CircularEconomy Analysis EN by 0Q0S3Rc


									Environment & Social Development Sector Unit
(EASES),East Asia and Pacific Region
The World Bank

                     Part B:
    The Application and Analyses of Circular
         Economy Indicators in China

                  WU Zongxin

              November 19, 2006

1.The resource productivity in china
2.Energy intensity of GDP
3.Water resource utilization
4.Mineral resource utilization
5.Domestic Process Outputs
     Direct Material input (DMI) is adopted to measure the direct input of materials
used into the economy. DMI equals domestic extracted resources plus imports.
The resource productivity is defined as the ratio of GDP to DMI. The trench of
China DMI and their composition as well as related indicators of resource
productivity and per capita DMI through 2000-2004 are shown in Table1.
    Table 1:The trench of China DMI and their composition through 2000-2004
                                               2000     2001     2002     2003     2004
    DMI (Mt)                                   9797     10435    11244    12605    13940
                          Renewable            22.91    21.93    21.24    19.60    18.80
DMI composition           Industrial mineral   13.47    13.64    13.85    14.30    14.92
   (%)                    Building mineral     52.18    52.17    51.38    51.50    50.64
                          Fossil fuel          11.43    12.26    13.52    14.61    15.63
                          Quantity             9469     10060    10809    12060    13256
Domestic extraction       Percent in DMI       96.65%   96.41%   96.13%   95.68%   95.09%
                          Quantity             328.22   374.79   435.03   545.1    684.12
Import in physical unit   Percent in DMI       3.35%    3.59%    3.87%    4.32%    4.91%
DMI growth rate(%/a)                                    6.51%    7.75%    12.10%   10.59%
Population (billion)                           1.267    1.276    1.285    1.292    1.300
Per capita DMI                                 7.73     8.18     8.75     9.75     10.72
GDP(billion,US$,2000 price)                    12011    13008    14192    15611    17188
GDP growth rate(%/a)                                    8.30%    9.10%    10.00%   10.10%
GDP productivity(US$/ton)                      123      125      126      124      123
GDP productivity reduction rate(%/年)                    -1.68%   -1.25%   1.88%    0.44%
GDPppp(billion US$,2000 price)                 5369.1   5814.8   6343.9   6978.3   7683.1
GDPppp productivity(US$/ton)                   548      557      564      554      551
     Source:DMI data quoted from LIU Bin report
     In order to make analyses, a comparison of the DMI and their composition as
well as resource productivity of China with other countries would be necessary.
Table 2 indicates the DMI and their composition as well as resource productivity of
United States through 1975-2000 and Table 3 indicates the resource productivity
of France, UK, Italy, German and Japan in 2000.
     Although China and those countries are in different development stages,
some conclusion could preliminarily be derived from the comparison:
(1) Low resource productivity in China

    The resource productivities were around 123 US$/ton in China through
2000-2004, in contrast which were around 1500 US$/ton for UK, Italy, German
and United States. The Japan resource productivity even reaches as high as
3000US$/ton. China resource productivity is much lower than those countries
even with several orders gap. The reasons causing the big gap are analyzed as
                  Table 2: The DMI and composition in US (1975-2000)
                                            1975        1980     1985    1990    1995    2000
       DMI (Mt)                             4380        4783     4919    5483    5922    6855
       DMI composition        Agriculture   17.50       16.95    16.48   15.45   15.24   14.66
       (%)                    Forest         4.93        5.62     6.30    6.02    5.42    5.14
                              Mineral       39.45       38.52    38.78   41.16   42.51   45.08
                              Fossil fuel   38.07       38.90    38.44   37.37   36.83   35.11
       GDP(billion US%, 2000 price)         4325        5200     6063    7106    7997    9817
       Population (billion)                 0.216       0.228    0.238   0.25    0.263   0.275
       GDP productivity(US$/ton)            988         1092     1233    1296    1350    1432
       Per capita DMI (tons)                20.3        21.0     20.7    21.9    22.5    24.9
       DPO ( million tons)                  2003        2139     2057    2274    2379    2519
       NAS (million tons)                   1580        1681     1779    2084    2324    2887
       Sources:Donald Rogich etc, Material flows in the United States –
                  a physical accounting of the U.S industrial economy, Sept., 2005, WRI。

                   Table 3: The international comparison (2000)
                                                   France       German   Italy   UK      Japan
     DMI (Mt)                                      1101         1737     843     890     1912
                          Renewable                38.42        19.80    22.54   19.10   6.78
     DMI composition      Building material        33.88        40.70    41.52   30.11   55.89
     (%)                  Industrial mineral       11.72        11.74    17.08   10.90   16.29
                          Fossil fuel              15.99        27.81    18.98   40.00   21.28
     GDP (billion, 1995 price)                     1772         2686     1204    1306    5681
     Population (million)                          59.2         82.2     57.9    58.7    127
     GDP productivity(US$/ton)                     1609         1546     1428    1467    2971
     Per capita DMI (tons)                         18.60        21.13    14.56   15.16   15.06
    Source:Material use in the European Union, 1980-2000: Indicators and
           analyses, Eurostart, 2003

