Abstract
This paper summarizes and evaluates China’s policies toward the rare-earth industry from 1975 to 2018. We define five stages over this period and focus on China’s purpose, the underlying economic background in each stage, and the connections between stages. By reviewing a broad set of original policy documents, we find that the purpose of China’s policies has evolved, affected by the market players, the development of the mineral industry, and the state of the Chinese economy. Initially, the Chinese government encouraged the development of the upstream rare-earth sector. Since the early 1990s, China has focused on the development of downstream activities that use rare earths in the manufacture of intermediate and final products. Since the early 2000s, China has focused additionally on the problems of disorder in the rare-earth industry with particular reference to the environmental degradation caused by rare-earth production, as well as industrial reorganization to discourage unsanctioned production.
Highlights
Rare-earth elements are essential to the modern economy, providing essential properties to magnets in high-efficiency motors, to phosphors in lighting, and to catalysts in a variety of chemical activities, among other important applications
As China was producing most of the RE minerals in the world, these actions caused a sharp increase in the RE prices
We focus on the underlying factors that drove China’s tightened RE policies and, more broadly, the development of the Chinese RE policies between 1975 and 2018
Summary
Rare-earth elements are essential to the modern economy, providing essential properties to magnets in high-efficiency motors, to phosphors in lighting, and to catalysts in a variety of chemical activities, among other important applications. The documents state that the Chinese central government attempts to, first, change the structure of industry by controlling the capacities of mining and separation and encouraging the innovation of new technologies in the downstream industry; second, to protect the environment and sustainability of resources by employing higher environmental standards, establishing industrial order, and imposing more efficient resource and environmental taxes; third, to weed out backward production technology that is not qualified according to the emission standards, and to promote the technical transformation of the mining industry; fourth, to complete the laws and regulations along the supply chain for a unified, normative, and efficient RE regulation system; fifth, to accelerate the process of merging and creating an industrial structure led by dominant firms, including the goal that the industrial concentration of the largest three southern ionic clay RE firms should be 80%; sixth, to coordinate the RE industry with the local economies and the interests between different entities (central government and local government, state-owned enterprises and private firms, local government and local firms, state-owned enterprise owned by the central government and local governments); seventh, to coordinate the relevant national ministries and departments in terms of planning and policy implementation; and last, to increase the qualification requirements for RE exporting firms and crack down on illegal exports Starting from this stage, China began to employ environmental policies and industrial standards for RE production emissions.
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