China denies cuts in rare earth exports

BEIJING, Oct. 20 (UPI) -- China denied on Wednesday that it has made further cuts to export quotas of rare earth minerals.

The announcement follows a report by The New York Times in which three anonymous industry sources said China had quietly halted shipments of rare earths to the United States and Europe.

China has been blocking shipments of the minerals to Japan for the last month due to a diplomatic dispute between the two countries.

"The embargo is expanding" beyond Japan, one of the rare earth industry officials told the Times.

The Chinese officials said the restrictions were imposed Monday after Zhang Guobao, vice chairman of China's National Development and Reform Commission, called a news conference Sunday to denounce U.S. trade actions.

Zhang was responding to a U.S. trade representative's announcement Friday of an investigation into Beijing's green technology sector to determine whether government support is in violation of China's commitments to the World Trade Organization.

That investigation includes whether Beijing's continued rare earth export quota cuts, as well as high export taxes on the minerals, are designed to force multinational corporations to manufacture more high-technology products in China.

Beijing has already lowered rare earth export quotas this year by 40 percent from last year.

China produces 97 percent of the world's supply of rare earths, crucial for green energy and high-tech components such as wind turbines, low-energy light bulbs, batteries for hybrid and electric cars, lasers, fiber-optic cables, cell phones and flat-screen monitors. The elements are also used for military applications, such as missiles.

China Daily, the country's English-language newspaper, on Tuesday also quoted an unnamed official as saying the government would cut export quotas by as much as 30 percent in 2011.

But Beijing said Wednesday that media reports about such plans to reduce quotas were "false" and "groundless."

"China will continue to supply rare earth to the world," the Ministry of Commerce said in a statement to state-run news agency Xinhua.

China has long maintained that environmental concerns are the reason for the cuts.

"Strategic, environmental and economic considerations mean that the country [China] can't afford to continue shouldering the burden of supplying the world," Chao Ning, a foreign trade section chief with the Commerce Ministry, was quoted as saying in the China Daily article.

Wang Baodong, a spokesman for the Chinese Embassy in Washington, told the Times that China was not imposing an embargo or attempting to use rare earths as a bargaining chip, saying he did not see any link between China's "reasonable" rare earth export control policy and the "irrational U.S. decision of protectionist nature to investigate China's clean energy industries."