China will strive to streamline its rare earth industry within five years, said Chinese Premier Wen Jiabao at an executive meeting of the State Council on Wednesday.

A document released after the meeting said China should accelerate industrial upgrading and technological innovation to protect the environment and save resources.

The industry should maintain rational production and inventory control, make better use of domestic and overseas markets and resources, and have active international cooperation for a healthy and sustainable development.

For that purpose, the nation would establish and improve the supervision framework of laws and rules on the industry, impose stricter mining policies to protect the environment and resources and protection standards for the environment, and make reasonable plans for mining and exports.

Meanwhile, authorities would carry out special campaigns to crack down on illegal mining activities to maintain order in production, further consolidate the industry and promote technological innovation, said the document.

At the meeting, clear demarcation was set out for responsibilities in relevant areas and government agencies, according to the document.

The Ministry of Land and Resources announced last month the establishment of 11 state-managed rare earth mining zones in Ganzhou Prefecture, east China's Jiangxi Province, an area rich in ion-absorbed-type rare earth, to protect resources and the environment.

The 11 mining zones have a combined area of 2,500 square kilometers, with rare earth reserves estimated at 760,000 tonnes.

The ministry also designated two state-managed iron mining zones in Panzhihua, western Sichuan Province. The zones have an area of 460 square kilometers.

As the world's largest rare earth producer and exporter, China provides more than 90 percent of the global rare earth demand, though its reserves account for one third of the world's total.

The Ministry of Commerce said last month that China exported 35,000 tonnes of rare earth from January to November last year, up 14.5 percent from a year earlier.

Rare earth elements are crucial for the production of components used in a variety of high-tech products such as consumer electronics, but their mining is known to be destructive to forests, soil and farmland. The waste released after mining also damages the environment.