China is rich in rare earth resources. However, for a long time, most of China’s rare earth enterprises have limited independent intellectual property rights, lack highly skilled personnel, and consequently exhibit low innovation capacity. China has explicitly set “high-quality development” as a strategic goal, and the technological innovation capability of enterprises is a key driving force for achieving this goal. Based on innovation ecosystem theory and policy mix theory, this paper employs text analysis to review China’s policy documents concerning technological innovation in the rare earth industry. It discusses the current inadequacies in the combination of policy tools for enterprise innovation within the sector. Based on this analysis, the paper proposes countermeasures for improving China’s technological innovation policies for rare earth enterprises.