Abstract: Rare earth plays an important role in leading the energy technology innovation and improving the performance of new materials which is an important raw material.China’s rare earth industry governance has achieved remarkable results through many rounds of rectification, integration and mergers and acquisitions.However, there still exists unknown strategy and policy orientation, incessant illegal mining, industry overcapacity and long-term imbalance between supply and demand, lack of critical functional material capacity, and insufficient recognition of environmental negative externalities in the process of the development.Based on this, combined with the current actual situation, it was suggested that China should strengthen the whole rare earth industry chain management by the means of law, optimize the allocation of rare earth resources to achieve the balance of supply and demand, reduce excess production capacity, promote green development of rare earth resources, and speed up technological innovation to enhance the competitiveness of the industry.The main purpose of this paper is to promote sustainable development of the rare earth industry in China.