TOKYO | (Reuters) - China told Japanese business leaders that it hoped their companies would bring technology to develop rare-earth products to China, while standing by its controversial decision to limit the metals' exports, Japanese media reported.

China produces more than 95 percent of the world's rare earth metals and its efforts to bring the sector under greater control, citing resource depletion and environmental degradation, have alarmed its overseas customers.

Chinese Vice Premier Li Keqiang met on Tuesday in Beijing with Hiromasa Yonekura, chairman of Japan's biggest business lobby, Nippon Keidanren, and Toyota Motor Corp Chairman Fujio Cho, both of whom head the Japan-China Economic Association.

In the meeting, Cho appealed for a reevaluation of Beijing's policy on rare earth exports but Li defended the steps as necessary to protect the environment, Japanese national broadcaster NHK said.

Li, who is widely expected to replace Wen Jiabao as China's next premier, added that he hoped Japanese companies would bring the technology to develop products using rare earths to China, according to NHK.

"Japan has advanced technology to develop and use rare earths," Japan's Jiji news agency cited Li as saying. "I hope that both countries' companies can promote cooperation in this field," he was quoted as saying.

In a move that could raise tensions further, Chinese state media said on Tuesday it would halt production of rare earths at three major mines.

Demand for rare earths -- a group of 17 elements used for catalytic converters, battery cells and motors for hybrid cars, among others -- is expected to double in the next five years. Toyota, for one, has said it plans to offer a hybrid option on all of its vehicle models by 2020.

Toyota said in April it plans to develop and produce energy-efficient cars and components in China, though it has given few specifics.

The World Trade Organization ruled in July that China broke international law when it curbed exports of raw materials, in a landmark case that threatened Beijing's legal defense for similar export brakes on rare earths. Beijing has appealed the decision.

Japan accounts for a third of global rare earth demand and has been stung badly by China's export curbs.

Reporting by Chang-Ran Kim; Editing by Edwina Gibbs