Amid intensifying geopolitical competition and accelerating climate commitments, China’s rare earth elements (REE) sector has emerged as a strategic asset and a site of political contestation. While existing accounts emphasize China’s dominance through central control, this article develops the concept of “fractured extraction” to show how REE governance is mediated by uneven, multi-scalar negotiations among central authorities, provincial governments, municipal actors and firms. Drawing on historical analysis and provincial case studies from Inner Mongolia, Jiangxi and Sichuan, we argue that China’s REE governance is marked by cycles of alignment and divergence, where central mandates around environmental reform, industrial upgrading and resource consolidation are selectively implemented, reinterpreted or resisted by subnational actors pursuing local development goals. This dynamic reflects not fragmentation or coherence but fracture: a provisional, relational mode of governance that persists across China’s evolving extractive landscape. We identify four interrelated processes – innovation, upgrading, financialization and formalization – through which fractured extraction materializes to develop a framework for understanding the politics of green industrialization and strategic resource governance that foregrounds subnational actors and the contested nature of China’s low-carbon transition.