China's current dominance in rare earth metals—a group of 17 minerals critical for electronics, defence systems, and green energy—was no accident. While many world leaders only recently began focusing on these strategic materials, Beijing has been developing its rare earth strategy for nearly half a century. The foundations of China’s monopoly were laid in the 1970s and 1980s through a series of calculated industrial decisions, scientific investments, and environmental trade-offs, the New York Times reported.
From Mao’s steel dreams to Fang Yi’s rare earth pivot
During Mao Zedong’s rule, the Chinese government prioritized volume over quality in steel production. The result was a glut of low-grade iron and steel that often failed to meet industrial demands. By contrast, in the West, metallurgists had already discovered by the late 1940s that adding rare earth elements like cerium to molten metal could significantly improve the quality of ductile iron—used in everything from pipelines to car components.
When Deng Xiaoping took over as China’s paramount leader in 1978, he moved quickly to modernize the country's backward industrial systems. He appointed Fang Yi, a veteran technocrat, to lead the State Science and Technology Commission. Fang promptly visited Baotou in Inner Mongolia, home to China’s largest iron ore mine, and made a pivotal decision: to start extracting the rare earths laced within the region’s iron ore deposits.
Tapping into a mineral treasure in Baotou
Baotou’s ore not only contained light rare earths like cerium and lanthanum—used in refining oil and improving iron—but also medium-weight elements like samarium, a key ingredient in high-temperature magnets used in jet engines and military missiles. Fang’s decision signalled a turning point, as China began investing not just in steel but in the exotic metals that could power future technologies.
At a time when Sino-U.S. relations were warming, Fang took senior engineers to visit America’s top aerospace plants, including Lockheed Martin and McDonnell Douglas. China quickly understood that rare earths weren’t just industrial curiosities—they were essential to national security and technological leadership.
Inventing cheaper, faster ways to refine rare earths
Extracting rare earths from ore is technically difficult. In the West, separation methods relied on expensive stainless steel equipment and high-grade nitric acid, making the process economically unviable under tightening environmental rules.
China’s state research institutes were tasked with solving that problem. Engineers discovered that plastic tanks and cheap hydrochloric acid could do the job. It was a breakthrough. The new process slashed production costs. Combined with lax environmental enforcement, this gave Chinese refiners a steep advantage.
By the 1990s, as Western plants shut down under pressure from environmental laws and rising costs, Chinese refineries thrived. State investment surged further when geologists confirmed that China holds nearly half of the world’s rare earth reserves, including heavy rare earths like dysprosium and terbium in the south-central province of Jiangxi. These elements are crucial for electric vehicle motors, wind turbines, and medical imaging.
Deng’s vision, Wen Jiabao’s execution
In 1992, Deng famously remarked, “The Middle East has oil. China has rare earths.” By then, he and Fang had already groomed the next steward of the country’s rare earth strategy: Wen Jiabao, a trained geologist with a master’s degree in rare earth sciences.
Wen rose to become vice premier in 1998 and served as premier from 2003 to 2013. During that time, he played a direct role in shaping and protecting China’s rare earth sector. In 2010, amid global tensions over Chinese export restrictions, Wen declared that little happened in China’s rare earth policy without his personal involvement.
A monopoly decades in the making
Today, China controls the vast majority of global rare earth processing. Its dominance stretches from the mines of Baotou and Jiangxi to the global supply chains of electric vehicles, smartphones, and military hardware. This dominance wasn’t built overnight. It was the result of decades of state planning, scientific innovation, and industrial strategy—quietly unfolding while much of the world looked the other way.
Now, as geopolitical tensions rise and the West scrambles to build alternative rare earth supply chains, it’s clear that China’s early bets on these obscure minerals have paid off.
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