Highlights

• China is aggressively positioning itself to dominate the global rare earth supply chain through integrated scientific and industrial innovation.
• The 'Two Rare Earth Bases' strategy in Baotou and Ganzhou focuses on comprehensive development from raw materials to advanced applications.
• Chinese officials are mobilizing national resources to create a vertically integrated rare earth ecosystem with strategic implications for global technology and manufacturing.

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On the two-year anniversary of President Xi Jinping’s high-profile 2023 visit to Inner Mongolia, China convened a high-level strategy summit to accelerate integration of science and industry under its “Two Rare Earth Bases” plan—Baotou (raw materials, new materials) and Ganzhou (deep processing, magnets). The message was clear (opens in a new tab): China intends not only to control global rare earth supply but also to lead in innovation, end-use dominance, and strategic resilience. Of course, this raises significant implications for Western complacency.

The "Seminar on the Integrated Development of Scientific and Industrial Innovation for the Construction of the Two Rare Earth Bases" was co-hosted by the Inner Mongolia Science and Industry Ministries, the Baotou Municipal Government, and Baogang Group—China’s key state-owned rare earth conglomerate. Senior Party and government officials delivered speeches, alongside nine distinguished academicians from the Chinese Academy of Sciences and Engineering, and leaders from top Chinese universities and rare earth companies.

The event functioned as both a celebration and a mobilization. In the words of Baotou Party Secretary Ding Xiufeng, the past two years have seen:

• China’s largest rare earth new materials base was completed in Baotou
• Significant breakthroughs in the rare earth R&D system reforms
• Strengthened supply chain security and expanded international competitiveness
• A national-level push toward becoming a “global leader in rare earth applications”

Key themes included:

• Deep integration of scientific and industrial innovation
• Expansion of the rare earth industry chain to maximize economic and strategic value
• Greater alignment with national strategic needs, including clean energy, defense, and advanced manufacturing
• Deployment of “national team” scientific resources, such as Tsinghua andthe Chinese Academy of Sciences labs, into pilot plants and tech parks

Top officials pledged intensified support across financing, infrastructure, and policy. Inner Mongolia’s Tech Minister, Zhang Wentao, committed to scaling R&D platforms and promoting scientific entrepreneurship. Industry Minister Wang Jinbao emphasized that high-end, intelligent, and green development will be the future pillars of China’s rare earth leadership.

REEx Food for Thought:

• Western industrial policies must accelerate. Piecemeal funding and isolated R&D efforts are no match for China’s vertically integrated, state-backed innovation pipeline.
• The “green, smart, high-end” upgrade narrative poses reputational risks for Western companies still reliant on Chinese supply chains.
• Expect deeper global price-setting power from China as it moves downstream into magnets, motors, and systems, reducing reliance on raw export revenues.

Bottom Line

China’s “Two Bases” strategy is no longer aspirational, we believe, despite the always omnipresent Chinese propaganda—it’s becoming operational.

Baotou is now positioning itself not just as a mining hub, but as the capital of the world’s rare earth innovation machine. Unless the U.S. and its allies coordinate more quickly, deeply, and boldly, they risk becoming permanent downstream consumers in a China-dominated value chain.