China to Limit Exports of Rare Earth Minerals

China said it will drastically limit exports of a group of minerals used in a host of consumer technology products, part of what the Obama administration sees as a broader strategy to unfairly help Chinese manufacturers.

The Ministry of Commerce today released an English-language announcement of Tuesday's decision to set early 2011 export quotas for rare earth minerals, which are used in cell phones, flat-screen televisions, hybrid cars and many other products.

China controls 95 to 97 percent of the global supply of rare earth minerals. It set off worldwide alarm in September when it quietly cut off all shipments to Japan during a dispute over territorial waters, and temporarily halted shipments to the United States and Europe as well.

Last week, the Office of the U.S. Trade Representative, in its annual report to Congress on China's compliance with World Trade Organization rules, said Beijing "continued to deploy export quotas, export license restrictions, minimum export prices, export duties and other export restraints on a number of raw material inputs where it holds the advantage of being one of the world's leading producers.

"Through these export restraints, it appears that China is able to provide substantial artificial advantages, both in China's market and other markets around the world, to a wide range of downstream producers in China," the USTR added.

And though the U.S. hasn't included rare earths in its current cases at the WTO against Chinese export restraints, the limits on rare earth exports has been worrying enough that the Obama administration confronted Beijing about it this month and "will not hesitate to take further actions, including WTO dispute settlement, if appropriate," the USTR said.