China’s new cut to rare earth export quota

USA is looking at building a trade case on the restrictions at WTO, accusing China of market manipulation with its 72% cut of export quota of rare earth elements. China currently dominates the market of rare earth elements with 95% of global production, and its move is seen as particularly dangerous for the ICT and Telco sectors which strictly depend on those elements.

Rare earth elements production (Wikipedia)

Actually, China’s restrictions to export quota are not new, as on September 1, 2009, it announced plans to reduce its export quota to 35,000 tons per year in 2010–2015, ostensibly to conserve scarce resources and protect the environment. But the underlying reasons can be found in the words of Liu Aisheng, director of the Chinese Society of Rare Earth: “The rare earths industry officials have realized that, after many years of continued growth in exports, the industry didn’t receive due profit returns”.

China had been released new export quota in 2010 and 2011. However, the new announcement represents China’s major cut to export quota so far and competitors are visibly getting nervous.