    1) Low industrial value added
    In the international industrial chain, China is in the place of manufacturing
segment with high labour intensive and low value added. Now China plays as a
hub of world manufacturing, but most products are with low value added and only
small part of products are with high value added, whether row material production
such as steel, building material and chemical making, or machinery and
equipment production including car, machine, electric appliance and IT products.
Although the resource inputs to make a same product in China are only slightly
higher than that in developed countries, but the difference could be only very
small fraction. The much lower resource productivity in China could be especially
attributed to the much lower value added of most products, even only a small
fraction of that in developed countries.
 2)Tendency of moving heavy industrial structure
    China is experiencing a heavy industry accelerating increasing progress. In
recent years the proportion of heavy industries in whole industry has increased by
near ten percentages. The tendency of moving heavy industrial structure was
strongly derived by demand structure change. The ratio of capital investment in
GDP use of China accounted for as 44%, which was much higher than that in
developed countries, where the capital investment proportion in GDP are only
20-30%. The high capital investment maintained the high annual GDP growth rate
as 10% as high in past years. In the other hand, China has been experiencing the
residential expenditure structure upgrading and urbanization. Typically, the car
and housing demands are accelerating increasing and urbanization rate
increases annually by one percentage.          The GDP structure change in demand
side fostered the tendency of moving heavy industrial structure.
    The demand structure change, whether by capital investment proportion
increase or expenditure structure upgrading and urbanization, all might require
increasing supply of steel, cement and non-ferrous metals, which are commonly
used as capital goods in building and infrastructure construction. This demand
structure is also the factor causing high proportion of industry sector and low
proportion of service sector in GDP. In 2005 the industry sector accounted for
47% in GDP and service sector accounted for 40% in GDP. By contrast the

industry sector accounted for only 26% and service sector accounted for 72% in
United States.
    3)Accelerating increasing of foreign trade dependency
   In past years, China import and export amounts have been increasing. In 2005
the total import and export amounts accounted for 65% of GDP, which increased
by 24 percentages in compared to 2000. Especially, the improvement trade was
increasing so quickly.
   The   improvement     trade   implicates   that   the   exported   products   are
manufactured by using most of energy and resources in China and only creating
low value added in manufacturing process in China, and the high value added
created in design and marketing belongs to the foreign orderer with near zero
energy and resource consumption. Therefore, the improvement trade could make
the energy intensity even higher in China.
    Most industrialized countries have experienced a period of resource
consumption rapid growth during their industrialization. In the early stage of
industrialization the resource consumption intensity of GDP was relative low. But
in the middle stage of industrialization the resource consumption intensity of GDP
was increasing rapidly attributed to the demand for large amount of industrial
infrastructure establishment and urbanization. When entering to the post-industry
period the resource intensity of GDP would be reducing along with the
development of technology intensive and knowledge intensive industries as well
as the service sector proportion increase. Fig.1 shows the change of main metal
consumption intensity during past 100 years in United States, which typically
indicates the tendency of resource consumption intensity during industrialization.
4)The management and technical factors
    Due to the poor management and backward technologies the most products
are manufactured in China using more energy and materials higher than
developed countries by 20-40%. It is one of the factor causing China high
resource consumption intensity, but it would not be the dominate factor.

    Per capita resource consumption is related to per GDP level and would

increase along with per capita GDP increase. Fig. 2 shows the relations of per
capita resource consumption with per capita GDP in past 50 years in Japan.
Before per capita reached 10,000US$, the per capita resource consumption
would increase along with per capita GDP increase, after then it would approach
    In past years per capita resource consumption in China increased from 7.73
tons in 2000 to 10.72 tons in 2004. But the per capita resource consumption in
China is still in low level compared to developed countries and only half of United
States and German, and two thirds of UK and Japan.

