Abstract
China’s rare earth export trade has developed so rapidly since 1990s that China has gradually occupied a leading position in the international market. However, this fast development was proceeding at the cost of the rare earth energy consumption and environmental devastation. Now China begins to attach great importance to environmental protection, which attracts many researchers. This study aims to analyze the influence of environmental regulation on China’s rare earth export trade. And the original study is amongst the few to examine the relationship between environmental regulation and China’s rare earth export with the product-level data. Different from previous studies, this paper selects China’s rare earth export data from 1995 to 2015 and introduces product heterogeneity based on the rare earth production process. Moreover, this study uses the entropy weight method to measure the intensity of environmental regulation. The core conclusions are as follows: (1) Environmental regulation significantly promotes rather than restrains China’s rare earth export. (2) According to the rare earth production process, this paper divides rare earth products into 3 kinds, that is, rare earth raw materials, rare earth useful components and rare earth end-use applications. Then, it is found that rare earth useful component export in processing and smelting is positively affected by environmental regulation. Rare earth raw materials and end-use applications in China’s export are hardly affected. (3) Technological innovation has a mediating effect on the impact mechanism of environmental regulation on China’s rare earth export, which means that environmental regulation significantly promotes technological innovation of enterprises, and thereby the rare earth export is increased. The findings are helpful for policymakers to resolve the issue of environmental devastation.
Highlights
Rare earth (RE) is widely used in modern industry such as new energy, new materials, energy conservation, aeronautics and astronautics, and electronic information on account of its special physical properties [1]
In the analysis of product heterogeneity, RE products are divided into RE raw materials, RE useful components and RE end-use applications [48]
Following Van Beers and Van den Bergh [18], Cantore and Cheng [21] and Abbasi et al [56], there are seven control variables being added into the econometric model in this paper: gross domestic product (GDP) (GDPit and GDPjt), the geographic distance (Disij), absolute value of the difference in per capita GDP, economic freedom index (IEFjt), dummy variable stating whether the trade partner has a RE dispute with China (TFijt) and total factor productivity (TFPjt)
Summary
Rare earth (RE) is widely used in modern industry such as new energy, new materials, energy conservation, aeronautics and astronautics, and electronic information on account of its special physical properties [1]. RE is listed as a kind of critical materials by U.S Department of Energy [2]. Chinese RE industry has grown quickly since 1990s and Chinese RE mining and refining technology has been upgraded all the time. In 2000, China became the largest RE producer and exporter in the world.
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