Abstract：China ranks first in terms of rare earths reserves, production, and export. However, its huge resource endowment was not turned into economic interests in the global market. China’s domination on rare earth supply results in great costs, rather than monopoly pricing power. In this paper, we estimate and analyze full costs and benefits of rare earths export. The results show that earnings from rare earths export cannot cover the full cost. Export of low value-added rare earths products resulted in excessive exploitation of resources and serious environmental deterioration. In order to balance the benefits and costs, internalization of resource and environmental costs is crucial. In addition, China should avoid exhaustion of rare earths resources with balanced import and export. Specifically, the country should encourage export of high value-added products and increase its international competitiveness in the rare earth industry. Strategy of rare earth reserve and international cooperation in investment are important policy tools for the sustainable utilization of the resource.
Keywords: Full Cost, Costs of Rare Earths Trade, Adjustment of Strategies
source:Finance & Trade Economics ,No3,2014