The store, which sits along the most trafficked part of the route, happened to be selling the rare goods Friday, drawing a crowd of people desperate for a few bags of flour.

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Where once the West relied on China's lack of environmental enforcement to tamp down rare-earth prices and implicitly subsidize high-tech goods, in the future the nature of the subsidy will change so that China's cheap(er) labor will subsidize Western mid-tech goods.

WSJ: Business Asia: Postcards From the Rare-Earth Front

Controlling the supply of rare earths means that China can also control their processing and use in finished goods, which would fit a broader effort to drive its manufacturers from low- to high-value goods.

ECONOMIST: Rare earths