Reading Between the Lines: Baogang Group’s Reform Manifesto Is Less About Markets-More About State Power

Highlights

• Baogang Group’s press release exposes a state-controlled industrial strategy disguised as market innovation in rare earth and technology sectors.
• The company’s ‘transformation’ is actually a mechanism for tightening Party control over strategic industries and technological development.
• China’s rare earth industry is being strategically consolidated to enhance geopolitical leverage and national self-reliance.

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Baogang Group, one of China’s industrial giants and the parent company of China Northern Rare Earth (CNREHT), has issued a sweeping, high-gloss press release (opens in a new tab) detailing its latest transformation strategy, styled as a model for “deepened reform and innovation-led development.” At face value, the report is a celebration of Baogang’s pivot toward “new productive forces,” featuring buzzwords like green tech, hydrogen energy, and intelligent manufacturing. But a closer reading—especially through the lens of rare earth supply chain geopolitics—reveals a very different picture: not a company embracing market dynamism, but a state-owned entity tightening its grip on strategic industries under the banner of modernization.

This 5,000+ word announcement, published May 26 in Baogang Daily, outlines a centrally coordinated, Party-led transformation. It praises national science policy, Xi Jinping’s industrial directives, and the CCP’s Eight-Point Guidelines, while embedding Baogang’s performance into national goals such as resource security, Party discipline, and regional development. Every corporate “breakthrough” is framed within political loyalty, and every initiative is engineered to bolster China’s self-reliance in strategic sectors like rare earths, smart mining, green steel, and hydrogen storage.

Key Takeaways: What Baogang Is Really Saying

1. State-Driven “Innovation” Means Political Control Over Industrial Tech

Baogang claims to innovate across rare earth alloys, solid-state hydrogen systems, permanent magnets, and intelligent mining platforms. However, Rare Earth Exchanges (REEx) suggests that these advances are not market-oriented. Rather, they’re tightly woven into government funding programs, state lab projects, and Party-led R&D reforms. For example, Baogang brags about deploying 5G networks and unmanned mining systems—not as a private venture—but as part of its contribution to CCP goals like “new quality productive forces.”

This is not entrepreneurial risk-taking—it is state-directed technological nationalism.

2. Rare Earth Security Is Framed as a National Military-Industrial Imperative

The company reiterates its role in building the “two rare earth bases” (Baotou and Ganzhou) and adds that it leads the industry’s first national green demonstration project. REEx has translated the “two rare earth bases” into a program for deeper integration of rare earth processing monopolies and value-added production downstream.

CNREHT’s expanded refining capacity, near-total “on-site transformation rate” (90 %+), and control of the new Baotou Rare Earth Exchange point to the same direction: China is consolidating upstream and downstream control to weaponize rare earths in the geopolitical economy.

This consolidation matters. It reinforces China’s ability to restrict exports during global tensions and strengthens its pricing and bargaining power, especially in the context of the ongoing U.S.-China trade war.

3. Financialization and Platform Control Are Expanding Under State Logic

Baogang boasts of building a digital “capital management platform” that controls liquidity, monitors fund usage, and ties financial operations to Party priorities. Its new “supply chain finance” program, presented as fintech innovation, is actually a vertically integrated tool for controlling SME participants, directing capital toward politically favored segments, and consolidating economic power under SOE leadership.

Western firms dependent on Chinese material inputs should be cautious: this is not simply financial modernization. It’s capital discipline as a form of industrial command.

4. Party Oversight Has Intensified, Not Diminished

While the press release includes language about “market-based reforms,” it simultaneously outlines the construction of a “smart Party-building cockpit,” the expansion of “strong fortress party branches,” and ideological purification campaigns across Baogang subsidiaries. From recruiting talent to deploying AI and evaluating performance, Party control permeates every level of management and production. Governance reform is framed not in terms of shareholder value or efficiency, but in the CCP’s own language: “Four Pillars, Eight Beams,” “Two Consistencies,” and “Red Engine” loyalty metrics.

In short, the SOE remains a political instrument—not a privatizing enterprise.

5. The Push for “World-Class” Status Is a Domestic Political Performance

The press release repeatedly refers to building a “world-class enterprise.” But this is not a call to join competitive global markets. It’s a mandate to align with domestic political standards of control, loyalty, and industrial self-reliance. When Baogang says it wants to be “first-class,” it means first in China’s command economy—not first in international innovation, efficiency, or transparency.

The same applies to the company’s “performance metrics”: they are linked more to administrative obedience and national benchmarking than to external competitiveness or shareholder accountability.

Critical Implications for the West

This Baogang report is not just a corporate update. It’s a geopolitical blueprint. It suggests that one of China’s largest rare earth producers and steel conglomerates is working to embed even deeper into the political architecture of the Party State, becoming a testbed for what could be classified as a techno-industrial autarky.

The risk isn’t just price volatility for Western governments and manufacturers relying on Chinese rare earths, magnets, and green steel. It’s systemic dependency on a vertically integrated, politically guided industrial machine without separating corporate strategy and national security.

While the U.S. under President Donald Trump ramps up Section 232 actions and allies scramble for supply diversification, Baogang’s evolution should raise a red flag. This isn’t market reform. It’s reform with Chinese characteristics, where capital, talent, and resources are fully subordinated to geopolitical goals.

Rare Earth Exchanges (REEx) provides independent, critical coverage of the global rare earth and critical minerals sector—from mine to policy, market to strategy—informing retail investors injecting capital into the nascent “ex-China” market.