# The impact of China’s clean energy market on the market connectivity of rare earth industrial chain

## TL;DR

This paper explores how China's clean energy market affects the rare earth industrial chain's stability and connectivity.

## Contribution

The study introduces a novel approach to analyzing market connectivity using advanced econometric models.

## Key findings

- Short-term clean energy market shocks significantly enhance rare earth industry chain connectivity.
- Long-term market stabilization weakens the interactions between clean energy and rare earth markets.
- The photovoltaic sector has a particularly strong influence on rare earth market connectivity.

## Abstract

The accelerating global transition to clean energy underscores the critical role of rare earth elements in renewable technologies. As the world’s largest producer of clean energy and rare earth minerals, China’s market dynamics are pivotal to the stability and connectivity of the rare earth industrial chain. This study investigates the interplay between China’s clean energy market and the connectivity of its rare earth industry chain using a Time-Varying Parameter Vector Autoregression model, as well as Autoregressive Distributed Lag and Nonlinear Autoregressive Distributed Lag models. The results reveal significant short-term spillover effects from clean energy market shocks, which enhance connectivity within the rare earth industry chain, while long-term impacts weaken these interactions as markets stabilize. Asymmetric effects are pronounced, with the photovoltaic sector exerting a particularly significant influence on rare earth market connectivity. These findings highlight the dynamic and nonlinear linkages between clean energy and rare earth markets, providing valuable insights for policymakers and investors to ensure industrial chain resilience and support sustainable development.