It probably has little to do with the Chinese deciding to play by the rules and more to do with the realization that their attempt to use their dominant position to coerce political concessions has backfired. China’s monopoly of RE production has been quickly slipping away due to market forces since it “slashed” export quotas in 2010.
In 2010, China produced 97 percent of the world’s rare earth minerals, which are used in high-tech products such as wind turbines, cell phones, and hybrid cars. In the same year, China began restricting these exports and the price of many RE rose tenfold. At the time, there was a global scare that the Chinese would use the precious minerals as an economic weapon, particularly after they severely restricted exports to Japan due to a political dispute.
Fast forward four years. Today, the Chinese share of the RE industry has dropped to 70 percent and is set to fall much further. As we are witnessing in the crude oil industry, the best cure for high prices are high prices. The skyrocketing price of RE caused production to start or expand in Japan, Malaysia, and Australia. Manufacturers found ways to economize by recycling the minerals or finding substitutes. Chinese manufacturers of the minerals found ways to smuggle. By the late 2000s, it was believed that they were selling 15–30 percent of their RE outside China.
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