You are trying to neatly package 12yrs of Chinese RE history in a glossy cereal box with half a dozen of your favourite flavours, and a plastic donkey.
Not going to waste time wading thru it, your basic premise is totally wrong.
"China" did NOT make money out of the price spike, the speculators did. Quite obviously you have no idea of how the RE business was transacted back then, go talk to some of the people directly involved before, during, and after the spike, I have several times, they have some great stories to tell.
The price spike did massive damage to China's RE ambitions, totally destroyed the suite balance, both at the low value bulk end Ce & Y, and the high value HRE end with phosphors imploding, and NdFeB progressively.
The spike collapsed exports to less than half in 2011 & 2012, and about 25% of pre quota peak 2006, leaving the Dragon with massive overcapacity which they are still 8yrs later trying to contain.
As a consequence, with State subsidies stripped out and enviro costs priced in "China" RE has been a huge loss maker largely due to the incredibly clumsy mkt manipulation 2007 - 2010. Go talk to some experienced players, either side of the bamboo curtain, you'll quickly find your keyboard conspiracies have no basis in fact.
The only reason the RE industry survived such gross mismanagement as a going concern is the inherent advantage NdPr > NdFeB, which is where I focused my investment from ~2013.
LYC Price at posting:
$2.05 Sentiment: Buy Disclosure: Held
(20min delay)