The United States and Japan have accused China of breaking World Trade Organization rules for having adjusted its export quota for rare earth elements. But in reality, they are trying to force China to increase its export quota, says an article in Guangzhou Daily. Excerpts:
Known as the "vitamins of industry", rare earth elements have a wide use across the world, especially in nuclear energy production and military affairs. China has the largest reserve of rare earth. And since it is also the largest producer and exporter of the elements, it should have the right to control their prices.
But because of the long-term, excessive and disorderly mining of the elements at home, as well as the foreign intervention in fixing their prices, China has been deprived of having a say in either their exports or fixing of their prices.
The result: China has been exporting rare earth elements at much lower prices, and developed countries such as the US and Japan have been importing more than they actually require. In fact, they have been importing to hoard the elements. This has led to a drain on China's rare earth reserves over the last two decades. Hence, China has more than enough reasons to try and adjust its export quota and play a decisive role in fixing the prices of rare earth elements.
Although China's reserve of rare earth is not secure, the US and Japan seem to have stockpiled enough of the elements to meet their demand for some time to come. It's strange that despite having the world's second largest reserve of rare earth, the US has not contributed anything to the world production since 2001. Instead, it has been forcing China to part with its reserves. And Japan has been stockpiling rare earth since 1983.
The demand by the US and Japan that China increase exports of rare earth is thus not only unreasonable, but also offensive. Rare earth is related to the economic development and national security of a country, and China has the right to devise its reserve system that best suits its national conditions.
(China Daily 10/28/2010 page9)