The World Trade Organization released a report on Wednesday, saying China's export restrictions on rare earths, molybdenum and tungsten are incompatible with WTO rules.

It marks a second successful challenge to China's use of export quotas and tariffs as an industrial policy tool.

"China regrets that the panel ruled that China's export duties, export quota and related administration measures were inconsistent with the WTO rules and China's WTO obligation," a statement on the Ministry of Commerce's website said.