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China's rare earth sector – between domestic consolidation and global hegemony

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  • Reinhard Peter Biedermann

Abstract

Purpose - – China holds a global monopoly of up to 97 percent for rare earth elements (REEs), which are indispensable for all kinds of twenty-first century high-tech applications. Since China has disrupted its exports and started discriminating between domestic and foreign demand, REEs have become a geostrategic resource. In March 2012, Japan, the USA and the European Union jointly filed a World Trade Organization dispute settlement case against China. The purpose of this paper is to elaborate why China implemented export quotas and tariffs on REEs and how the state is engaged in this sector domestically and abroad. Design/methodology/approach - – The analysis frames China as a “competition state” and connects domestic with foreign economic policy on REEs. It uses data from Chinese official documents and non-Chinese sources. Findings - – Better government control aims to consolidate the sector and lay the foundation for three other goals, namely: the establishment of integrated and innovative Chinese corporations that compete globally; the provision of incentives to attract high-tech foreign direct investment to China; and better environmental protection. China wants to climb the next step of the technological ladder to gain global economic leadership. Practical implications - – Global environmental protection in mining is eased. However, non-Chinese market players can only take advantage of new business opportunities when the prices remain high. Since REEs are of strategic importance, rising political interference and raw materials diplomacy will continue to distort markets and price building. Originality/value - – The paper connects domestic reregulation of China's rare earth sector with foreign policy goals (or “going in” and “going out”) using the competition state approach.

Suggested Citation

  • Reinhard Peter Biedermann, 2014. "China's rare earth sector – between domestic consolidation and global hegemony," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 9(2), pages 276-293, April.
  • Handle: RePEc:eme:ijoemp:ijoem-05-2013-0080
    DOI: 10.1108/IJoEM-05-2013-0080
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    Citations

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    Cited by:

    1. Park, Sulgiye & Tracy, Cameron L. & Ewing, Rodney C., 2023. "Reimagining US rare earth production: Domestic failures and the decline of US rare earth production dominance – Lessons learned and recommendations," Resources Policy, Elsevier, vol. 85(PA).
    2. Abbas, Shujaat & Sinha, Avik & Saha, Tanaya & Shah, Muhammad Ibrahim, 2023. "Response of mineral market to renewable energy production in the USA: Where lies the sustainable energy future," Energy Policy, Elsevier, vol. 182(C).
    3. Fan, John Hua & Omura, Akihiro & Roca, Eduardo, 2023. "Geopolitics and rare earth metals," European Journal of Political Economy, Elsevier, vol. 78(C).

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