China’s rare-earth success offers lessons in economic security

China’s Baotou Rare Earth Industrial Development Zone in the Inner Mongolia Autonomous Region is the country’s only national-level development zone dedicated specifically to the rare-earths industry. | REUTERS

By Naoise McDonagh
Contributing writer

Oct 29, 2026

China’s rare-earth dominance reveals the strengths and vulnerabilities of its distinctive political economy — and offers lessons for competitors such as Japan.

In 2024, China mined 60% of global rare earths but produced 91% of refined oxides and 94% of sintered permanent rare-earth magnets. This dominance reflects more than geological luck, cheap labor and state subsidies, although each played a role.

China captured the rare-earth magnet supply chain through an evolving industrial policy that melded communist economic planning with capitalist market dynamics. The state set strategic direction and controlled critical gateways, while firms absorbed technology, cut costs and scaled production. This produced the world’s most complete and lowest-cost mine-to-magnet innovation ecosystem — and a formidable source of geoeconomic leverage.

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