China has warned that the decline in its rare earth reserves in major mining areas is "accelerating", as most of the original resources are depleted.
In a policy paper, China's cabinet blamed excessive exploitation and illegal mining for the decline.
China accounts for more than 90% of the world's rare earth supplies, but has just 23% of global reserves.
It has urged those with reserves to boost production of the elements, which are used to make electrical goods.
"After more than 50 years of excessive mining, China's rare earth reserves have kept declining and the years of guaranteed rare earth supply have been reducing," China's cabinet said in the paper on the rare earth industry published by the official Xinhua news agency.
The term rare earth refers to a group of 17 elements that are used to make a range of hi-tech gadgets.
These elements are used in products ranging from MP3 players to mobile phones, flatscreen TVs and hybrid batteries.
With those products becoming increasingly popular, the demand for rare earths has been rising.
But China has imposed export quotas on these elements. It says it has done so to prevent excessive mining of these elements, which also causes damage to the environment.
The US, Japan and the European Union have called the quotas illegal and dragged Beijing to the World Trade Organization (WTO) over the matter.
However, Gao Yunhu, deputy chief of the Rare Earth Office at the Ministry of Industry and Information Technology, said China's policies were in compliance with the WTO rules and that Beijing was keen to settle the dispute with its trading partners.
"We're willing to cooperate with the parties involved to solve the dispute as soon as possible," Mr Gao was quoted as saying by Xinhua.
"At the same time, we will actively use WTO rules to defend China's legitimate rights and interests."
In the policy paper, China added that it would implement "stricter standards" and "protective exploitation policies" to ensure sustained growth of the sector.