Rare earth sector reflects broader modernization strategy

Rare earth elements come up for discussion a lot these days, because of the strategic competition around them. The new energy order shaped by electric vehicles, battery technologies, wind turbines, and semiconductors makes many ask: who play key roles in critical minerals? While this approach is important, the real issue is not about who owns the resources, but about how those resources are transformed into a development model. After all, possessing resources is not the same thing as managing development. The more important thing to ask is: how can resource advantage be transformed into sustainable modernization?

That is why the Inner Mongolia autonomous region is not merely a place of geopolitical interest; it is a central part of any discussion on rare earths' economic transformation.

This question is important not only for China, but also for many developing countries. The story of development reminds us how natural resources alone do not create wealth. In fact, in many cases, quite the opposite happens — resource abundance can become a development trap when institutional capacity and industrial strategy are missing. Take Africa or Latin America as examples. There is no dearth of resources there, but transforming them into long-term industrial strength requires state capacity.

This is precisely why Inner Mongolia is not simply a mining region, but one of the most important laboratories of Chinese modernization.

The scale of Inner Mongolia's resource endowment helps explain why the region occupies such a prominent place in this discussion. China is the world's largest holder of rare earth reserves and the largest producer of rare earth elements. Baotou, in the Inner Mongolia autonomous region, accounts for 83.7 percent of China's rare earth reserves and 37.8 percent of the global output. The Bayan Obo mine in Baotou is the world's largest rare earth deposit.

Home to some of the world's largest rare earth reserves, the region is often described only as a center of critical minerals. Yet the essence of the issue is not merely what lies beneath the ground. The real question is how these resources are transformed into an economic structure, industrial capacity, and a model of sustainable development.

It is no longer sufficient to explain Chinese modernization solely through rapid growth figures. In recent years, the concept of "high-quality development" has become more prominent. This model requires production capacity, technological upgrading, energy transition, ecological security and regional balance to be considered together. Inner Mongolia represents one of the clearest examples of this approach.

Here, rare earth elements are not simply raw materials for export. The real strategy lies in combining refining capacity, advanced manufacturing, industrial clustering, and a modern energy economy. Many countries possess reserves, but true power lies not in extracting minerals, but in placing them at the center of global production chains. Inner Mongolia is not merely a place where rare earth elements are extracted; it is also a center where these resources meet technology, production, and strategic capacity. In other words, the issue is not simply resource ownership, but resource management.

This industrial transformation takes place upon an exceptional resource base. Bayan Obo is estimated to contain more than 41 percent of the world's identified rare earth resources. It also has the world's largest fluorite reserves and the world's second-largest reserves of niobium and thorium, highlighting its significance as a strategic mineral base that extends well beyond rare earths. Yet Inner Mongolia's importance today lies not only in its geological wealth. Increasingly, it has extended the value chain through rare earth separation, functional materials, permanent magnets and advanced manufacturing, demonstrating how natural resource advantages can be transformed into technological and industrial competitiveness.

Today, Inner Mongolia is also home to some of China's largest wind and solar energy clusters. This shows us that the issue is not only mining, but the integration of resources and energy transition within the same development strategy. For this reason, the rising importance of Inner Mongolia is being closely watched not only in terms of China's domestic development strategy, but also in the global economy. The model being built there shapes not only the economic value of critical minerals, but also the future of production chains and industrial competition.

This is why, in Europe and the United States, the issue is often framed as a debate about "dependence on China". The argument there is that while moving away from fossil fuels, they are becoming increasingly dependent on China for critical minerals. However, this is an incomplete reading. China's central role in this field is not the result of sudden geopolitical opportunism, but of long-term industrial planning.

Much of the discomfort the West feels today stems less from China's rise than from its own industrial neglect. Their outsourcing of production capacity, the transfer of environmental costs to other regions, and the abandonment of strategic sectors for pure market logic created today's vulnerabilities. Now, the same actors are returning to industrial policy under the language of "strategic autonomy".

The European Union's critical raw materials policies, the US' clean energy incentives, and supply chain security measures are not merely environmental policies. They are also delayed industrial policies. Governments speak publicly about sustainability, but within their own strategic planning they are asking a much more fundamental question: who will control the production chains of the future?

This is where the importance of Inner Mongolia becomes even clearer. The region is not only a center of the energy economy, but also one of the core zones of China's northern ecological security barrier. Combating desertification, water management, carbon targets, and renewable energy investments cannot be separated from economic growth. The new phase of Chinese modernization is no longer driven by a simple "growth first" logic, but by an understanding of coordinated modernization.

Likewise, Inner Mongolia is also a critical gateway in China's strategy of opening up to the north. Connecting China with Russia, Mongolia, and Central Asia, the region is not only part of local development, but also an important component of regional integration. For this reason, the model being built there is not merely a regional development project, but an essential link in China's broader modernization strategy.

Perhaps the most important lesson here is this: what is truly rare is not rare earth elements, but sustainable modernization itself.

Many countries possess natural resources. Transforming those resources into long-term development, combining industrial strategy with ecological balance, and linking that process with regional stability is far more difficult. This is where the real test of Chinese modernization begins.

That is why Inner Mongolia matters not only because of the wealth beneath its soil, but because of the development model it is trying to build above it. The real issue is not rare earth elements themselves, but the kind of future these resources are used to create.

The author is an associate professor at Harran University in Turkiye.

The views don't necessarily reflect those of China Daily.

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