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Beijing (AFP) Aug 22, 2012
China announced Wednesday a slight increase in its export quota for rare earth resources, amid falling demand and as the country remains at loggerheads with major trading partners over the limits.
The Ministry of Commerce said it has granted an additional quota of 9,770 tonnes for the export of rare earth minerals, bringing the full-year total to 30,996 tonnes from last year's 30,184 tonnes.
The 2.7% increase, the first since 2009 according to analysts, came after major trading partners sought litigation through the World Trade Organization (WTO) in a months-long dispute over China's export restrictions on the metals.
The European Union, the United States and Japan in June asked the WTO to form a panel to resolve the dispute after earlier consultations through the trade body failed.
In March, they claimed the producer of more than 90 percent of the world's rare earths -- used in high-tech equipment from iPods to missiles -- was unfairly choking off exports of the commodities to benefit domestic industries.
China has repeatedly defended its practices, saying they aim to protect the resources and the environment as part of an effort to promote sustainable development.
Beijing also says that its regulation of the industry complies with global trade rules.
The increase comes after overseas demand last year for China's rare earths slumped as prices surged and less than 62 percent of the 2011 quota was used.
"The overseas market contracted and exports tumbled after prices of rare earths rocketed last year, particularly in the second half," Ye Peipei, a Shanghai-based analyst with Shenyin Wanguo Securities, told AFP.
Smuggling also played a role in the decline of demand for legal exports, she added.
Ye said that this year's increase in the quota, based on company export data from 2009-2011, was partly a result of stabilising performance by rare earth firms after they digested an industry consolidation that began over the past two to three years.
However, she said it was too small to indicate any shift in China's policy stance.
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