**Abstract**
Recently, it was reported that the interim report from the World Trade Organization (WTO) Dispute Settlement Body’s Expert Panel ruled that the United States, Japan, and the European Union violated China’s rare earth export restrictions. As a result, China is expected to revise its current rare earth export quota system and tariffs. This development has sparked discussions about how China will manage its rare earth industry in the coming months.
Following the release of this news, some media outlets suggested that China is preparing several new policies to adapt to the evolving situation. These include stricter regulations on private mining operations, the introduction of new rules for managing rare metals, and differentiated management strategies for different types of rare earths. However, industry experts have emphasized that while these measures may seem like a comprehensive approach, more preparation and careful planning are needed from both the government and the industry.
**Pressure from WTO Litigation**
For years, the Chinese rare earth industry has struggled with issues such as unregulated mining, environmental degradation, and low-cost exports. Despite these challenges, the U.S., EU, and Japan have consistently criticized China’s environmental practices and pushed for greater access to its rare earth resources.
Since 2009, when the EU first called for China to lift its export quotas for rare metal products, many countries have taken steps to secure cheaper access to rare earths. According to Wei Qining, a researcher at China Investment Consulting, the pressure from WTO litigation could lead to the liberalization of China’s rare earth export system, including the removal of quotas and tariffs. He warned that this could revive past problems, such as smuggling and illegal trading, and further complicate an already struggling industry.
Wang Qinhua, vice president of the China Nonferrous Metals Industry Association, stated that the WTO case involving rare earths is nearing a conclusion. Once the case is resolved, the removal of export quotas may be discussed, starting with light rare earths. The gradual opening of light rare earth exports could help prevent the outflow of heavy rare earths, which are primarily found in southern China.
Heavy rare earths are crucial for high-tech applications due to their unique properties, such as improving the performance of electronic devices. Many of these elements, like lanthanum and cerium, can only be mined for a limited period, making their conservation even more important.
**Industry Consolidation Shows Results**
The WTO ruling has significantly altered the landscape for rare earth exports in 2014. With limited time to respond, the Chinese government has accelerated efforts to reform the industry. This includes implementing stricter regulations, cracking down on illegal activities, and promoting more sustainable practices.
According to Zhang Beibei, a rare earth analyst, the industry has seen improvements after recent crackdowns. Illegal exports have decreased, and some companies now require special invoices for rare earth transactions. Additionally, there has been a noticeable increase in orders during July and August, signaling a potential recovery in demand.
Recent announcements, such as Baosteel’s rare earth pricing and the purchase and storage initiatives, have boosted market confidence. Zhang noted that some traders have already raised prices for certain oxides, like cerium oxide. While a price increase is expected in November, its extent and duration will depend on whether national purchasing policies are effectively implemented and whether other supportive measures are introduced.
Zhang also mentioned that the government has centralized resource management through macroeconomic control, ensuring that export prices remain stable. Meanwhile, officials from the China Rare Earth Society clarified that no special policies are being introduced for state-owned enterprises. Instead, new regulations aim to raise entry barriers, combat illegal activities, and promote technological innovation.
**Need to Be Treated Rationally**
Experts caution that the recent price rebound is likely a short-term trend. Many factors influence rare earth prices, including global supply and demand, domestic and international mining activities, and economic conditions. Therefore, investors and industry players should maintain a balanced perspective.
Zhang Beibei pointed out that only price increases driven by genuine demand reflect a real market shift. Over the past two years, rare earth prices have steadily declined, partly due to weak demand and high initial prices. Some companies report low order volumes and thin profit margins, indicating ongoing challenges in the sector.
Industry insiders note that many downstream firms collapsed after a sharp price rise in 2011. Currently, global demand remains sluggish, and despite regulatory improvements, the black market still exists. To address this, the government must encourage targeted technological development and ensure that upstream and downstream sectors grow in tandem. This process, they say, will take time and sustained effort.
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