Has pollution discharge fee influenced China's rare earth exports?——evidence from micro-enterprises

The extraction and export of rare earth, China's strategic mineral resources, has brought serious environmental pollution. In this paper, rare earth enterprises' pollution discharge fee, as an index of environmental regulations, was introduced into the trade model of heterogeneous enterprises. By analyzing the connection between the data of enterprises' pollution discharge fee and the trade data from the Customs, the effect of pollution discharge fees paid by enterprises on export was studied. The research found that there was a negative correlation between enterprises' total volume of export and their pollution discharge fees. And there was no "a race to the bottom line" in China. The study also noticed that the regulations on the administration of collection and use of pollution discharge fees was effective, and that the total volume of enterprises' exports first increased and then decreased, with the increase of unit output and pollution discharge fees. The product quality was negatively correlated with the pollution discharge fees. And there existed a U-shaped relationship between the unit output and pollution discharge fees, and the product quality. The product quality decreased as unit output and pollution discharge fees rose. But it didn't reach the inflection point. This, to some extent, supported the porter hypothesis. Although the increase of productivity would lower the volume of export, it improved the quality of exported rare earth products. In general, environmental regulations help reduce pollution emitted by China's rare earth companies and improve the quality of rare earth products.