China gives U.S. assurances on rare earth minerals

SANYA, China Sat Oct 30, 2010 3:22pm EDT

SANYA, China (Reuters) - China told the United States on Saturday it would not withhold rare earth minerals but the two nations did not appear to make headway on disputes over North Korea and regional territorial claims.

China's top diplomat, State Counselor Dai Bingguo, and Foreign Minister Yang Jiechi offered reassurances about the minerals used in products from iPhones to superconductors in separate meetings with Secretary of State Hillary Clinton.

After meeting Yang at a regional summit in Hanoi, Clinton said she was pleased by the Chinese stance on the minerals but said the world still needed to find other suppliers.

She also urged China and Japan to cool fresh tension over rival territorial claims in the East China Sea and offered to hold three-way talks, a proposal unlikely to be embraced by an increasingly assertive Beijing.

She then met Dai, who outranks Yang in the ruling Communist Party hierarchy, on the southern island of Hainan, where a U.S. spy plane made an emergency landing after colliding with a Chinese fighter in 2001 and its crew was held for 11 days.

The incident on Hainan -- also a base for China's expanding navy, including a planned new generation of submarines said to be capable of carrying nuclear missiles -- illustrates the growing friction between the two nations.

U.S. WANTS 'TEMPERATURE TO GO DOWN'

The United States has been uncomfortable about China's decision to slash rare earth export quotas generally and to cut shipments to Japan, with which it is embroiled in a territorial dispute over islands they both claim in the East China Sea.

While Chinese officials have said they will not exploit the high-tech ores used in lasers, superconductors, computers and other electronics for leverage, prices have spiked and firms are rushing to develop sources outside China.

"Minister Yang clarified China has no intention of withholding these minerals from the market," Clinton told a news conference in Hanoi after meeting Yang.

"Although we are pleased by the clarification we have received from the Chinese government, we still think that the world as a whole needs to find alternatives," she added.

A senior U.S. official told reporters a joint working group would discuss the minerals issue in Washington in a few weeks.

Clinton met Yang on the sidelines of the East Asia Summit in Hanoi, which has been overshadowed by the Sino-Japanese squabbling over the disputed East China Sea islands, called the Senkaku islands in Japanese and the Diaoyu islands in Chinese.

A senior U.S. official who spoke on condition of anonymity told reporters: "We have made very clear to both sides that we want the temperature to go down."

NORTH KOREA

Another area where Washington wants Beijing's help to ease tensions is the Korean Peninsula, where North-South relations sank to their lowest point in years with the March torpedoing of a South Korean warship that killed 46 South Korean sailors.

Seoul and Washington blamed the incident on Pyongyang, which denied responsibility.

Clinton and the Chinese officials discussed North Korea, the November 11-12 G20 summit in Seoul and Chinese President Hu Jintao's visit to Washington in January, but gave few details.

Yang will visit the United States, probably in late November, to prepare for Hu's visit, the senior official said.

"We conveyed today the need for China to exert pressure and influence on North Korea ... to behave responsibly in the run up to the G20," to rebuild trust with South Korea and to honor its 2005 commitments to abandon its nuclear programs, he said.

North Korea has twice conducted nuclear tests despite the 2005 agreement.

North and South Korea, which technically remain at war because the 1950-53 Korean War ended in an armistice rather than a peace treaty, exchanged gunfire across their heavily armed land border on Friday, the South's military said.

Clinton also pressed China on human rights during her talks, urging it to free Nobel Peace Prize laureate and dissident Liu Xiaobo and Xue Feng, a Chinese-born U.S. geologist jailed for eight years for stealing state secrets.

(Editing by Peter Graff)

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