outdated production processes and techniques in the mining, dressing, smelting and separating of rare earth ores have severely damaged surface vegetation, caused soil erosion, pollution and acidification, and reduced or even eliminated food crop output. In the past, the outmoded tank leaching and heap leaching techniques were employed at ion-absorption middle and heavy rare earth mines, creating 2,000 tons of tailings for the production of every ton of REO (rare earth oxide). Although more advanced in-situ leaching method has been widely adopted, large quantities of ammonium nitrogen, heavy metal and other pollutants are being produced, resulting in the destruction of vegetation and severe pollution of surface water, ground water and farmland
Reflecting on Polluted Village
Inner Mongolia's Dalahai Village was a place of utopian beauty. With a landscape of lush green hills, exuberant grasslands and herds of sheep and cows, the village used to be the quintessential image of a nice place to live.

Today, the quaint village is gone, replaced by a barren landscape void of life. Cancer cases among the remaining local populace have been on the rise.

Su Bo, Vice Minister of Industry and Information Technology: "Opening up the rare earth sector is the existing policy. We will follow a win-win strategy of maintaining a reasonable amount of rare earth supply to the international market, while at the same time protecting the environment and resources."

Shen Danyang, spokesman of China's Ministry of Commerce: "China has reiterated that curbing rare earth mining operations and output was done for the sole purpose of protecting the environment. We didn't mean to protect domestic industry by twisting trade," said Shen. "This is going to take time and we're going to face a lot of pressure, but we're going to fight this to the end."

Song Hong, Head of the Department of International Trade at the Chinese Academy of Social Sciences: "The United States, EU and Japan claimed that rare earth was not among the list of China's export control products when China entered the WTO. This is quite disadvantageous for China. China promised to impose a tariff on 84 products during its WTO entry, but rare earth is not among them."

Gao Yunhu, Deputy Director of the Rare Earth Office under the Ministery of Industry and Information Technology: "China's regulation of the rare earth sector is totally consistent with WTO rules. China treats domestic and foreign companies equally, and the price of rare earth should be adjusted by the market. China has synchronized management and regulation in all links, from exploitation to processing and finally to export."

Tu Xinquan, Deputy Director of the WTO Research Center under the University of International Business and Economics: "The essential problem lies in the production link. We should reflect on why we failed in rectifying such a small sector after years of efforts."

Ma Yu, Director of the Foreign Direct Investment Department of the Chinese Academy of International Trade and Economic Cooperation under the China's Ministry of Commerce: "If China only has restriction on exports and foreign consumers have to pay a different price compared with domestic consumers, it is distorting the trade. But China has implemented restrictive measures in all links, from rare earth exploration and processing to exports. Those measures will have the same impact on both domestic and foreign buyers. For the same product, they pay the same price. This doesn't violate WTO rules because we have never twisted trade."

Disputes on China's Rare Earth Export
On March 13, the United States, the European Union and Japan lodged a joint complaint to the WTO, accusing China of breaking WTO rules on rare earth exports.

On July 23, the WTO established a panel to consider China's exports of rare earths, tungsten and molybdenum following complaints brought by the United States, the EU and Japan over China's export restrictions of those materials.

On July 27, the three turned to the WTO's dispute-settlement system to have an expert panel investigate the issue. They said China's exports controls, including export quotas and export tariffs, unfairly favor China's domestic manufacturers.
Current Situation of China's Rare Earth Industry
China is relatively abundant in rare earth resources, and its rare earth reserves account for approximately 23 percent of the world's total
  Elements Crucial to Industry    
It is mainly used in flat displays, semiconductor data transmission tools and the manufacturing of space products. China's indium reserves rank first in the world.
It is mainly used in the production of night vision devices, heat vision devices, activators for petroleum products and solar cells. China has the largest germanium reserves in the world
It is mainly used in the smelting of alloy steel, stainless steel, heat-resistant steel and super alloys. China has the second largest molybdenum reserve in the world
It is mainly used in products such as hard alloy and special steel, and is also widely used in mechanical processing. China, with the largest tungsten reserves in the world, supplies 85 percent of the world's tungsten demand
Rare Earth
Also called the "gourmet powder" of hi-tech industries. Nuclear magnetic resonance imaging systems, hard disk drives, magnetically levitated trains and many other devices utilize rare earth. China has the largest reserve of rare earth in the world
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