Highlights
- China’s state-backed crackdown on Baogang Group is more about political control than anti-corruption efforts.
- Beijing seeks to dominate rare earth supply chains critical for EVs, wind turbines, and defense technologies.
- Western nations must urgently develop independent rare earth mining, refining, and strategic stockpiling capabilities.
Beijing is locking down control over Baogang Group (opens in a new tab), one of China’s primary steel and rare earth giant, under the guise of an anti-corruption crackdown. A high-level meeting, led by Party Secretaryand Chairman Meng Fanying, aligned with Xi Jinping’s latestdirectives on rooting out corruption in state-owned enterprises (SOEs). The focus? Political discipline, governance reform, and ensuring absolute CCP control over Baogang’s operations.
What’s Really Happening?
Well first of all the state-backed rare earth industry in China has been known to be somewhat of a wild west in the past. But these companies have been under state control for a handful of years now. Are they really so bad, despite this ownership?
No, Rare Earth Exchanges posits the likelihood of total Chinese Communist Party (CCP) oversight. That is, party officials are embedding deeper into corporate leadership to enforce “strict discipline” and remove any weak links. Why….Rare Earth Exchanges knows something about that answer. One definite unfolding reality is the ongoing wave of industry consolidation. Anti-corruption drives in China often pave the way for restructuring—potentially tightening state dominance over rare earth supply.
And we can only guess, but we suspect more export controls are in the works. If rare earths are a national security asset (and they are), expect Beijing to turn the screws on foreign buyers with new restrictions or price manipulations.
Why This Matters for the West
Baogang controls a massive share of the world’s neodymium and praseodymium, which is critical for EVs, wind turbines, and defense tech. This move isn’t just about cleaning up corruption—it’s about making sure Xi’s government, not the market, dictates global rare earth flows.
The West Needs to Move—Fast.
The U.S., EU, and allies must accelerate rare earth independence. Yet we are fairly certain governments from America to England and Australia don’t truly appreciate the magnitude of the situation.
Regardless, they must do the following, and in an expedited manner.
- Expanding mining & refining outside China (MP Materials, Lynas, Arafura).
- Strategic stockpiling & securing supply chains to reduce exposure.
- Ramping up domestic R&D in alternative materials and recycling.
- Consider industrial policy for rare earth elements and critical minerals
Bottom Line: China’s latest rare earth crackdown is more than likely less about corruption and more about control. The West can’t afford to wait.
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