China accounts for 97 percent of rare earth output and its 2009 decision to curb exports while it builds up an industry to create products made with them alarmed foreign companies that depend on Chinese supplies.
In its latest quota, the Commerce Ministry said exporters will be allowed to sell 10,546 tons of rare earths in the first half of 2012. That is a 27 percent reduction from the quota for the first half of 2011.
China's export restrictions have strained relations with the United States the European Union, Japan and other governments that have called on Beijing to remove its curbs and make its intentions clear.
Despite production and export curbs, rare earths prices in China have tumbled as U.S. and European economic woes dent demand for its exports. The government ordered its biggest producer to suspend output for a month in October to shore up prices.