China has the richest rare earth resources in the world.The annual processing capacity of REO (rare earth oxides) had reached 110 kt in 1998, which was almost twice the world demand. As a result, its rare earth has to rely on export. The exported rare earth accounts for two thirds of its total production. The better way out for this problem is to develop new products, especially the high-tech materials and high value-added products, then industrialize them and exploit further domestic and overseas markets. The application of rare earth in fields of metallurgy, permanent magnet, hydrogen storage alloys (nickel metal hydride battery, power source for electromobile, etc.), catalysis (in petroleum cracking and automobile exhaust emission control), solid oxide fuel cell and laser materials, etc., is described in this paper.