Beijing has imposed quotas on exports of rare earth elements, a move which its critics say has pushed up prices.
Last month, the US, Japan and the European Union filed a case at the World Trade Organization, challenging China’s restrictions.
China produces more than 95% of the world’s rare earth elements.
Hardball?
These elements are critical components in the manufacture of various high-tech products, including DVDs, mobile phones, flatscreen TVs and hybrid batteries.
China’s trading partners have alleged that Beijing has been trying to utilise its position as the world’s biggest producer of rare earths to benefit domestic manufacturers.
They have argued that by limiting exports, Beijing has kept prices low for domestic buyers, while international firms have had to pay more.
It’s also claimed that Beijing was trying to put pressure on international manufacturers to move to China.
The state new agency Xinhua said the new association was likely to help with efforts to cope with international trade frictions and disputes.