VI. Promoting Fair Trade and International Cooperation

Opening up is a basic national policy of China. In the field of rare earths, China givessimultaneous consideration to both domestic and international resources and markets, andfollows a win-win strategy that both ensures a reasonable supply of rare earth products on theinternational market and helps protect the environment and resources. China will continue itsefforts in promoting fair trade and international exchanges and cooperation in this field.

In view of the needs of protecting the environment and resources and developing in asustainable way, and after giving overall considerations to the domestic and internationalmarkets, the carrying capacity of resources and environment, as well as domestic productionconditions, China strictly controls the total volumes of rare earth mining and production, andtakes restrictive measures on the mining, production, consumption and export of rare earthproducts simultaneously. The state sets a reasonable quota for annual rare earth exports thatbasically satisfies the normal demand of the international market. Meanwhile, China tightenscustoms control, regulates the management of declarations to be filed by enterprises, andorders rare earth export enterprises to comply with the industrial policies, industry access andenvironmental standards. The state is reinforcing its supervision and control over exportenterprises and the self-discipline of the industry. In accordance with the law, it investigatesand punishes enterprises that export rare earth products clandestinely, export productsprocured from illegal channels or commit other acts disrupting the normal order of rare earthexport. In 2011, the state carried out a special campaign to crack down on rare earthsmuggling, during which it tracked down 769 tonnes of smuggled rare earth products and 23criminal suspects in eight cases. Meanwhile, the state strictly bans the import of rare earthproducts containing radioactive substances that exceed the prescribed limits.

(Chart 4 Market of China's Rare Earth Export in 2011)

Regarding rare earth trade, the Chinese government has reiterated on more than oneoccasion that China will continue its rare earth supply to the international market. The tightenedcontrol over rare earth export by the Chinese government is carried out in concert with thatover the mining, production and other links of the rare earth industry. This is in alignment withChina's sustainable development and the interests of all countries in the world. China opposespoliticizing the rare earth issue, and is willing to strengthen dialogue and cooperation with otherrare earth producers and consumers in a constructive and responsible manner, to worktogether with them in preventing excessive speculation in the rare earth market and solving theresource and environmental problems in the development of the industry. It also hopes thatcountries and regions with abundant rare earth reserves will make active efforts in developingtheir own resources to diversify the supply and expand rare earth trade in the internationalmarket, shouldering together the responsibility of global rare earth supply in order to meet theneeds of the sustainable development of the world economy. In recent years, China has beenactively creating a fair and open environment for foreign investment, encouraging foreigninvestment in environment restoration, waste product recycling, and high-end applicationdevelopment and equipment manufacturing in the rare earth industry. Enterprises from theUnited States, Germany, France, Canada and Japan have invested a total of 6.1 billion yuan inChina's rare earth industry, establishing 38 sole-proprietorship and joint-venture enterprises.Their products are mainly made for export to meet the needs of the mother countries of theseinvestors. China encourages domestic enterprises to follow international practice and marketrules to participate actively in international technological and economic cooperation in the fieldof rare earths.

China has actively participated in international exchanges in the field of rare earths. It hasconsecutively established the International Conference on Rare Earth Development andApplication, International Rare Earth Industry Summit, Baotou Rare Earth Industry Forum, andother platforms for academic exchanges. China has taken an active part in activities held by theInternational Workshop on Rare Earth Permanent Magnets, International Commission onIllumination and other related international organizations. It has conducted bilateral andmultilateral exchanges and dialogues on a broad range of issues concerning rare earths withthe US, the EU, Russia and Japan, to share information, enhance mutual understanding, andwork hand in hand to promote the sustainable development of rare earth science andtechnology and the rare earth industry as a whole.

The sustained, healthy development of the rare earth industry is crucial to the sustainable useof rare earth reserves as important natural resources of the world, as well as to the protectionof Planet Earth, which is home to all mankind. Nowadays, as all countries depend on each otherfor existence and prosperity, they should strengthen cooperation and share responsibilities andachievements. In future, China will adhere to the Scientific Outlook on Development, improve itsrare earth policies, reinforce supervision over the industry, and work closely with theinternational community to safeguard a fair and rational order of the rare earth market, bettercoordinate rare earth development and utilization with the protection of the environment andresources, and make new contributions to the world's economic growth and scientific andtechnological development.