China will reinforce the protection of its rare earth resources, strengthen full industrial chain regulation and establish a mechanism under the State Council to decide and coordinate on major policy measures, according to a draft guideline published on Friday.

The guideline was published on the website of the Ministry of Industry and Information Technology and will be kept open for public opinion till Feb 15.

"Rare earths are important strategic resources that are not renewable, and it is necessary to reinforce the full industrial chain regulations targeting activities that are currently disrupting the healthy development of the industry and damaging the environment, such as illegal, destructive, unplanned and excessive mining, and illicit trading," the ministry said.

The guideline aims to regulate the rare earth industry under the framework of laws and regulations, the ministry said.

A group of 17 metallic elements that have distinctive properties such as electrical conductivity and magnetism, rare earths are used in a wide variety of applications, ranging from cellphone batteries, computers, wind turbines and televisions, to fiber optics and missiles, and are widely considered important strategic resources.

Stating the prized resources' irreplaceable significance for the upgrade of traditional industries, and the development of emerging industries and the national defense industry, the guideline said special measures must be taken to protect the resources.

It mentioned administrative license and project approval procedures for rare earth mining and the process of smelting and separation, and quotas respectively for mining, and for smelting and separation.

According to the guideline, any organization or natural person is prohibited from purchasing or selling rare earth products that are illegally mined, or smelted and separated.

It also stressed that rare earth import and export enterprises must abide by the foreign trade and export control laws and regulations.

As the world's largest rare earth supplier, China produces around 80 percent of the world's total supplies.

However, the country's rare-earth industry faces problems such as smuggling, illegal mining and environmental damage issues.

To protect the important strategic resource, the rare earth industry should have more precise rules and regulations, and the government should encourage innovation and development of high-end rare earth products such as new materials to move up the global value chain, said Bai Ming, deputy director of the Institute of International Market Research at the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce.