Highlights
- Chinese politician Sun Shaocheng conducted strategic research on rare earth element enterprises, emphasizing reform and development of state-owned companies.
- The Third Plenary Session of the 20th Central Committee outlined key economic reforms targeting innovation, national security, and modernization by 2029.
- China’s rare earth sector is undergoing significant transformation, focusing on improving efficiency, technological innovation, and aligning with national economic strategies.
Sun Shaocheng (opens in a new tab) is a Chinese politician currently serving as party secretary of Inner Mongolia. On November 5 of this year, Shaocheng, the Secretary of the Party Committee of the Autonomous Region, went to Baotou Steel Group (opens in a new tab) to conduct research on the reform and development of state-owned enterprises involved with rare earth elements (REE).
According to a media entry of Chinese Northern Rare Earth (Group) High-Tech Co., Ltd (opens in a new tab). Sun Shaocheng made the trek, successfully, to the National Rare Earth Functional Materials Innovation Center, the Northern Rare Earth Green Smelting Upgrading Project Site, and the Technology Center of Baotou Steel United Co., Ltd. to gain an in-depth understanding of the company’s production and operation status and product development and application.
The inner-Mongolian Party leader said that it is necessary to thoroughly study and implement the spirit of General Secretary Xi Jinping’s important directives and orders, anchor the construction of “two rare earth bases”, strengthen rare earth application research, strengthen high-end terminal applications, reduce product costs, and allow more scientific research results to move from the laboratory to the big market.
Clearly the Chinese rare earth enterprise is yet again on the move!
According to the recent press release during this series of meetings, Sun Shaocheng presided over a symposium, listened to relevant work reports from Baotou Steel Group, the Autonomous Region State-owned Assets Supervision and Administration Commission and Baotou City, and worked with relevant parties to study and solve difficulties and problems in the reform and development of state-owned enterprises.
He said that state-owned enterprises in the region must follow the major deployment of deepening the reform of state-owned assets and state-owned enterprises at the Third Plenary Session of the 20th Central Committee of the Communist Party of China (opens in a new tab), based on development needs, dare to think and do, and be determined to reform, so as to achieve an overall “breakthrough” as soon as possible.
Summary of Third Plenary Session of the 20th Central Committee of the Communist Party of China
At the Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC), the leadership, including Xi Jinping, emphasized a range of priorities reflecting China’s long-term development and reform strategies. Central themes included deepening reforms, addressing economic challenges, and ensuring national security.
Rare Earth Exchanges summarizes via translation the following targets:
| Targets | Summary |
|---|---|
| Economic Reform and Development | The session focused on building a high-standard socialist market economy, emphasizing fair and efficient resource allocation. It advocated for deepening supply-side structural reforms to promote high-quality development and create new economic drivers. The leadership emphasized enhancing the integration of the digital and real economies, improving urban-rural development, and modernizing infrastructure to increase resilience and security across industrial and supply chains. |
| Innovation and Talent | The CPC committed to comprehensive reforms in science, technology, education, and talent development. This aims to support China’s transition to high-quality growth through cutting-edge innovation and strengthened institutions. |
| Macroeconomic Governance | Reforms in fiscal, tax, and financial systems were highlighted to ensure consistency in macroeconomic policies and foster a stable economic environment. Efforts were also directed toward addressing vulnerabilities in real estate, local government debt, and small financial institutions. |
| National Security and Governance | National security was a major priority, with calls to safeguard stability and economic development while integrating security into broader governance frameworks. |
| Reform Timelines | A notable announcement was the target to complete key reform tasks by 2029, aligning with the 80th anniversary of the People’s Republic of China. This timeline aims to accelerate the implementation of reforms that were laid out in earlier strategic plans, ensuring tangible progress toward modernization goals. |
| Foreign Policy and Opening Up | The session reaffirmed China’s commitment to opening up markets, international cooperation under initiatives like the Belt and Road, while balancing openness with national security considerations. But China’s doing it based on CCP precepts, not distributed, decentralized market forces. |
The session reflected the CPC’s determination to achieve comprehensive modernization by 2035 and sustain long-term economic and political stability. It also acknowledged challenges in areas like underconsumption (a classical conundrum that can surface in capitalist economies!) and urban-rural disparities, emphasizing the need for practical solutions in these areas.
Rare Earth Exchanges notes contacts in China report mounting economic uneasiness, a growing wealth gap between those with means and those not, which can overlay with urban and rural dynamics. Reports are that the change in political environment also has led individuals and groups with capital to seek escape valves as well, where and when possible. The opportunity for returns for the middle class are all but nonexistent at this point.
