Research On International Market Forces Of China’s Rare Earth

Rare earth, a kind of industry mineral resource, which has a lot of characters and is needed by so many high-tech and is called "industry vitamins". Rare earth’s feature makes it be widely used in traditional industry, the development of emerging industry also depends on the rare earth, such as wind power, new energy vehicles, advanced medical equipment and so on. Rare earth is also widely used in a variety of high-tech weapons, also rare earth as strategic resources is in the world’s attention. At present, most developed countries have put rare earth as strategic resource which is related to development of national economy and defense.Rare earth is one of our advantage resources and the reserve is big. Our exports accounts for more than80percents in the world rare earth trade. So our country occupy monopoly status in the world rare earth market, and the monopoly status and the lack of pricing power contradict with each other, which has always been the existing problems in the development of China’s rare earths. Rare earth industry in China is in a critical period, how can convert resource advantage into economic advantage and industrial advantage, and how to take advantage of current export monopoly to enhance the market forces, improve the pricing power, promote the healthy development of rare earth, and safeguard national interests, is a key point in the research of the rare earth industry, also is the purpose of this article explores and hope to achieve.Based on the market forces of rare earth products and the present situation of world rare earth trade, this paper mainly use the Normative Analysis and the Empirical Analysis. This paper firstly reviews and analyses the domestic and foreign research literatures from three aspects, the meaning of international market forces, the measurement of market forces, the reasons and measures of China’s rare earth lacking pricing power. Then the main countries and China’s rare earth resources, the present status of production and distribution are analyzed. In recent years, the supply of the world rare earth has changed, other countries account for an increase in the rare earths supply of world and more in the supply of the light rare earths. China’s supply of rare earth resources, especially the supply of heavy rare earths is still on the important position in world rare earth trade. And then the paper analyzes the development situation of China’s rare earth trade from four aspects: export quantity, prices, flow destination, and China’s rare earth export trade policy. China rare earth trade presents obvious concentration, both on reserve, import and export. At present, as the major nation in mineral reserves and production, China plays an important role in global trade of rare earth. Through the study of international market structure found that rare earth rare earth belongs to the obvious oligopolistic type and China’s rare earth occupies the absolute market share in the international market with a strong monopolistic status.By using Goldberg&Knetter model measure export market competition degree of China’s rare earth international market forces, this paper found that the exports of China’s rare earths only has a weak market force in the main consumer market, which conflicts with China’s monopoly position. China don’t convert the resource superiority into the reality of market power. By discussing the market structure of rare earth trade, we can further understand the causes of the weak market forces in main consumer market. From three angles:buyer’s market, domestic industry and government policy this paper analyses the reasons of the lack of market forces in the exports of China. Low industry admittance limitation leads a large amount of capital flow into the domestic rare earth industry, production expanding is strict with the supply exceeding demand and the price fell sharply. High concentration on buyer’s market enhances the bargaining power; Low concentration on China’s domestic rare earth market weakens the oligopolistic status of our country. The lack of government’s export quota management and the absence of national collection and storage strategy leads to the lack of bargaining power of China’s rare earth enterprises in international market and weakens the international market power. Finally this paper puts forward the relative policy suggestions to strengthen the rare earth international market power as below:collect domestic production enterprises tax to raise the entry barriers, consolidate the rare earth industry chain to increase concentrative degree, appropriate adjustment of export control and establish rare earth strategic reserve system.