Trading Risk Spillover Mechanism of Rare Earth in China: New Perspective Based on Time-Varying Connectedness Approach

Our research contributes a new point of view on China’s rare earth dynamic risk spillover measurement; this was performed by combining complex network and multivariate nonlinear Granger causality to construct the time-varying connectedness analyze formation mechanism using impulse response. First, our empirical found that for characteristics market, due instability, uncertainty, geopolitical decisions, disruption can be captured well TVP-VAR-SV model. Second, except praseodymium, oxides are all takers more affected impact other assets, which means composite index catalysts main sources spillovers in trading system. Third, from perspective macroeconomic variables, there significant impacts total they exhibit asymmetric shock characteristics. These findings indicate overall linkage contagion market is strong. Strengthening interconnections among assets important practical significance. Empirical results also provide policy recommendations establishing protection measures under macro-prudential supervision. Especially investors regulators, mitigation. When systemic occur, allocation oxide hedge part risk.