The strategic value of rare earth resources in great power competition has become increasingly prominent. Against the backdrop of the U.S. push for "de-Sinicization" of industrial chains and China's supply pressures, Southeast Asian countries have risen in importance. This analysis addresses the insufficient attention paid to Southeast Asia in existing research, proposing that rare earth resources possess a dual nature as both bargaining chips for geopolitical competition and foundations for development. It emphasizes the need for systematic examination of how these countries seek balance between security and development, ultimately exploring whether Southeast Asian nations can transform industrial chain dependence into strategic space and break through traditional resource security dilemmas.

I. Driving Factors of Rare Earth Strategies in Southeast Asian Countries

This section examines three driving factors behind the implementation of rare earth strategies in Southeast Asian countries. First, amid the rise of the Global South, Southeast Asian countries are transforming from passive actors in great power competition into "new middle ground" states with nodal power. Traditional theory treats middle ground as objects of great power rivalry, but current Southeast Asian countries, leveraging economic growth and industrial chain node status, demonstrate stronger agency and strategic planning capabilities, exploring pathways to convert limited resources into strategic leverage and sustainable industrial competitiveness. Second, the transformation of global resource governance paradigms has reshaped the logic of resource nationalism. Supply risks for critical minerals have shifted governance logic from market-oriented approaches to state-led security logic, making rare earths strategic resources rather than mere commodities; meanwhile, high-tech dependency has shifted competitive focus from raw material possession to industrial chain control, with technology rather than resources themselves becoming the core element of supply chain power. Southeast Asian countries have therefore adopted resource strategization pathways oriented toward industrial capacity enhancement, rather than closed, exclusionary traditional resource nationalism. Third, U.S.-Western reconstruction of rare earth supply chains has provided Southeast Asian countries with a window of opportunity. The United States actively courts Southeast Asian countries through building mini-lateral systems and promoting "friend-shoring" arrangements, with critical mineral cooperation deeply embedded in its diplomatic agenda. The rare earth strategies of Southeast Asian countries represent active responses to great power competition driven by development aspirations, with their nodal positions, external dependency structures, and windows of opportunity intertwining to shape policy orientations that use resources as leverage and industrial capacity enhancement as objectives.

II. Rare Earth Resource Endowments of Southeast Asian Countries

This section analyzes the core position of Southeast Asian countries in the global rare earth supply chain, examining two dimensions: resource reserves and structural advantages, and critical supply chain nodes. Regarding resource endowments, Southeast Asia ranks among the top globally in rare earth reserves, with Vietnam holding 22 million tons (second globally), Malaysia announcing approximately 16.2 million tons in 2024, and Myanmar reaching 31,000 tons in mining output in 2024 (third globally). More importantly, the region is rich in heavy rare earth resources of extremely high strategic value. Driven by global energy transition and artificial intelligence industries, heavy rare earth supply-demand imbalances have intensified, with Southeast Asia becoming an important pivot for alleviating supply chain pressure—Myanmar accounts for 45% of global dysprosium and terbium production, while Malaysia has become the only country outside China with heavy rare earth smelting and separation capacity. Regarding supply chain position, Southeast Asia has evolved for China from a simple import source to an important pillar of industrial chain security, with Myanmar's heavy rare earths accounting for over 50% of Chinese consumption, and Laos and Myanmar combined accounting for over 91% of China's rare earth oxide imports; simultaneously, it holds significant importance for U.S.-Western supply chain reconstruction, with Malaysia accounting for 13% of U.S. imports, Vietnam and two other countries accounting for 42% of Japan's rare earth metal imports, and export share to the EU jumping from 0.05% in 2019 to 20% in 2024.

