A statement from the Ministry of Industry and Information Technology said the 2021 rare earth mining output had been set at 168,000 tonnes, up from 140,000 last year.
The quota for smelting and separation - or processing of rare earths into a form that can be used by manufacturers - is 162,000 tonnes, also up 20% on the year, the statement showed.
China is the world's dominant producer of rare earths, a prized group of 17 minerals used in consumer electronics and military equipment.
It announces quotas twice a year, splitting the mining quotas into those for light rare earths, the more common type, and heavy rare earths.
"The quota increase was pretty inevitable with the current supply situation in China and demand growth from NdFeB manufacturers," said Wood Mackenzie analyst David Merriman, referring to a type of rare-earth magnet used in consumer goods.
Neighbouring Myanmar supplies around half of China's heavy rare earths feedstock but the closure of a key border crossing to contain the spread of COVID-19 has seen shipments dry up.
"I expect the tight supply situation for (heavy rare earth) feedstock to persist until the Myanmar border reopens," Merriman added in an email.
Quotas for the first half of 2021 were earlier set at 84,000 tonnes for mining and 81,000 tonnes for smelting and separation. The full-year quotas, which have been published unusually late, imply the same levels for the second half.
The quotas are awarded to six state-run companies, including China Minmetals Rare Earth Co, Chinalco Rare Earth & Metals Co and China Northern Rare Earth Group.
The Minmetals unit last week flagged potential consolidation of the so-called "Big Six" when it said its parent was discussing restructuring with Chinalco and the government of rare earths hub Ganzhou.
The table below shows company rare earth quotas for 2021 in tonnes.
|Company||Light rare earth ore||Medium/heavy rare earth ore||Smelting/separation|
|Chinalco Rare Earth & Metals Co||14,550||2,500||23,879|
|China Minmetals Rare Earth Co||2,010||5,658|
|China Northern Rare Earth Group||100,350||89,634|
|China Southern Rare Earth Group||33,950||8,500||28,262|
|Guangdong Rising Rare Metals||2,700||10,604|