So back to the visit of Sun Shaocheng to the rare earth elements complex in China’s rural west.
State-owned enterprises must pay attention to efficiency, and the way to improve efficiency lies in reform, meaning in this case, change and transformation. This is how China’s top-down leadership must embrace and somehow change to keep the country’s apparatus up with unfolding market dynamics, for example.
Calling for a deepening of reform of state-owned enterprises with efficiency as the center, the continued push to insist on seeking efficiency from the main business, innovation, and management, points to a growing productivity crisis.
Read between the lines and forthcoming crises are imminent, if not already unfolding. How will incoming President Trump’s policy exacerbate such crises?
Also, in this recent communication it’s clear that mounting challenges must be corrected, with transcendental outcomes.
Citing that the process of reform exists to “correct mistakes” as well as “strengthen management, plug loopholes, improve ideas and promote development through correcting mistakes” it’s clear that numerous issues mount in the vertically integrated, increasingly inflexible rare earth element consolidation.
The Chinese seek to reinforce their dominant position via change by updating systems, processes, talents, and even strategies, given the tendency for stagnation in such a top-down milieu.
Calling for modernization, the combination of digital and physical, and the embrace of modern market entities, Rare Earth Exchanges suggests the writing is on the wall for a series of substantive shake ups across the integrated consolidators that are China’s rare earth monopolies.
Interestingly in the Rare Earth Exchanges translation and interpretation we believe the Communist Party’s grip on control on the one hand helps the groups make decisions faster, yet on the other hand potentially led to decisions more decisively removed from market realities.
For example, in the recent media release the giant Chinese consolidator informs of the need for yes, unification of party leadership combined with corporate governance, importantly to align with a more scientifically grounded basis, clearly a signal they have deviated from some key scientific tenets.
On the other hand, the call for clear subordination to the party resonates as the company declares it must “promote the comprehensive and in-depth development of strict party and enterprise governance.”
The contradictions unfolding and interplaying could not be more fascinating.
A little bit on the Regulator
The State-owned Assets Supervision and Administration Commission of the autonomous region should proactively coordinate and solve problems for state-owned enterprises. All regions, departments, and enterprises must be focused, concentrated, and work hard for two months to achieve the annual economic and social development goals.
Generally, the State-owned Assets Supervision and Administration Commission (SASAC) of an autonomous region in China operates as a regional counterpart to the central SASAC, which oversees state-owned enterprises (SOEs). The SASAC at this level manages, supervises, and reforms regional SOEs to align with both national and local strategic objectives.
What are their key roles and responsibilities?
SASAC manages the assets of SOEs in the autonomous region, ensuring efficient operation, compliance with laws, and adherence to government priorities. It evaluates the performance of these enterprises and appoints or removes key executives.
When there are calls for reform or restructuring the SASAC oversees the reform and restructuring of SOEs to improve efficiency and align them with market-oriented practices.
SASAC often directs SOEs to consolidate or collaborate in sectors deemed critical to regional or national strategies.
Also, SASAC can implement state policies on industries like energy, mining, transportation, and telecommunications, which often feature significant SOE involvement. Or in this case of course, REE.
The regulator ensures that regional enterprises contribute to broader goals, such as economic modernization, technological self-reliance, and sustainable development. As well, the commission ensures that regional SOEs align with national priorities, such as the “Belt and Road Initiative” or policies for high-quality development.
Importance in Autonomous Regions
In autonomous regions like Inner Mongolia or Xinjiang, SASAC plays a significant role in industries tied to natural resources, such as rare earth mining, energy, and agriculture. For instance, in Inner Mongolia, the SASAC supervises companies involved in the rare earth sector, ensuring compliance with central government production quotas and environmental regulations.
In Xinjiang, it oversees enterprises involved in resource extraction, infrastructure, and transportation to foster development and maintain regional stability.
The regional SASAC operates under dual guidance from both the local government and the central SASAC, reflecting a balance between regional autonomy and national oversight. For more tailored insights, examining specific SASACs, such as in Inner Mongolia, can highlight its role in industries like rare earth production.
Players involved in this report include Ding Xiufeng (opens in a new tab), elected to the Central Committee as an alternate member at the 18th Party Congress in November 2012. Ding became the director of the CCP General Secretary’s office in May 2013, responsible for aiding CCP General Secretary Xi Jinping. In 2016, Ding became a deputy director of the CCP General Office.
Also involved was Meng Fanying, director and deputy secretary of the party committee of Baotou Steel (Group), as well as Li Xiao (opens in a new tab), former President of the company as well as others.
Daniel
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