Abstract: The extension of industrial chain is the only way to make good use of rare earths and achieve sustainable and healthy development of the rare earth industry.Based on the two major driving factors of efficiency and risk, this paper from the perspective of micro-finance, compares and analyzes the efficiency risk levels of front-end and back-end enterprises in China's rare earth industry chain from 2011 to 2018, and tries to find out the key obstacles that hinder the expansion of China's rare earth industry chain.The results show that the efficiency and risk levels of front-end and back-end companies in the industrial chain during the observation period cannot effectively drive the expansion of China's rare-earth industrial chain; the efficiency risk gap between the front and back of the industrial chain is expanding, and the prospect of back-end development is worrying; pure technical inefficiency and high asset-liability ratios are the main reasons for the back end to be less efficient and riskier than the front end.At present, the scale efficiency of the front-end of the industrial chain has become saturated.Therefore, it is urgent to develop the back-end of the industrial chain and extend the industrial chain.