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Why Western countries press China to export rare earth

(People's Daily Online)

09:24, July 30, 2012

Production of rare earth result in the huge environmental destruction

At the request of the European Union (EU), the United States and Japan, the World Trade Organization (WTO) organized a special group on July 23, investigating, discussing and settling about China's export control measures on rare earth elements, tungsten and molybdenum.

In March, the E.U., the United States and Japan resorted China's export restriction policies on tungsten, molybdenum and 17 rare earth elements to the WTO. On June 27, they again demanded the WTO to launch the dispute settlement mechanism and set up special group so as to solve the dispute on China's controlling exports of rare earth elements and some other metallic elements.

What is their intention to deliberately provoke rare earth dispute?

China possesses less than 50 percent of total rare earth reserves in the world but it provided the world with 90 percent of rare earth output in 2001 and 97 percent in 2010.

However, so large world market share did not bring monopoly profits to China and the global rare earth had been maintaining at a super low price by 2005. Supported by local governments of all levels, the large, medium and small enterprises poured in rare earth industry and began excessive competition. Driven by short-term profits, plenty of small enterprises predatorily exploited rare earth elements, bringing the productivity of the whole rare earth industry down. The recovery ratio of rare earth exploited by state-owned enterprises only reaches to 60 percent per ton, that of large private enterprises is 40 percent and that of illegal enterprises is only 5 percent. The rare earth resource was squandered a lot, thus causing severe environmental problem.

In order to protect environment and the rare earth resource, Chinese government tried to control the predatory production and exportations of the rare earth resource. The export quota has been reduced to about 30,000 tons from original 65,000 tons from 2005 to 2010, which greatly decreased overexploitation of rare earth resource.

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