INTERVIEW - China: no fast change in rare earth export

GENEVA Fri Oct 22, 2010 3:40pm IST

Related Topics

Inside the Peshawar school

Inside the Peshawar school

The aftermath inside the Pakistan school where at least 132 students and nine staff members were killed by Taliban gunmen.  Pictures 

GENEVA (Reuters) - China's new five-year-plan will not bring any rapid change in export quotas for rare earth metals required worldwide for high-tech products, a senior Chinese trade official said on Thursday.

Sun Zhenyu, ambassador to the World Trade Organization, told Reuters Insider that China's own stocks of the rare metals, for which it is the dominant supplier, were depleting fast and that Beijing had to conserve them.

"I think there will be probably not a very quick change in the export quota mechanism of rare earths," Sun said in an interview on the trade implications of the five-year-plan, unveiled this month.

For full Insider interview go to link.reuters.com/paz59p

The plan is the blueprint for the five years from 2011 for what will become the world's biggest economy as China shifts the emphasis to domestic consumption from exports.

China's policy on rare earths -- used to make parts for vehicles, computers, mobile phones and missiles -- has been at the top of the trade agenda since reports that China had halted shipments to Japan during a territorial dispute.

Chinese export restrictions on rare earths have already been challenged at the WTO by the United States, European Union and Mexico, which say the policy helps Chinese producers that use the minerals at the expense of foreign competitors.

The Commerce Ministry denied on Wednesday a report that the government planned to slash export quotas next year.

China, which now provides more than 90 percent of the world's supplies of rare earths, says it has to conserve them for environmental reasons and because they are disappearing.

Sun said China's resources had fallen to 30 percent of the world total from 33 percent in 1996 and would last only another 15-20 years.

Curtailing production would affect both foreign customers and domestic producers, he said.

Rising prices and concerns about Chinese supply have prompted companies in the United States and other countries to reopen mines that had been considered uneconomic.

U.S. EXPORTS

"We would like that our partners would also start working on some kind of production of rare earths of their own resources," Sun said. "So we are very glad to see that some of our trading partners are starting to do so."

Sun also said he was hopeful the United States would soon relax restrictions on high-tech products that have both commercial and military applications -- a long-standing request of Beijing.

Under the new five-year-plan China will develop several strategic industries such as alternative energy and new materials, for which it will need to import high-tech equipment from the U.S. and elsewhere.

Sun said there were positive signs that the U.S. business community was pushing the government to relax controls on this dual-use technology and that eventually China would be able to buy these goods from America.

"That will have a major impact on the trade balance between China and the U.S.," Sun said.

The United States has an advantage in high-tech goods, but they made up a relatively small proportion of U.S. exports to China. Easing restrictions could boost U.S. exports to China by $90 billion a year, he said.

President Barack Obama has called for the restrictions to be streamlined as part of his plan to double U.S. exports.

(Editing by Stephanie Nebehay)

FILED UNDER:

Economic Pulse

REUTERS SHOWCASE

New Tax Rules

New Tax Rules

Government to compensate states for revenue losses from new GST.   Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Reuters Exclusive

Reuters Exclusive

Google aiming to go straight into car with next Android – sources.  Full Article 

26/11 Plotter

26/11 Plotter

Pakistan to challenge bail for Mumbai attack "mastermind".  Full Article 

Chinese Economy

Chinese Economy

China revises up size of 2013 economy, sees no effect on 2014 growth.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage