After using export pressure for political leverage, Beijing lifted the export restrictions and flooded the market, driving prices below what any unsubsidized Western producer could sustain. Despite being America’s only player in this critical industry, Molycorp couldn’t compete against state-backed rivals and went bankrupt, ensuring U.S. dependency on China.
The lesson was that China would weaponize critical supply chains when needed, then use subsidies to prevent Western competition from emerging. We spent years warning policymakers, but the response was always the same: “In America, markets decide.” They couldn’t grasp that subsidized competition makes market-based investment impossible