China Debates Restrictions on Rare Earth Exports

The Japan-China High-Level Economic Dialogue concluded in Beijing on Aug. 28. During the dialogue, Japan asked China to relax export restrictions on rare earth materials.

Some Japanese media said the rising prices of imported rare earth limits the Japanese production capacity of computer parts, hybrid vehicles and some other products that use rare earth elements as important materials.

In this regard, China's Ministry of Commerce official said under the existing conditions, large scale extraction of rare earth has caused great damage and destruction to the ecological environment, so China is imposing restrictions on rare earth production, mining and trade.

This approach is consistent with WTO rules. China's rare earth export policy does not only take into account the economy, but also considers a combination of factors, such as the protection of the environment and national security.

"For resources products such as rare earth, China can make its own industrial development strategies and has some voice in the pricing in international market." said Mei Xinyu, expert from Research Institute of International Trade and Cooperation of the Ministry of Commerce.

China cut its export quotas for rare earth by 72 percent for the second half of this year, according to data from the Ministry of Commerce on released on July 8. Shipments will be capped at around 8,000 metric tons, down from roughly 28,000 tons for the same period a year ago.

Japanese officials told their counterparts that the lower quotas could have a major effect on global industry and demanded early action on easing them. Japan urged China to make ample supplies of rare earth materials available.

Chinese Commerce Minister Chen Deming said China's restrictions on the rare earth industry will assist in protecting the environment. He stressed that in order to protect the country's environment, China had no choice but to take such measures.

Chen also called on Japan to ease high technology export controls to China and simplify visa procedures for Chinese business people.

Chen said through the dialogue that the two sides had enhanced communications and increased mutual understanding over these issues.

During the dialogue, the issue of rising labor costs in China also attracted much attention. Japan said the increasingly frequent labor disputes had an impact on a number of Japanese companies operating in China.

A human resources expert said labor conflicts caused by increasing wages not only appeared in Japanese enterprises. Data shows that this year, more than 20 provinces and cities nationwide like Beijing, Henan, Shenzhen, Shaanxi, Anhui and Hainan have started to raise minimum wages, and the average wage level increased by 20 percent or more.

"In the background of China's industrial upgrading, the rising labor costs are an inevitable trend," Mei said.

He said through legislation and a management system, enterprises will create a harmonious relationship between employees' salaries and the development of the corporation.

"On the other hand, foreign-funded enterprises in China can also reduce costs through enhancing the degree of localization, which is to reduce its expatriate employees," Mei said.