According to Xinhua News Agency, China recently issued the "Regulations on the Management of Rare Earths", which will be implemented on October 1, 2024. There are 32 articles involved, which clearly point out that rare earth resources belong to the state, and no organization or individual shall encroach on and destroy rare earths. The Regulations clarify the responsibilities of relevant departments and local governments, and also announce regulatory measures and the consequences of violations. For those who illegally mine rare earths, they will be fined between 5 and 10 times, and in serious cases, they may be ordered to stop production. The relevant personnel will be punished in accordance with the law. China accounts for more than 7% of the world's rare earth production, rare earth as an indispensable "vitamin" of the contemporary industrial system, China's monopoly position in the rare earth industry from reserves, output to primary and deep processing, giving China the tools to implement effective countermeasures against relevant foreign parties. In 2021, after the integration of a number of rare earth manufacturers, China Rare Earth Group was established.
As a strategic resource that profoundly affects industrial construction, the "Regulations" issued this time clearly stipulate the state-owned nature of rare earths. We are committed to putting an end to the indiscriminate mining of rare earths and illegal export routes, clarifying the responsibilities of relevant departments and local governments at or above the county level, and imposing high fines of 5-10 times the income from illegal mining. It has laid the foundation for China to make better use of rare earth brands for foreign countermeasures.
The "Regulations" also point out that for other rare metals other than rare earths, their mining, supervision and punishment shall be carried out in accordance with the relevant regulations on rare earths. After the promulgation of the "Regulations", the relevant persons in charge of the Ministry of Justice and the Ministry of Industry and Information Technology responded to the issues of general concern to public opinion. During the period, it was pointed out that the "Regulations" were issued in the past when the measures for illegal mining, smelting, trading and disposal were insufficient. In order to better protect China's rare earth resources and promote the development of rare earth industry. In view of the current situation of over-exploitation of rare earths, the "Regulations" determine the follow-up dynamic regulation of the total amount of rare earth industry.
This means that similar to the adjustment of oil production by major oil-producing countries according to the situation, China's rare earths, which are also non-renewable and strategic basic resources, have also entered the stage of total regulation and control. This is critical for China to maintain its pricing power over rare earths. The Regulations promote the establishment of a traceability system for rare earth products, clarify the flow of products, and strengthen the effectiveness of China's established export controls. In the follow-up, the relevant Chinese departments represented by the Ministry of Industry and Information Technology will increase the publicity and interpretation of the "Regulations", promote the implementation of the "Regulations" in specific law enforcement, and promote the upgrading of China's rare earth industry.
At present, the Sino-US trade war and technology war continue, and the United States has imposed restrictions on its chip technology and products, and has repeatedly increased its control efforts. In the first debate of the recent U.S. election, Biden and Trump faced off on domestic affairs such as immigration, abortion, and medical care, and the two remained consistent and competed to see who was tougher on tariffs on China. In the case of the United States increasing chip restrictions on China, the promulgation of the "Regulations" further improves China's countermeasure system.
China has a monopoly position in key raw materials such as gallium, germanium, graphite, and rare earths. If the U.S. side still does not relent, China has sufficient tools to carry out counterattacks against the U.S. side. At the same time as further control and governance of the rare earth industry, new minerals were discovered in the Baiyun Obo deposit in Inner Mongolia. The two new minerals are niobium and scandium, which are of great significance in the field of national defense and military industry. Baiyun Obo Mine, located in Baotou City, is the world's largest mineable rare earth mine. Since 1959, 18 minerals have been discovered in the deposit, and niobium and scandium have recently been discovered, bringing the total number of rare minerals in the deposit to 20.
Bloomberg published a commentary article on June 25 saying that the United States' restrictions on China may have the opposite effect, which may reverse China's innovation capabilities. According to data from relevant think tanks, the proportion of China's top researchers in the world has increased from 29% five years ago to 47% in 2022. In the United States, the proportion fell from 20% to 18%. In the confrontation between China and the United States in the industrial chain, the balance is increasingly tilting in favor of China.