Effect and Dilemma of China's Foreign Trade Control on Rare Earth Industry

This article analyzes the big bottleneck problems that China faces when implementing export controls on rare earth products: consistency of foreign and domestic trade policies, of price conduction mechanism on the real economy, issues concerning environmental protection and sustainable development.Through the analysis this study finds that:(1) export restrictions have effectively contained the export price disadvantage, but the increase in industrial concentration and separate management of enterprises coexist in the domestic market;(2)export controls encourage the expectations of price rises in the market, resulting in enterprises' unlimited sprawl in their scale and magnifying the bullwhip effect in the industrial chain which eventually impairs the industry;(3) although energy utilization efficiency has improved, the problem of environmental pollution is also highlighted, especially in the rare earth metal industry. Finally, this paper suggests that the export regulation be transformed, the government replace tariffs with environmental taxes, facilitate free circulation of market information, reduce administrative intervention, ease the dominance of state-owned enterprises, strengthen the supervision of environmental protection, etc.