China's restrictions on rare earth exports to Japan have nothing to do with the two countries' ongoing dispute over the Diaoyu Islands, Chinese Commerce Minister Chen Deming said in a recent television interview. An article published by China.com.cn further pointed out that environmental degradation at home and plummeting prices in the international market are the main reasons for China, the world's largest rare earth producer, to restrict the export of rare earth minerals—materials critical for advanced manufacturing. Edited excerpts follow:
The United States has long restricted hi-tech exports despite other countries' frequent calls for it to lift the restrictions. Likewise, it is up to China to decide whether it should increase or reduce its export of certain goods, and no other countries shall interfere. Why, then, is Japan making a fuss over China's rare earth export controls?
Japan has played up the issue amid an international outcry over "China's rare earth dominance"—its rare earth reserves, output and exports all rank first worldwide.
In 2009, China's rare earth reserves amounted to 36 million tons, accounting for 36 percent of the world total, according to a recent report to Congress presented by a U.S. energy policy analyst. However, its rare earth output, which stood at 120,000 tons, represented 97 percent of the world total, says the report, titled "Rare Earth Elements: The Global Supply Chain."
In contrast, the United States and Russia, which respectively held 13 percent (13 million tons) and 19 percent (19 million tons) of the world's total rare earth reserves, did not produce any rare earth minerals at all. Neither did Australia, whose reserves totaled 5.4 million tons. India, which held 3 percent (3.1 million tons) of the world's reserves, produced 2,700 tons, or 2 percent of the world total.
The per-capita rare earth reserves of both the United States and Russia are higher than those of China. But since it is at the lower end of the global industrial chain, China, a country that possesses about one third of the world's rare earth reserves, is responsible for 97 percent of the world's rare earth production. The United States, which holds 13 percent of the world's rare earth reserves, relies completely on imports without exploiting its own reserves. In this sense, the United States has no reason whatsoever to criticize China for a "rare earth embargo."
China began to control rare earth exports in 2007 to address environmental degradation resulting from rare earth exploitation. Despite its tough restrictions, the Chinese Government has not banned rare earth production. In 2009, it produced more rare earth minerals than any other country in the world.
Low prices in the international market have also prompted China to control rare earth exports. By 2005, China's rare earth exports had increased to nearly 10 times their 1990 level, but the average price was only half that 15 years earlier. Under these circumstances, China adjusted rare earth production and export in 2007. As its rare earth exports dropped from 53,300 tons in 2006 to 34,000 tons in 2008, rare earth prices went up. The price of a ton of rare earth minerals climbed by 170,000 yuan ($24,000) in the first half of 2007, before diving to 70,000 yuan ($10,000) in August the next year.
Given the plummeting prices, it is unfair to demand that China export rare earth minerals in large quantities. There are, however, some biased foreign politicians who consider every major change in China's policy as a "threat." That's why they keep urging the country to increase rare earth exports, by touting the ridiculous theory that China could pose a threat to other countries with its huge rare earth reserves. For them, China is a good partner only if it obeys their orders.
Japan has long profited from processing rare earth minerals imported from China. It is no wonder the country is dissatisfied with China's export controls. But why can't countries like Japan understand Chinese enterprises' frustration at low rare earth prices and China's environmental woes caused by rare earth exploitation?