China denies ban on rare earths exports to Japan

[September 23, 2010]  SHANGHAI (AP) -- China's Trade Ministry denied reports Thursday that Beijing is tightening curbs on exports of rare earths to Japan after a territorial dispute further strained often tense relations between the rival Asian powers.

With offices closed in both Japan and China for public holidays, it was difficult to confirm if the curbs were new or if, as reported by The New York Times, they were specifically targeting only Japan.

A spokesman for China's Ministry of Commerce, Chen Rongkai, denied that Beijing had ordered a ban specifically on rare earths exports to Japan. Rare earths are crucial for computers, hybrid electric cars and other high-tech products.

"I don't know where The New York Times got that information, but we did not issue any ban of that sort," Chen said.

The New York Times report cited Dudley Kingsnorth, executive director of the rare earth consulting company Industrial Minerals Company of Australia, as saying he had been getting calls from associates in the rare earth industry who said they had been asked to halt exports to Japan.

Kingsnorth told The Associated Press he spoke to a contact at a Japanese trading house and then contacted another consultant in Japan who confirmed that report.

"I was told it was an 'unofficial ban,'" Kingsnorth said. "(China) requested major companies to withhold major exports to Japan with a clear indication that if they do export, it might impact on their export quotas."

Phone calls to Japan's Foreign and Trade ministries were not answered Thursday, as did calls to major automakers in Japan whose new energy vehicles would be most severely affected by restrictions on supplies of key rare earths materials.

In high-level economic meetings late last month, Japanese officials said they urged China to ease export controls imposed earlier this year on rare earths.

Japanese Foreign Ministry spokesman Satoru Sato told reporters that Chinese Premier Wen Jiabao explained that the limits on exports were intended to counter problems with excess supplies and smuggling.

Relations have sharply deteriorated since then, following Japan's arrest of the Chinese captain of a fishing boat that collided two weeks ago with Japanese coast guard vessels near islands in the East China Sea claimed by both nations. Japan extended his detention Sunday, and China responded by suspending contacts.

On Tuesday, Premier Wen Jiabao threatened action against Japan if it does not immediately release the captain, saying Tokyo "bears full responsibility for the situation, and it will bear all consequences."

Wen, whose comments were reported on the Chinese Foreign Ministry's website, made the remarks while visiting New York for the U.N. General Assembly. The report did not elaborate on what actions China might take.

However, the dispute has already resulted in the cancellation of tourist visits and a concert in Shanghai by the Japanese pop group SMAP.

[Associated Press; By ELAINE KURTENBACH]

Associated Press writers Kristen Gelineau in Sydney, Shino Yuasa in Tokyo and Chi-Chi Zhang in Beijing contributed to this report.

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