Economics IA Commentary - Protectionism. Title of Extract: China Expands Export Quotas with New Rare-Earths Policy

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Name of Candidate: FaiyazAzamKolia

Candidate Number: 3071-040

Economics Commentary Number: SL Number 3

Title of Extract: China Expands Export Quotas with New Rare-Earths’ Policy

Source of Extract:  

Date of Extract: Friday, 20th May 2011

Date Written: Monday, 30th May 2011

Word Count: 729

Section of Syllabus: 4

Name of Candidate: FaiyazAzamKolia

Candidate Number: 3071-040


CHINA EXPANDS EXPORT QUOTAS WITH NEW RARE-EARTHS' POLICY

CHINA has tightened its control over rare earths by expanding its export quota system, imposing higher taxes and announcing that it wants its biggest companies to lead the industry's development.

It also said it will get tough with companies that resell export quotas and won't approve any new projects - or the expansion of existing ones - in rare earth separation over the next five years.

The measures were announced separately by the State Council, or Cabinet, and the Commerce Ministry in an apparently co-ordinated offensive in a sector that has become highly politicized.

The State Council said the country aims to concentrate 80 per cent of the heavy rare earth mining business in the hands of the three biggest companies in the next one to two years.

It's the first time that Beijing has publicly said it will let the three biggest companies head a consolidation of the industry.

Sources told Dow Jones Newswires earlier that China Nonferrous Metal Mining Group and China Min metals will be in the lead.

China, which supplies around 95 per cent of the world's rare earth metals, has been tightening its control over the sector by raising the threshold for entry, imposing stricter environmental standards and slashing export quotas.

First-half 2011 quotas total 14,508 tonnes, down about 35 per cent from the same period last year, according to the Ministry of Commerce.

These measures have boosted rare earth prices and made export quotas much more valuable.

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China has also moved to make political gains from its dominant role in the sector.

Japanese companies said rare earth deliveries stagnated after Japan detained a Chinese fishing boat captain following a collision with a patrol vessel in disputed waters. China has denied any special curbs on exports.

More recently, a consultant to Taiwan's government told Dow Jones Newswires that Beijing had discussed giving the island greater access to China's rare earths in an apparent effort to gain goodwill with its government.

In the latest move, Beijing said it is raising the tax on light rare ...

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