Rare Earth Export Restrictions in China: a difference-in-differences analysis:(Master Thesis)

Abstract

This thesis has empirically researched what the effect was of China’s export restrictions, regarding rare earth elements, on China’s domestic refining and downstream production of rare earth elements. This was done by using the difference-in-differences technique, using six different models frequently used in gravity model estimations; OLS, Poisson, negative binomial, zero-inflated Poisson, zero-inflated negative binomial and Poisson pseudo-maximum likelihood. The data that is used are Chinese export values to 85 countries divided into roughly 5,000 commodity classes. This research indicates that there is evidence that the export restrictions on rare earths in China resulted in 13.8% to 15.8% more exports of rare earths-using commodities. This would mean that as long as domestic consumption of these commodities remained constant or is increased, the downstream production of rare earths-using commodities also increased with at least these percentages