Page 218 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
to rare earth, the exploring, exploiting of rare earth and sanction systems are transparent, based on the
will continue to be banned for foreign investors, rule of law and consistent with international and
which shows China’s intention to control upstream World Trade Organization regulations (Zheng).
resources of rare earth, as China is streamlining
the negative list on a larger scale. And that in turn Coal
demonstrates the strategic importance of rare earth
resource (Comsenz UI Team). China’s thermal coal imports declined by
between 1 million and 13 million US tons in 2019
“The low prices of China’s exports have failed largely because of rising domestic output in the
to reflect the real value of the precious resource,” world’s top producer and consumer. The country’s
said Zhu Yi, a senior metals and mining analyst coal output, however, increased to reduce its
with Bloomberg Intelligence. “Rare earths are reliance on overseas supplies. China produced
strategic to making high-tech products such as an additional 110 million US tons of coal in 2019.
technical products, electric vehicles and military China produced 4.4 billion US tons of coal in 2018,
(equipment), and it’s necessary that these elements according to the National Bureau of Statistics.
applied in smartphones, consumer electronics, It also added about 215 million US tons in mine
military equipment and electric vehicles be given capacity that year, despite promising to cut excess
strategic due.” Exports of rare earths from China capacity for the sector. The primary reason for
barely reflect their real value. While China’s reserve the increase is for the first time in several years
of rare earths accounted for 38 percent of the the state planner approved 12 new coal mining
global total in 2018, it produced 72 percent of the projects. This comes after traders already cut back
global total,” she said. Comparatively, Brazil, the on purchases of both thermal and metallurgical
world’s second-largest country with a rare earth coal from Australia due to lengthy quality checks
reserve and which accounts for 18 percent of the on supplies from there that have lasted as long
total global reserve, only produced 1 percent of as two months at some ports (Reuters, China’s
the world’s total.” China’s rare-earth industry, thermal coal).
which also faces such challenges as rapidly
decreasing inventory, inefficient production and China sought to lower its domestic coal prices
environmental pollution, mostly involves initial to aid power producers in 2019, and proposed
processing such as exploration and extraction. that miners bring the benchmark grade to below
However, it lacks high value-added further US$87 per US ton. The NDRC made the proposal to
processing. The industries of China and the United coal producers after six major utilities sought the
States are highly complementary, and cooperation government’s help to reduce their raw material
will benefit both countries, while confrontation will costs in order to deliver a cut to power prices. China
only undermine their interests. The NDRC said China plans to lower electricity prices for industrial and
will adhere to the principle of fair and free trade in its commercial users by 10 percent. The top economic
management of rare-earth exports, but “the Chinese planning agency decided to bring monthly
people will be unhappy” if the country’s exported contract prices down to a so-called “yellow zone”
rare-earth metals are used against China. The US and is targeted benchmark coal with energy value
relies on rare-earth imports from China, although of 5,500 kcal/kg coal at less than 600 yuan. The
it is rich itself in rare-earth resources. Importing step isn’t unusual. China has previously sought to
from China is cheaper than producing domestically. balance the needs of its power enterprises with
If China stops exporting to the US, the production those of miners by securing a price range of about
of rare earths in the US would be very costly, and 500 to 570 yuan. Domestic coal prices rose after
it takes time to ramp up. Jin Baisong, a former being spurred by mine inspections and import
researcher at the Chinese Academy of International restrictions that crimped supply. The move signals
Trade and Economic Cooperation, said China needs coal power generators are under pressure from
to set up an export controls and economic sanctions high raw material costs and the government’s
systems for certain products, especially strategically plan to cut electricity charges. They’re also being
important ones that China produces in bulk. This challenged by a growing share of clean energy.
should be done under the condition that the control
218
to rare earth, the exploring, exploiting of rare earth and sanction systems are transparent, based on the
will continue to be banned for foreign investors, rule of law and consistent with international and
which shows China’s intention to control upstream World Trade Organization regulations (Zheng).
resources of rare earth, as China is streamlining
the negative list on a larger scale. And that in turn Coal
demonstrates the strategic importance of rare earth
resource (Comsenz UI Team). China’s thermal coal imports declined by
between 1 million and 13 million US tons in 2019
“The low prices of China’s exports have failed largely because of rising domestic output in the
to reflect the real value of the precious resource,” world’s top producer and consumer. The country’s
said Zhu Yi, a senior metals and mining analyst coal output, however, increased to reduce its
with Bloomberg Intelligence. “Rare earths are reliance on overseas supplies. China produced
strategic to making high-tech products such as an additional 110 million US tons of coal in 2019.
technical products, electric vehicles and military China produced 4.4 billion US tons of coal in 2018,
(equipment), and it’s necessary that these elements according to the National Bureau of Statistics.
applied in smartphones, consumer electronics, It also added about 215 million US tons in mine
military equipment and electric vehicles be given capacity that year, despite promising to cut excess
strategic due.” Exports of rare earths from China capacity for the sector. The primary reason for
barely reflect their real value. While China’s reserve the increase is for the first time in several years
of rare earths accounted for 38 percent of the the state planner approved 12 new coal mining
global total in 2018, it produced 72 percent of the projects. This comes after traders already cut back
global total,” she said. Comparatively, Brazil, the on purchases of both thermal and metallurgical
world’s second-largest country with a rare earth coal from Australia due to lengthy quality checks
reserve and which accounts for 18 percent of the on supplies from there that have lasted as long
total global reserve, only produced 1 percent of as two months at some ports (Reuters, China’s
the world’s total.” China’s rare-earth industry, thermal coal).
which also faces such challenges as rapidly
decreasing inventory, inefficient production and China sought to lower its domestic coal prices
environmental pollution, mostly involves initial to aid power producers in 2019, and proposed
processing such as exploration and extraction. that miners bring the benchmark grade to below
However, it lacks high value-added further US$87 per US ton. The NDRC made the proposal to
processing. The industries of China and the United coal producers after six major utilities sought the
States are highly complementary, and cooperation government’s help to reduce their raw material
will benefit both countries, while confrontation will costs in order to deliver a cut to power prices. China
only undermine their interests. The NDRC said China plans to lower electricity prices for industrial and
will adhere to the principle of fair and free trade in its commercial users by 10 percent. The top economic
management of rare-earth exports, but “the Chinese planning agency decided to bring monthly
people will be unhappy” if the country’s exported contract prices down to a so-called “yellow zone”
rare-earth metals are used against China. The US and is targeted benchmark coal with energy value
relies on rare-earth imports from China, although of 5,500 kcal/kg coal at less than 600 yuan. The
it is rich itself in rare-earth resources. Importing step isn’t unusual. China has previously sought to
from China is cheaper than producing domestically. balance the needs of its power enterprises with
If China stops exporting to the US, the production those of miners by securing a price range of about
of rare earths in the US would be very costly, and 500 to 570 yuan. Domestic coal prices rose after
it takes time to ramp up. Jin Baisong, a former being spurred by mine inspections and import
researcher at the Chinese Academy of International restrictions that crimped supply. The move signals
Trade and Economic Cooperation, said China needs coal power generators are under pressure from
to set up an export controls and economic sanctions high raw material costs and the government’s
systems for certain products, especially strategically plan to cut electricity charges. They’re also being
important ones that China produces in bulk. This challenged by a growing share of clean energy.
should be done under the condition that the control
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