Chinese media on Wednesday lashed out at a ruling by the World Trade Organisation that said Beijing's export restrictions on raw materials are illegal, and warned rare earths would be the next target.

The WTO on Tuesday upheld complaints by the United States, European Union and Mexico, ruling that China had failed to abide by accession commitments when it imposed quotas and duties on several types of minerals.

These include bauxite, coking coal, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus and zinc.

The Economic Information Daily accused the European Union and United States of wanting access to "China's low-cost resources to satisfy the needs of their domestic industries, especially the development needs of high-tech industries."

The newspaper -- owned by the official Xinhua news agency -- said China should be "on guard" as some countries pursue their own interests and "make better use of WTO rules to fight for its own lawful rights and interests".

A report carried on the Caixin business website Wednesday also warned China's export controls over rare earths were "very likely" to become the next target of WTO complaints.

China on Tuesday expressed regret at the WTO ruling and said its measures are in line with the objective of sustainable development promoted by the WTO and they help to induce the resource industry towards healthy development.

The complainants had argued that the metals are all key inputs for numerous products in the steel, aluminium and chemical sectors and as China is a leading producer for these materials, any restrictions could lead to sharp spikes in world prices.

Tuesday's ruling comes amid an international uproar over China's moves to tighten its grip over rare earths -- 17 elements critical to making many high-tech products -- including slashing exports and imposing higher taxes.

China, the world's largest producer of rare earths, has cited environmental concerns and domestic demand for tightening restrictions, leading to skyrocketing prices.

EU Trade Commissioner Karel De Gucht said that in light of the WTO ruling China should ensure "free and fair access to rare earth supplies".

earlier related report
Hyundai says it will not bid for Hynix stake
Seoul (AFP) July 6, 2011 - South Korea's Hynix Semiconductor Wednesday lost its sole potential buyer after shipmaking giant Hyundai Heavy Industries said it would not bid for a stake in the world's second-largest memory chip maker.

Hyundai Heavy, the world's largest shipbuilder, announced it would not seek the 15 percent stake held by creditors despite growing speculation it was interested.

The announcement left no potential buyers for Hynix's creditors, who wanted to select a preferred bidder in August and complete the sale by the end of the year.

The creditors have been trying for years to sell their shares in Hynix after taking control of it in 2001 following several debt-for-equity swaps when the chip maker almost collapsed due to weak market conditions.

The creditors, led by Korea Exchange Bank (KEB), earlier said they would accept preliminary bids by Friday.

"We have decided not to submit a bid for Hynix Semiconductor," Hyundai said in a regulatory filing.

"Acquiring Hynix would not generate business synergies with our existing businesses. There seems to be no win-win, or complementary, effect between the shipbuilding industry and the semiconductor industry."

The creditors' previous attempts to sell their stakes have been dogged by uncertainties over the chipmaking sector and the need for huge investment.

In February they invited bids but failed to attract any interest. In November 2009 Hyosung Corp, the sole bidder in the first sale attempt, dropped out.

KEB is the biggest shareholder with a 3.42 percent stake, followed by Woori Bank with 3.34 percent, state policy lender Korea Finance Corp with 2.58 and smaller stakeholders.

The chief of Korea Finance Corp said in late March that creditors are considering issuing new shares, a move that would bolster the chip maker's financial strength and ease the need for extra investment.

The creditors injected $4.6 billion to rescue Hynix by swapping their debt holdings into shares in 2001 and 2002.

The company's first-quarter net profit slumped 66 percent year-on-year because of falling computer memory chip prices.

-- Dow Jones Newswires contributed to this report --

Tweet

Related Links Global Trade News