China has set up a rare earth industry group, the government said Monday, in a bid to streamline the sprawling sector and fend off complaints about Beijing's seemingly monopolistic control.

The United States, European Union and Japan last month lodged a complaint with the World Trade Organization, saying China was choking off exports of rare earths to unfairly benefit domestic industries.

China, a producer of more than 95 percent of the world's rare earths -- which have a wide range of applications in the military and technology sectors in particular -- has set output caps and export quotas on the coveted resource.

The Association of China Rare Earth Industry, composed of 155 members, was set up Sunday in Beijing, the Ministry of Industry and Information Technology, which supervises rare earth development, said in a statement.

Vice industry minister Su Bo said the group would promote "healthy development" of the sector and urged firms to strictly follow government production plans, according to the statement.

China has defended its management of the rare earth industry, saying its measures aim to limit harm to the environment from excessive mining, while meeting the country's surging domestic demand.

Separately, the new head of the industry group said the association would "properly" handle trade disputes, the official Xinhua news agency said, but gave no further details.

Gan Yong who is also an academic at the Chinese Academy of Engineering, said the group would create a "reasonable" price mechanism, according to the report.

Members of the group include industry giants like China Minmetals and aluminium producer Chalco.

China's trading partners complain Beijing has deliberately sought to drive up prices and force foreign companies to relocate to the country for access to rare earths.

China has set its 2012 export quota for rare earths at around 30,000 tonnes, roughly the same level as 2011.