China Rare Earth Group is experiencing an exodus of high-level executives this year, with the company’s officials recently stating that it is a “normal personnel arrangement.” However, some analysts believe that as the United States and Western countries begin to develop their own rare earth industry chains to reduce dependence on China’s rare earths, Chinese rare earth talents are likely to be lured abroad with high salaries. With the outflow of talent and technology, both China’s rare earth industry and technological capabilities are expected to decline, and China’s leverage in using rare earths as a countermeasure against the West will diminish.
It has been reported that China Rare Earth, a company listed on the Shenzhen Stock Exchange under the “China Rare Earth Group,” has seen a series of resignations among top executives this year. This includes the resignation of the company’s Chief Financial Officer Qi Shuyong and Chairman of the Supervisory Board Yang Jie in January, Vice General Manager Liao Chunsheng in April, and Independent Directors Yang Guoan, Dong Xianting, and Guo Huifu, as well as General Manager Yan Shengjian stepping down from his position but remaining in roles such as the company’s Party Committee Secretary and Director.
The resignation of Liao Chunsheng has drawn attention as he is a leading figure in the field of rare earth separation technology in China. Rumor has it that after his departure along with other high-ranking executives, he took his rare earth technology to work in a Canadian rare earth laboratory.
There have been widespread rumors on the internet of “multiple senior management at China Rare Earth defecting.” In response, China Rare Earth Group stated on June 28 that Liao Chunsheng is now a research and technology expert at China Rare Earth (Shenzhen) Research Institute Co., Ltd.
On the following day, June 29, China Rare Earth Group released a statement asserting that these changes in top management are “job adjustments” aimed at “optimizing the company’s governance structure, enhancing management efficiency.” They claimed it was a “normal personnel arrangement,” and the relevant personnel are “still employed in other positions within the group,” with no disruption to their work due to these changes.
Established in Ganzhou City, Jiangxi Province in December 2021, China Rare Earth Group is a central enterprise directly supervised by the State-owned Assets Supervision and Administration Commission of the State Council of China.
Rare earths are currently widely used in high-tech industries, including electronics, new energy, aerospace technologies, and are considered essential strategic resources influencing both the economy and defense industry.
According to data from the International Energy Agency (IEA), under government subsidies and lenient environmental policies, China controls over 60% of global rare earth mining and 92% of refining capacity. As per the U.S. Geological Survey data, between 2019 and 2022, approximately 75% of the United States’ rare earth imports came from China.
In the ongoing power struggle between China and the U.S., China frequently uses rare earths as a retaliation card against America. In response to the equal tariffs imposed by the U.S. in April, China began implementing an export permit system for seven rare earth metals and related magnetic materials starting from April, followed by the release of the “Rare Earth Management Regulations” in June. On June 10, the U.S. and China announced reaching an agreement, with China promising to expedite rare earth exports, but China has been delaying this. On June 27, the Chinese Ministry of Commerce stated that the U.S. and China have confirmed the framework details for implementing the Geneva Trade Negotiation consensus, and China will approve export requests for controlled items in accordance with the law. Thus, the over two-month-long rare earth crisis appears to have temporarily concluded.
Rong-Wei Lai, Chief Executive Officer of the Taiwan Inspiration Association (TIA), believes that “currently, with countries around the world aiming to break free from the Red Supply Chain of (China), they are all very cautious about China’s technological penetration. Therefore, basically, in the entire industry, China has already been choked.” He added that China seeks to retaliate by using rare earths as a leverage.
In response to China weaponizing rare earths, the U.S. and Western countries have jointly embarked on developing their rare earth mining and refining industries to swiftly reduce reliance on China’s rare earth supply chain.
Ming-Shi Shen, a researcher at the Taiwan Institute for National Defense and Security Studies, told the Epoch Times that if European and American countries intend to break away from China’s control over rare earths or develop their own rare earth industry, they must have professional talents, with these countries likely already eyeing Chinese rare earth talents.
Rong-Wei Lai of the Taiwan Inspiration Association told the Epoch Times that due to the importance of rare earths in daily life, national defense, and the global technological competition among major powers, “it is very possible for talents within the Chinese rare earth industry and their accompanying technologies to be sought after and recruited by countries worldwide.”
Shen mentioned that for many Chinese individuals, if given the opportunity to work overseas, they would certainly seize it.
He noted that Europe and America require Chinese rare earth talents, including researchers and corporate executives, particularly those who possess expertise in both. Executives with international business dealings are more likely to travel abroad, and if offered favorable conditions, they might choose to stay there.
Shen suggested that Chinese rare earth talents who find it challenging to travel abroad may resort to defection. He added if the Chinese government withholds the passports of domestic rare earth experts or company executives, “this indicates a serious issue.”
According to an insider report cited by the U.S. Wall Street Journal on June 26, the Chinese Ministry of Commerce has recently demanded that Chinese rare earth companies submit lists of professional technical personnel, with some rare earth experts required to surrender their passports to ensure they “do not leave the country unauthorized or disclose business secrets.”
Regarding China Rare Earth Group’s statement to dispel rumors, Shen believed it was mainly for “saving face” and camouflage. On the one hand, they do not wish for foreign nations to know that their rare earth talents “have all left,” and on the other hand, they want to avoid being held accountable by the Central Committee of the Communist Party of China.
Lai considered China’s news releases regarding rare earths to be a mix of truth and falsehoods. As the Rare Earth Group is a central enterprise controlled by the Communist Party of China, any rumors of “collective executive defection” quickly prompt them to issue statements, likely out of fear of being purged.
Moreover, Lai stated that as a state-owned enterprise, the Rare Earth Group has a “political mission” to reassure the people that “our advantages will not be plundered” by others and to signal to the international community, “Do not come and encroach on our territory, or we will retaliate,” and so on.
He emphasized that the outflow of Chinese rare earth talents is “inevitable,” and this phenomenon is like “birds choosing the right tree to nest in.”
In 2023, a vice president of a southern Chinese rare earth group was sentenced to 11 years in prison for allegedly leaking core secrets of rare earth refining technology to overseas entities.
Shen stated that the departure of high-level personnel will significantly impact the development of China’s rare earth industry, consequently diminishing China’s leverage against the U.S.
He indicated that these individuals are likely to bring critical technologies with them. In order for them to be valued, Western companies would offer high salaries. Additionally, their experience and knowledge would be highly sought after.
Lai expressed that when these rare earth talents move overseas, even if they simply point out mistakes to other countries, it helps avoid unnecessary trial and error, reducing a lot of “learning costs.” He cited China’s poaching of talent from Taiwan Semiconductor in the past as a successful example, as it saved China a lot of “learning time and costs” in the semiconductor industry.
Shen also mentioned that even Chinese executives who are not technically adept can inform Western companies about the dynamics of China’s rare earth industry chain, such as raw material sourcing, technology partners, and future market prospects. Following a potential replacement of the Chinese market by Canada or the U.S., China’s attempts to use rare earths as leverage against the U.S. in negotiations would be ineffective.
Lai believed that China’s management of the migration of rare earth talents would become more stringent, with China likely resorting to violating human rights measures to retain talent, such as employing national security monitoring or using the talent’s family members as “hostages.”
He concluded that despite China’s efforts to prevent rare earth talent from leaving, “it is impossible to prevent it completely, and once a breach occurs, China’s technological capabilities will decline.”