CRI听力:Rare Earth Disputes

Rare earth metals are a set of seventeen elements that are vital for manufacturing an array of high-tech products, including cell phones, wind turbines, electric car batteries and missiles.

The United States, the European Union and Japan have joined forces to bring a case against China to the WTO over alleged export controls on rare earths, which they claim will result in unfair competition between Chinese and foreign manufacturers.

Wang Caifeng, a senior engineer with the Chinese Society of Rare Earths, says the accusation is baseless.

"China's foreign trade on rare earths is very open. For instance, the export quota for rare earths was more than 30 thousand tons last year, but the actual export volume reached less than 20 thousand tons. China's export volume can meet the global market demand."

Zhou Shijian, a senior researcher at the Center for US-China Relations of Tsinghua University, says that foreign countries are actually concerned with the price hike of rare earths.

"Due to the lack of protection on mineral resources, which has been the case for a long time, China sells valuable resources at rock bottom prices. If we set up the export quota and increase the export tax, the global price for rare earths will rise. That's the foreign countries' concern."

China has 36 percent of rare earth in the world, but it's supply over 90 percent of the world demand. Countries like US and Russia also have high reserve of rare earth, but none of them explore their own resources.

China's quota policy is drawn up out of concern for the environment and the sustainable use and development of resources. The disorderly mining of rare earths has long been blamed for the environmental damage in regions rich in rare-earth resources. Experts say it will be costly to repair those ecosystems that have been ruined as a result of rare earth mining. It's estimated that in Jiangxi Ganan area alone, the initial investment on environment will reach 38 billion yuan.

If the case is submitted to the WTO, what are the odds that China will be successful?

Sang Baichuan is Dean for the Institute of International Economy at University of International Business and Economicsl. He has a pessimistic view about China's prospects, because on January 30 earlier this year, the WTO ruled that China had violated the organization's regulations by restricting the export of nine kinds of raw materials and ultimately rejected China's appeal.

"China is very likely to lose the lawsuit, because they will cite the precedent case. China has every reason to protect its environment, but we don't have to achieve it by restricting exports. The precedent case tested the water; their true purpose was to guarantee access to rare earth, and sure enough this remains the case."

Professor Feng Jun with the Law School of the Shanghai Institute of Foreign Trade agrees with Sang. He says the government needs to learn from foreign countries concerning this issue. He cites the example of Australia.

"The Australian government levies a 30% resource tax on iron ore. They never restrain the trade, but the Australian people benefit from iron ore sales because of the high price. This is what we can do to protect the environment: impose resource taxes and restrict the amount of exploitation; or conduct protective mining at the very least."

This idea is also echoed by Professor Sang Baichuan. If China was to follow the precedent set by the United States, exhaustible resources of great strategic importance should not be applicable to free-trade theories where "national security" is concerned.

For CRI, I'm Zhong Qiu.