To standardize the development of rare earths and consolidate international pricing power

China's rare earths policy has again stirred the spotlight of public opinion at home and abroad.　　December 28, the Ministry of Commerce announced that the 2011 first batch of rare earths export quotas to 14446 tons, so that China's rare earth exports fell by about 11.4% Year-on-year.　　The current irreplaceable nature of rare earths in the fields of high technology and clean energy, as well as China's rare earth metals production and international trade volume occupy 97% of the global rare earth market, so any change in China's Rare-earth policy will become a highly focused international event. We believe that there is no fundamental conflict of interest between China and the US, Japan and Europe on the issue of rare earths, the difference between the two sides is based on their own interests and value judgments, the most prominent differences between the two sides focused on the U.S., Japan and Europe worry about China's export of rare earths quota policy, will affect its Rare-earth imports and international rare earths market order, etc.　　And China believes that the export quotas are aimed at curbing domestic environmental pollution and the indiscriminate deforestation of the rare-earth industry. The export quota policy has limited effect on curbing the pollution and disorderly production of rare earth, and its negative effect is obvious. The export quota policy of rare earths is easy to cut off the domestic rare earth market and the international rare earth market, artificially manufacture the price difference arbitrage space of the Rare-earth market at home and abroad, which is unfavorable to the effective development of the rare earth industry in China. such as the Rare-earth export quota policy, will make the export of Rare-earth production in the domestic digestion, leading to domestic prices down, the international rare earths market rare earths prices will rise. The lure of price differentials at home and abroad is likely to exacerbate problems such as the smuggling of rare earths, quota speculation and the export of rare earths.　　This has not only increased the cost of regulators to clean up the Rare-earth industry, but also artificially distorted market price signals and led to resource mismatches. At the same time, the export quota policy of rare earths can easily lead to the retreat of the country, thus exacerbating the monopoly pattern of SOEs in the Rare-earth market. Since the second half of this year to reduce the export quotas for rare earths, the domestic rare earth industry has Guining the situation. Therefore, once the Rare-earth export policy disguised as a prelude to the return of the country, then the domestic rare earth market will be completely competitive market structure to the market pattern of oligopoly under the role of the market.　　But once the rare earths state-owned enterprise monopoly market pattern formation, will not be advantageous to the rare earth as the raw material related industry development and the rare earth industry real market. It is unrealistic to increase China's international pricing power for rare earths by using rare earth export quota control and China's 97% absolute advantage in the international rare earth market, and it is very easy to have the effect of not being effective. China's current 30% share of global Rare-earth reserves accounts for 97% of the international market output and trade, and failed to obtain international pricing power in the Rare-earth area, rooted in China's systematic drive down the cost of rare earths: low factor Resource price, cheap labor cost, and the long absence of resource tax,　　These factors led to a significant lower cost of rare-earth mining for domestic companies than international rivals. The international pricing power of rare earths is essentially the pricing power of the Rare-earth market, which will become a market for rare earths, and does not depend on the supply advantages of a country to rare earths or the absoluteDemand advantage, but depends on which market provides efficient rare earth Resource Price discovery mechanism, hedging mechanism and low market transaction cost for both sides of the transaction. On the contrary, the imposition of rare-earth export quotas will not only bring China sustained international bargaining advantage, but also reduce China's voice in the international rare earths market.　　Consider the lessons of the Gulf state embargo on oil, which in the short term led to a spike in rare-earth prices, but in the medium to long term the rise of non-Gulf oil forces has weakened the international control of the Gulf states. In our view, if China can turn to the introduction of rare earth resources tax, the imposition of environmental taxes on Rare-earth development enterprises, strict requirements for Rare-earth enterprises to increase environmental protection equipment investment to raise the cost of Rare-earth investments, and the imposition of stringent access threshold for rare earths (such as the technology and management standards for enterprises to be allowed to In addition, we can increase the export tax of rare earths appropriately. So can also play a standard domestic rare earth industry, improve the export bargaining power of rare earths, reduce the pollution of rare-earth mining and so on. Moreover, compared with the export control policy, China can build the international rare earth Futures market and use China's absolute advantage in international rare earths production and trade to demand international buyers to trade in China's rare earth futures and spot markets, thus amassing China's pricing advantage in the international rare earths market.