The Fatal Visible Hand in Rare Earth Industry: “State Advances, Private Retreats” Stagnate the Development of Strategic Resource Industry in China
Room 3598 (via Lifts 27-28), Academic Building, HKUST


How can state-advance-private-retreat impact the development of strategic resource? In political economy literature, the comparative advantage theory tells that states would not import and export the same good with similar amount due to the logic of cost-minimization. Nevertheless, the case of Chinese rare earth industry may rebut this conventional wisdom. Recent data suggest that China, in 2018 became the biggest exporter and importer of rare earth simultaneously. This raises a conundrum – what is the rationale for China to import rare earth while it provides 90% of the global supply? Given that the Chinese rare earth industry is controlled by state-owned enterprise (SOE), this paper aims to provide a new theoretical perspective in understanding the puzzle through the lens of state-advance-private-retreat perspective. Via field research and official data, I demonstrate that (1) the structure and phenomenon of the Chinese rare earth industry, which is contradictory to official data; (2) the advance of SOE stagnated the development of the industry, especially the high-end application; and (3) what galvanize China to export rare earth to other states, and to import rare earth back to China.


Room 3598 (via Lifts 27-28), Academic Building, HKUST
Speakers / Performers:
Mr. LUI Kwok Kin