III. Structural Dilemmas and Market Dynamics of Rare Earth Industries in Southeast Asian Countries

This section analyzes the structural dilemmas and multiple market dynamics facing rare earth industries in Southeast Asian countries. Regarding industrial dilemmas, despite abundant resources, Southeast Asian countries are constrained by dual bottlenecks: first, significant technological deficiencies in upstream segments, including both lack of systematic knowledge of domestic rare earth reserves and grades with reliance on foreign institutions such as the U.S. Geological Survey, and remaining at laboratory stages in key technologies such as ion-adsorption deposit mining, with high capital investment and technological thresholds hindering independent industrial chain construction; second, downstream and midstream segments limited to transit processing roles, with Malaysian smelters dependent on Australian raw materials, and Vietnam and Thailand's magnetic material manufacturing bases dominated by foreign investment but using raw materials from outside the region, with domestic resources failing to be effectively integrated into industrial networks. Regarding market dynamics, the section identifies two types of structural demand reshaping regional rare earth patterns: first, localized demand driven by high-tech manufacturing agglomeration, with the shift of semiconductor and electronics manufacturing to Southeast Asia forcing magnetic material suppliers to establish nearby operations, with Malaysia, Vietnam, and Thailand accounting for nearly 40% of U.S. semiconductor imports in 2024, and industrial upgrading further strengthening demand for localized supply of rare earth permanent magnet materials; second, scaled demand in clean energy transition, with new energy power deployment and electric vehicle industry rise forming long-term dependence on rare earth materials, with Vietnam, Thailand, and Malaysia becoming major global photovoltaic producers, and Thailand, Indonesia and others promoting localized electric vehicle manufacturing, with the region's imports of rare earth magnetic materials from China growing 24% from 2020 to 2024, and end customers even willing to bear additional costs for using Vietnamese rare earths. These dynamics jointly accelerate multinational rare earth enterprises' Southeast Asian layout, strengthening various countries' nodal positions in industrial chains.

IV. Strategization Pathways for Rare Earth Resources in Southeast Asian Countries

This section examines the threefold pathways through which Southeast Asian countries systematically advance rare earth resource strategization amid a new wave of resource nationalism. First, strengthening resource sovereignty to enhance resource value. Countries employ policy tools such as raw ore export bans and local processing requirements to break through primary raw material supply roles, with Vietnam stipulating that rare earth raw ores must be processed to over 95% oxide content before export, and Indonesia, Malaysia and others following suit to ban raw ore exports; simultaneously improving legal systems to strengthen regulation, with Laos and Vietnam respectively revising mining laws to orderly open development and clarify extraction systems. Second, deepening international cooperation to promote industrial upgrading. Countries leverage foreign investment networks to exert resource stickiness effects, with Vietnam building complete industrial chains through global bidding and mandatory refining facility requirements, Malaysia using operational regulations to guide Lynas Corporation in serving local industrial chain construction, Thailand consolidating nodal status through downstream application market advantages, and Laos and Myanmar attracting investment into extraction and processing segments to enhance value-added. Third, conducting multilateral diplomacy to seek strategic autonomy. Countries employ rare earths as bargaining tools, introducing diverse investors while leveraging opportunities without choosing sides, using resource chips to gain U.S.-Western market access while maintaining technical exchanges with China; simultaneously bundling rare earths with high-tech industries to set agendas, with Vietnam using rare earths to attract semiconductor investment and Indonesia incorporating rare earths into tariff negotiations; additionally actively expanding industrial cooperation with Japan, South Korea and other countries, using strategic windows to transform resource advantages into industrial capabilities, with core logic lying in actively acquiring necessary upgrades rather than passively balancing great powers.

V. Concluding Remarks

This section discusses Southeast Asian countries' strategies for strengthening rare earth supply chain positions through "embedded autonomy" amid a new wave of resource nationalism, noting that while they have transformed resource advantages into strategic chips, they exhibit passive adaptation characteristics due to lack of core technologies, capital, and governance systems, facing domestic governance dilemmas and geopolitical uncertainty; simultaneously emphasizing that resource governance capacity and downstream industrial linkage are keys to breaking through "middle ground" dilemmas, with their pathways potentially providing typical paradigms for Global South countries' participation in critical mineral politics.