Perfectly rational Warhorse but for the fact that China places a...

Perfectly rational Warhorse but for the fact that China places a little more value on it's RE resource looking forward.

You can liken the three phases of Chinese RE dominance to that of a heroin dealer:

First phase, let's pump it out on the streets big time for all the hard foreign currency we can rake in and smash the competition.

Second phase, we got 'em hooked, let's ramp the price on the streets (VAT & tariffs) and make it cheaper at our place.
H'mmmm, that worked well, we've sucked in a whole bunch of hi tech users but the GFC has stuffed demand. Lol, why don't we cut their supply by 40%, that'll freak 'em. Bugger, they've flocked like rats up a drain pipe but the streets gone mad, nobody out there can afford to use our stuff any more and the home boys have cottoned on and are dicing our cake!

Third phase, chill, we got it covered, we got the resource, we've now got the tech to value add dese powders, white boy gotta play catchup, we'll just slip 'em 30ktpa to keep the cops (WTO) off our back, price don't matter 'cause we got all the white boy tech doing value add back home, and their gunna end up paying for it anyhow, lol.
Ok, they've wised up and got someone doing their own crack and it looks like it might compete (get's us off the hook with the cops) but white boys now so far behind on value add we're gunna whip their ass for the next few years so they gotta buy our metals & magnets. And while they've been tankin we've been skankin and got some hooks in the best stuff around. Steens gunna let us do there stuff, lol, Arafura's takin candy & NTU just went belly up for a tummy scratch, that Deng, he one smart fella.

Moral of the story: Follow the money.