China's Rare Earth Industry Poised for High-Quality Growth in 2026: Top Official Outlines Five Key Demand Drivers

As 2026 marks the opening year of China's "15th Five-Year Plan" period, the nation's rare earth industry is positioning itself to better serve national strategies while achieving its own high-quality development. In an exclusive interview with People's Daily Online during the "Two Sessions" (National People's Congress and Chinese People's Political Consultative Conference), Ao Hong, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), Vice President of the China Nonferrous Metals Industry Association, and President of its Rare Earth Branch, shared his insights on the sector's future.

Ao emphasized that rare earths are fundamental materials supporting the development of high-end manufacturing and green energy. Below are the key takeaways from the interview, structured for clarity and SEO optimization.

 Five Key Sectors to Drive Rare Earth Demand in the Next Five Years

When asked about the primary areas of demand growth during the "15th Five-Year Plan" period (2026-2030), Ao Hong highlighted five core sectors, all underpinned by the growing application of NdFeB permanent magnet materials:

 Strategies for Advancing the Value Chain of Medium and Heavy Rare Earths

Acknowledging the current "strong upstream, weak downstream" dynamic in China's medium and heavy rare earth (M/HRE) sector, Ao outlined a three-pronged strategy to translate resource advantages into industrial and strategic value. M/HRE elements like dysprosium (Dy) and terbium (Tb) are critical for enhancing the coercivity and high-temperature resistance of permanent magnets used in high-efficiency motors.

Despite the potential of M/HRE permanent magnet motors to save 10-50% energy compared to traditional motors, their current application penetration rate in China is below 10%. Ao attributed this to supply instability and price volatility, which hinder wider adoption.

To address these challenges and achieve a value-chain leap, Ao proposed the following measures:

1. Establish a Price Stabilization Mechanism for M/HRE

Goal: Stabilize market expectations to encourage broader application.

Method: Strengthen green development and efficient utilization of upstream resources. Improve the supply chain and reserve mechanisms to ensure stable supply and cost control for downstream users, preventing technology路线 shifts due to price fluctuations.

2. Create a Special Development Fund for M/HRE Applications

Goal: Enhance the strategic value of resource development and utilization.

Method: Leverage market mechanisms alongside technological innovation to continuously improve material performance and quality. Foster new technologies, products, applications, and scenarios.

3. Provide Key Support for M/HRE R&D and Industrialization Projects

Goal: Promote an open and prosperous development ecosystem.

Method: Use policy guidance and the leadership of key enterprises to encourage resource sharing across the industrial chain. Incentivize companies to continuously expand the application scope of M/HRE products, achieving a collaborative value-chain upgrade.

Industry Impact and Global Relevance

These insights from a leading industry official signal China's commitment to:

Securing demand: By identifying and nurturing key downstream sectors like AI robotics and green energy.

Stabilizing supply: Through mechanisms aimed at reducing price volatility, which is a major concern for international buyers.

Moving up the value chain: By specifically targeting the underutilized potential of M/HRE in high-tech applications, moving beyond raw material export towards supplying advanced materials and components.

For global stakeholders in the automotive, electronics, renewable energy, and robotics industries, these developments underscore the importance of China's rare earths in their own supply chains and the ongoing evolution towards a more application-driven market.

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