China will reduce its rare earth export quotas next year, but not by a very large margin, Yao Jian, spokesman of China's Ministry of Commerce, said Tuesday.

"To protect the environment and natural resources, China will stick to the quota system to manage rare earth exports next year, and quotas will also decline," Yao told Xinhua.

Though giving no clear extent of the decline, Yao's remarks echoed the comments of Wang Jian, a vice minister of commerce, made Monday at a press conference.

"I believe China will see no large rise or fall in rare earth exports next year," said Wang.

Wang emphasized that China has no embargo on rare earth exports, even though it uses a quota-system as a method of management.

Containing a class of 17 chemical elements, rare earths have been widely employed in manufacturing sophisticated products including flat-screen monitors, electric car batteries, wind turbines, missiles and aerospace alloys. However, mining the metals is very damaging to the environment.

Chinese officials have said on many occasions that China will strictly protect its non-renewable resources to prevent environmental damages due to over-exploitation and reckless mining.

China started the quota system on rare earth exports in 1998 and later banned it in processing trade. In 2006, China stopped granting new rare earth mining licenses and existing mines have since been operating according to government plans.

In early September, the State Council, or China's Cabinet, unveiled regulations to encourage merger and acquisitions within the industry.

However, China's restrictive policies were criticized by Japan, the United States and other European countries, claiming China's management violated World Trade Organization rules.

"China has no choice but to take such measures," Chen Deming, China's commerce minister, said in August. He pointed out that exports of rare earths should not threaten the country's environment or national security.

In response to the increasing criticism of China's rare earth exports management, the spokesman for China's Ministry of Industry and Information Technology said last week that China "will not use rare earths as a bargaining chip".

"It is the common strategy of some countries, such as the United States, to use global resources while conserving their own in their homeland," said Zhang Hanlin, director of China Institute for WTO Studies in China's University of International Business and Economics.

"Creating conflicts on resource issues for their self interests is a common practice," he said.

China is the world's largest producer and exporter of rare earths. With about one-third of all proven rare earth reserves, China's exports account for more than 90 percent of the world total.

"This shows some countries are conserving rare earth resources, " said Yao.

Early media reports said China would reduce the export quotas by up to 30 percent in 2011. Yet, this was denied as "false" and "groundless" by the Ministry of Commerce.

The ministry said the Chinese government will set the 2011 export quotas based upon the rare earths output, market demand and the needs for sustainable development.

It also said China would continue to supply rare earths to the world. Meanwhile, it will also take measures to limit the exploitation, production and exports of rare earths to maintain sustainable development, which is in line with WTO principles.

"Some countries managed to meet the openness requirement of international trade policies when limiting its resources exports," said Feng Jun, a director of the Shanghai WTO Affairs Consultation Center.

"China should learn from the experiences and explore its own way of protecting its strategic resources," said Feng.

(China Daily November 4, 2010)