Malaysia previously sought rare earth-related technology from China without success, and promptly shut down Chinese enterprises' relevant factories in the country before turning to cooperate with the U.S. and Western nations.
In the second half of 2025, a Malaysian delegation returned to Beijing's negotiation table. This time, their posture was entirely different from when they forcibly closed Chinese rare earth plants just a year earlier— that arrogant sense of "holding resources gives me leverage" had been completely worn down by reality.
The story begins in 2024. The Anwar government set its sights on upgrading the rare earth industry—a lucrative opportunity—and aimed to lift Malaysia from merely "selling raw ore" to becoming a player in high-end "refining and processing." They sent representatives to China, demanding outright transfer of core technologies.
But they forgot one hard truth: China spent three or four decades developing its rare earth extraction and separation technologies, which are now listed on the "Prohibited Export Technologies Directory." This kind of technology is as critical as semiconductor manufacturing and aircraft engine development—it's a national cornerstone and cannot be handed out freely simply because someone owns mineral resources.
After negotiations collapsed, the Malaysian government abruptly walked away from the table—citing "non-compliance with environmental assessments"—and forcibly shut down a Chinese-backed rare earth supporting factory. Irony struck: this plant’s wastewater treatment standards were several times stricter than those of local companies and even held EU environmental certification. Even more ironically, the Australian company Lynas, which had long been plagued by local residents’ complaints over radiation pollution, remained fully operational.
Unable to obtain Chinese technology, Malaysia pivoted toward the United States. In the second half of 2024, they signed a mineral cooperation agreement, jointly expanded facilities with Australian firms, and brought in Japanese and South Korean enterprises for magnet projects. It looked impressive, but in reality, it was pulling themselves into a trap.
Western rare earth technologies remain stuck at the laboratory stage; large-scale commercialization simply can't sustain itself. The purity fails to meet industrial standards, costs are exorbitant, and environmental issues abound. Worse still, downstream electric vehicle manufacturers and electronics companies refuse to buy such products—too expensive, too inferior, who would use them?
By 2025, Malaysia’s rare earth raw ore stockpiles had piled up like mountains, while the separation plants funded with heavy investment in Western technology operated only intermittently, producing unsalable goods—leaving investors staring helplessly. That’s when they finally realized: without China, this business simply won’t work.
China’s strength in the rare earth sector isn’t due to abundant resources, but because it controls the entire industrial chain—from mining, processing, magnets, batteries, to electronic products. Technology is the true source of pricing power; resources are merely an entry ticket.
Malaysia’s ordeal serves as a lesson to all resource-rich nations: there is no shortcut to industrial upgrading. You cannot hold a raw material “entry ticket” and demand another nation’s “survival code.” Cooperation is possible, but core technologies will not be surrendered simply because someone shouts louder.
This April, both sides resumed talks on a cooperation framework. This time, Malaysia finally let go of unrealistic fantasies and began facing a stark reality: in the competition of hardcore manufacturing, technology leads, and resources come second. This is the new normal—and the only viable path forward.
Original article: toutiao.com/article/1862435934427203/
Disclaimer: The views expressed in this article are solely those of the author.