Research On Policies Of China’s Rare Earth Export Policies Based On Game Theory

China’s rare earths (REs) have the comparative advantage of mineral resources.However, China’s RE industry and its policies have been still immature and deficientuntil now, which accelerates the exhaustion of RE resources and even threatens thedominant position of China’s RE resources.This paper plays the benefits game between China and its RE export tradepartners using a dynamic game model of incomplete information, based on thetheoretical frame of China’s RE export trade policies including international tradetheory, industry security theory, sustainable development theory as well as gametheory. After a series of gaming activities between Sino-US, China and Japan as wellas China and EU, an allocation scheme for China to export REs to those countries isdesigned. The study results of this paper provide the theoretical guidance anddecision-making reference for promoting China’s RE industry security and REsustainable development. Then the innovative study achievements are acquired asfollows.(1) Building the theoretical frame of China’s RE export trade policies. Thetheoretical frame of China’s RE export trade policies is built in this paper afteranalyzing the relationships between the theories (i.e. international trade theory,industry security theory, sustainable development theory as well as game theory) andChina’s RE export trade policies, which provides a theoretical basis for China’s REexport game study and policy-making.(2) Building China’s RE export trade game model. Based on the analysis of thecurrent RE supply-demand situations in China and the world and China’s RE industrypolicies, in view of the influences from supply-demand relationship, internationalrelationship between China and trade partners, partners’ international status and WTOrules, three game matrixes of RE trade between Sino-US, China and EU as well asChina and Japan are built with the set RE export shares which successive are4:5:1or3:6:1. Furthermore, using Bargain Model and Alternating Offers Model of gametheory, a game-playing is conducted to analyze the economic benefits of each country in China’s RE trade. According to the results of game-playing, an allocation schemefor China to export REs to to those partners (US, Japan and EU) is designed, whichprovides the reference for designing China’s RE export policies.(3) Designing China’s RE export trade policies. With the game-playing, anallocation scheme for China to export REs to those countries (US, Japan and EU) isgotten that the radio for China to export RE to US, EU and Japan successively are40.2%,38.9%and6%. The radio to export RE to other countries is15%. And everyyear, China’s exports to internal consumptions ratio is4to6. Based on this scheme,China’s RE export trade policies are designed, which promotes the current exportpolicies’ improvement.