CIRCULAR ECONOMY IN CHINA – PAST, PRESENT, FUTURE

Despite the rapidly approaching COP28 in Dubai, however, the newfound dialogue has not led to a new climate agreement between the two countries, partly because of tensions on Taiwan and Ukraine. The world’s top two greenhouse gas emitters will therefore continue down separate paths in their decarbonization strategies. A strategy that for the People’s Republic of China, in the past two decades, has included a form of circular economy.
 

The early stages of circular economy

Although the State Council had issued “Interim Provisions on the Development of Comprehensive Resource Utilization”, providing a detailed list of resources for more efficient use as early as 1985, the concept of circular economy in China did not become mainstream until the 1990s. Then, partly in the wake of 1992 Earth Summit in Rio de Janeiro, environmental damage prevention policies were introduced for the entire production process, which was increasingly inspired by cleaner production. In short, China went well beyond final waste management.

However, the first dedicated measure came only in 2002. The “Circular Economy Promotion Decree”, part of China’s strategy on pollution prevention, was adopted during the 28^th session of the 9^th National People’s Congress. Design improvements, use of clean energy and raw materials, technological development, and resource efficiency were the main focus of the new norm.

But it was not enough. In 2005, the State Council published its “Opinions on Accelerating the Development of the Circular Economy”, highlighting progress in energy and resource usage, but also pointing out the limits of high consumption and low efficiency. This led to the introduction of the “reduce, reuse, recycle” principles. The inclusion of circular economy among the goals of the 11^th Five-Year Plan for Economic and Social Development issued by the newly installed Hu Jintao administration in 2006 was a crucial step. In addition to promoting the efficient use of resources, it envisaged an EPR system to encourage reuse and recycling and the launch of pilot projects in major industries.
 

The first measure for the promotion of circular economy

On August 29, 2008, the same administration passed the “Circular Economy Promotion Law of the People's Republic of China”, which came into effect the following year, in order to improve resource use efficiency, protect and improve the environment, and achieve a sustainable development. According to the regulation, the new economic model would be government-powered, market-driven, and implemented by companies, including through broad public participation.

All these aspects were further analyzed in the 12^th Five-Year Plan for Economic and Social Development, officially approved on March 14, 2011, when China launched the Circular Transformation of Industrial Parks (CTIP) program to address resource and environmental challenges during rapid economic growth. This program aimed to promote an efficient use of resources in production by following circular economy principles such as “reduction”, “reuse” and “recycling”. China is home to a total of 2,543 industrial parks, created to optimize the use of space and adjust the industrial structure, adapting it to the principles of circular economy – from design to resource recovery – with an eye to industrial symbiosis.

In 2013 – a year after current President Xi Jinping succeeded in introducing the term “ecological civilization” in the Constitution of the Chinese Communist Party – a further strategic plan for the circular economy was approved. This time it was short-term, structured on three different levels (corporate, industrial parks, and city and province) and divided among all major industrial sectors: coal, power and steel, oil, textiles, construction, paper, and food industries.

On May 14, 2017, the Circular Development Leading Action was launched to promote the strategies outlined in the 13^th Five-Year Plan (2016-2021), which has since been approved, reshaping the “Chinese Dream”. Society was entering an era of moderate growth, dubbed the “New Normal”, where the economy remained socialist and market-based, but more open to the outside world. For 2020, the 2017 Plan envisioned a 15% increase in the resource productivity rate (compared to 2015 levels); a 54.6% recycling rate of major waste materials; a 73% reuse rate of industrial solid waste; and, most importantly, the initiation of circular transformation for 75% of national-level industrial parks and 50% of provincial-level industrial parks.
 

The main barriers to the development of the circular economy today

On July 7, 2021, China’s National Development and Reform Commission released the Circular Economy Development Plan. The document contains a set of goals that China intends to achieve by the end of the 14^th Five-Year Plan, in 2025. The development of the circular economy is to take place through several initiatives, such as increasing recycling, remanufacturing, sustainable products ecodesign and renewable resources. Specifically, the government aims to:

• increase resource productivity (the ratio of gross domestic product to domestic material consumption) by 20% from 2020 levels;
• reduce energy and water consumption per unit of GDP by 13.5% and 16%, respectively;
• use 60 million tons of waste paper and 320 million tons of steel scrap;
• produce 20 million tons of recycled nonferrous metals; and increase the output value of the resource recycling industry to $773 billion.

However, as was the case with the 2008 Promotion Law and the 2017 Plan, there are several obstacles to the development of the circular economy in China, which is slowly going from mere rhetoric to implementation. The main barriers – aside from a lack of specificity, with strategies inspired to very general principles – were highlighted in a 2022 study from the Henan Institute of Science and Technology, which analyzed keywords related to drivers and obstacles to circular economy in the existing literature. While recognizing the existence of key drivers of the circular economy as government policy support, public participation, economic benefits, and support for technology development, the study identifies several cultural, market, regulatory and technological factors as the main barriers to the circular economy transition in China. According to the researchers, such barriers can be overcome through higher education, which could really boost the driving factors.

Article written by Giorgio Kaldor and Emanuele Bompan