(Original post by uxa595)
Your neg points seem a little off to me even though i think they are right :P
I would have done:
- Raises export prices, causes a rise in foreign firms' raw material costs. This leads to them becoming less competitive. Also, There is likely to be a greater supply just for China, thus, raising supply for them,lowering the price, lowering cost push inf and increasing competitiveness.
- reserves natural recourses and reduces pollution in mining them. This should benefit the environment and potentially health too of the Chinese people. China has masses of pollution and lowering this pollution due to less mining due to a quota on it's exports may result in increases the HDI and living standards of the general public more then an increase in RGDP from more exports would bring, thus making it more viable if the current aim of China is to raise living standards, which it is now worrying about...
- It should help increase China's comparative adv in production. It may lead to greater production in China. There is a possibility if firm's can't locate these materials elsewhere or the quota is not enough, all production of goods with these materials will shift to China. This will be at no cost to China if they are well within there productive potential as they can produce these extra goods without a opportunity cost. China can use this increase in revenue and investment to help improve their comparative advantage further, improve their potential growth and allow them to enter new industries, removing it's partial dependance on manufacturing and maybe move the development process of these goods to china.
- Retaliation. Maybe of these goods are going to be exported internationally and exports are a large % of china's GDP. They will get assraped economically
if other countries put up lots of protectionist measures.
- Lowers choice for Chinese consumers. bad for living standards.
- IF the goods make up a fair % of GDP, their GDP will fall a lot. Further hurt by a multi+accel effect.
- If other countries produce these goods more cheaply, you get trade diversion. Raises import prices, and if imports are price inelastic, Chinese consumption will fall. Fall in living standards. Marshal-Lerner.
- More viable if China is suffering shortages causing cost push inflation.
- More viable if it saves lots of jobs.
- Benefits outweigh the costs that come with retaliation?
- Unlikely to see sanctions n the short run , where it is more viable, but in the long run, maybe neg effects. Sanctions limit exports, and rising import prices cause fall in chinese comsumption/cost-push inf.
- If rare metals are very inelastic in demand, may be worth it more. inc price, no dec in demand.
-Tariff a better option. It will lower demand for these metals while inc govt revenue.
Size of quota? Will it really affect global prices and reduce exports? May just be there to prevent overexploitation and move from a price at which it is a private cost on china to a social cost on the world.
Went a lil overboard but ended up doing a full plan as it seemed an interesting Q. BTW, ain't read the sim pack yet so this is all based on general knowledge and may be wrong.