China raises rare metal export quotas

China has given way to the demands of importers and increased its rare metal export quotas.  This year’s quota is 10,680 tons. 12 companies will enjoy the right to export these metals.

Japan, the U.S. and the European Unions have consistently accused China that it has restricted the rare metal export in order to inflate prices. Beijing has always rejected these accusations. In the latest dispute, in fact the most serious one in the spring, the World Trade Organization took the importers’ side. China failed to convince the WTO that it restricted the export of some metals for the reasons of environmental safety.

Meanwhile, China’s unilateral move triggered a sharp rise in the prices of rare metals. As a result, China reaped commercial benefits and at the same time, it sent a serious challenge to the U.S. Canada, Mexico and many EU countries, its main competitors on the market of non-ferrous metals and the chemical and steel industries. The reason here was that China’s move restricted access to raw materials.

However, China introduced additional quotas under pressure exerted by Japan, the U.S. and the EU. It’s no mere chance that this decision was declared at a time when talks on removing these discriminative restrictions by China were underway. An expert at the Institute of the Russian Far East, Yakov Berger has pointed to the fact that China doubled its raw material exports to the world market soon after two major political events – China’s strategic and economic dialogue with the U.S. and the China-Japan-South Korea summit. The three countries decided to start holding talks on the creation of a common free trade zone at their summit. Yakov Berger believes that China’s policy towards the rare metal market should be analyzed on the basis of these events.

“This issue has to be examined very attentively and comprehensively. If China makes some concessions, say in rare metal exports, it means that it is getting some advantage in some other area. Everything should be examined comprehensively. China is playing a multimove game on several chessboards with various partners. Consequently, this move should be examined in interrelation with its actions in other trends,” Yakov Berger said.

One of them is China’s expansion on the EU market. Europe has been setting up high barriers here by introducing new anti-dumping restrictions on Chinese goods and politically boycotting investment. Undoubtedly, an increase in rare metal exports in exchange for liberalization of the EU market was a topic at the summit.

An increase in rare metal exports will most likely lead to a fall in their prices. At the same time, China will be able to iron out its contradictions with its leading trade partners. This is crucial for China when taking into account the fall in demand for Chinese goods across the world.