A recent ruling by the World Trade Organization (WTO) highlights the concerns felt by Western nations about methods they see China using to try and dominate world trade.

The WTO decision (July 5, 2011) said China violated international law by curbing exports of nine raw materials, including bauxite, coke and magnesium, used in manufacturing of high technology products. The move sets a precedent for US and EU nations to file a complaint against China’s quotas on ‘rare-earth’ minerals. China produces 97 percent of the world’s supply of 17 minerals widely used by the technology, defense and medical industries in the manufacture of articles from magnets and batteries to crystals for MRI machines

According to The Economist, "Slashing their exports of rare-earth metals...is all about moving Chinese manufacturers up the supply chain, so they can sell valuable finished goods to the world rather than lowly raw materials."  In 2006 General Motors, which is involved in miniaturized magnet research, shut down its US office and moved its entire staff to China.

Beijing’s claim that the quotas were needed to curtail pollution, end smuggling and conserve natural resources were rejected by the WTO.  The People’s  Daily of the Chinese Communist Party called the charges ‘groundless’. Beijing is expected to appeal the ruling.

The WTO, which is basically a contract among participating nations, has no enforcement powers, meaning their decisions are essentially political.  China has therefore merely had its hand slapped and the issue is likely to fade in importance as major rare-earths deposits are once again mined elsewhere.

Until 1948, most of the world's rare earth minerals were found in India and Brazil. Through the 1950s, South Africa took over as the world's rare-earth source and between the 1960s and the 1980s, California’s Mountain Pass rare-earth mine was the leading producer. Today, Indian and South African deposits still produce some rare-earth concentrates, but they are dwarfed by the scale of Chinese production.

As a result of the increased demand for rare minerals and the tightening of restrictions on exports from China, searches for alternative sources in Australia, Brazil, Canada, South Africa, Greenland and the US are ongoing.  Mines in these countries were closed in response to stricter environmental controls at the same time China was undercutting world prices for rare-earth minerals.