November 17, 2010 / 10:21 AM / in 8 years

EU official says to press China on rare earths

BEIJING (Reuters) - The European Union (EU) will urge China not to limit the export of crucial rare earths during a meeting with Chinese officials later this week, an EU diplomat said on Wednesday.

Businesses in the EU, along with those in Japan and the United States, have been crying foul over cuts in China’s export quotas of rare earths, used in the production of high-tech goods such as hybrid cars, television screens and windmills.

“We shall be stressing very clearly our concerns on this issue and stressing the importance of keeping that quota open and discussing with the Chinese authorities what their plans are for 2011,” Matthew Baldwin, the European Commission’s director for market access and industry, told reporters in Beijing.

He said he would be bringing up the issue when he meets counterparts at China’s Ministry of Commerce this week, underscoring the increased global worries about China’s stranglehold over the minerals.

China roiled the high-tech industry and boosted metals prices in July when it announced it would cut export quotas for rare earth minerals by 72 percent for the second half of 2010 — continuing a drop in exports of the material since 2008.

The EU has said it would demand Beijing’s assurance that China would meet the bloc’s medium-term supply needs for rare earth — used in high-tech and defense products - during a meeting in December.

But Baldwin said the international community should not be too quick to point the finger at China, which has defended its export restrictions, citing protection of a diminishing resource and the environment.

“While we are looking with concern at the amounts of rare earths that are issued this year by China, and we’re concerned that they are being reduced in quantities, this is not an issue that is completely China-specific,” Baldwin said.

“It’s by no means China’s fault that it has 97 percent of the supply, when it only has 37 percent of the reserves,” he said.

“The international community also needs to look at itself in the mirror and look at what we can do by way of investing more in these important commodities in places such as the United States and Australia.”

The EU also hopes to raise the issue of equal access to China’s markets at its meeting with Chinese officials, Baldwin said.

In 2009, EU outbound foreign direct investment (FDI) that went to China stood at 53 billion euros — about 2-3 percent of the bloc’s total FDI, he said.

“That’s a percentage we would indeed like to see increase,” he said. “A number of people have commented to the effect that often the business environment in China is not as easy as it could be.” (Reporting by Sui-Lee Wee; Editing by Ben Blanchard)

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