    Fig.1: The tendency of main metal consumption during past 100 years in US
    The industrialization in a country would be accompanied with industrial
infrastructure   and   urban   infrastructure   construction.   The   infrastructure
construction in China is relative far away behind the developed countries. For
instance China has similar size territory to United States and there are only 77 km
long railway and 1980 km long highway per 10 thousands km2, and in US there
are 262 km railway and 7009 km highway per 10 thousands km2 by the end of
    The industrial infrastructure and urban infrastructure construction should
need large amount resource inputs. Therefore, the accumulative resource inputs

per capita could be used as an essential indicator to assess the industrialization
progress. For example, up to now developed countries have consumed certain
amount of steel and copper per capita during industrialization as following:
    Steel: UK 22 tons; US 20 tons; Japan 17 tons
    Copper: US 400 kg; Japan 220kg.
    In contrast, up to 2005 the accumulative steel consumption per capita is only
2.35 tons and copper is 26 kg in China. Therefore, referring to the developed
countries it will still be needed to input more steel and copper into infrastructure
construction in the future in China.
    In considering the per capita peak annual consumption level, China also has a
big gap compared with the developed countries. In 2004 the steel was only 230 kg
and copper was only 2.5 kg in China. In correspondence with the developed
countries, US and UK reached the steel peak level around 440-680 kg in 1950’s
and 1970’s and the copper peak level about 10-11 kg in 1940’s and 1960’s,
respectively. Japan and Korea reached the steel peak level around 600-900 kg in
1970’s and 1990’s, and the copper peak level about 12-29 kg in 1999 and 2000,

                                       Per Capita GDP (US$)
                    Fig.2: Relation of per capita resource consumption
                       with per capita GDP during past 50 years in Japan

      Therefore, whether the accumulative resource consumption or peak annual
consumption per capita in China still have a big gap compared to the developed
      In addition, the per capita resource consumption for a country is relevant to
the per capita territory areas. If the population density is low and the per capita
resource consumption could be relative high shown in Fig.3. The population
density in China is about 135 person / km2, corresponding to the middle level and
similar to most Europe countries.      In addition to the average the distribution of
population density also matters. China’s industrial activities and pollution are both
highly concentrated and spatially imbalanced, which means disproportionately
high pressures on Eastern China’s ecosystems and population centers. From
both of these perspectives a more even distribution and shift of industrial activities
to Western China would be desirable, which is of course a declared policy


      Fig.3: The relation of domestic material consumption with population density

      The future tendency of resource productivity in China is an especially
    concerned issue. At present the resource productivity in China is lower than the
    developed countries by more one order and the per capita resource consumption
    level is lower than the developed countries by doubles. But per capita GDP in

 China is still in much low level. If per capita GDP in China would reach to 10,000
 US$ in the future the GDP will increase at least by 6 times. It is concerned what
 impact on the resource consumption could be brought about? During 2000-2004
 the resource productivity essentially remains stable. If China intends to follow
 sustainable development, the resource productivity should be brought into step
 with GDP increasing. During 1980-2000 EU countries followed this development
 mode. While the GDP increased by 157%, the resource productivity increased
 by 158% through 1980 to 2000 shown in Fig.4. The material over-consumption
 has now been recognized as an important issue by the EU, and increasing
 resource use efficiency and potentially reducing overall volume would be
 essential for the achievement of the goals of the EU’s sustainable development
 strategy. It will be very difficult for China, because China is just during the middle
 stage    of   industrialization   accompanied with     high   growth    of   resource

         Fig.4: The trend of GDP and resource productivity in EU countries
                              during 1980-2000

    In considering DMI composition in China the agriculture and forest renewable
 resources account for 20%, which is similar to US; the fossil fuel accounts for

15% in China and in contrast US is 35%; the building material account for 50%
and the industrial metal and non-metal mineral 15% in China and sum of both
accounts for 45% in US. That is the agriculture and forest renewable resources
share in DMI is similar for both of China and US, the fossil fuel share in US is
much higher than China by 20%, and the building material and industrial mineral
share in China are higher than US by 20%. The reason causing the composition
difference between both countries of China and US is owing to the different
development stage and much high capital investment ratio in China. That
brought the building material and industrial mineral consumption in China high
intensive. As well as the very high energy consumption intensity of GDP in US
makes the high proportion of fossil fuel input.
  DMI is composed of large amount of building material such as sand, stone
and clay extracted in China. Of course those materials extraction would bring
harmful impact on the environment. But in considering China social-economic
sustainable development in long term those resources would not comparably
crucial with fossil fuel and metal minerals of iron, copper and aluminum etc,
which resources are poor in China and will be essential in terms of strategically
significance. In order to notice these resources greatly important, an additional
indicator of Key DMI only covering some strategically resource is recommend in
China circular economy indicators. The Key DMI includes 15 extracted resources
ranging fossil fuels (coal, oil and natural gas), iron, copper, bauxite, lead, zinc,
nickel, chromium, manganese, potassium, fan, titanium, gold, rare earth,
phosphorus, iron pyrite and limestone etc. All of these materials are accounted in
physical units. Table 4 indicates the Key DMI and relevant indicators and Table 5
indicates the Key DMI compositions.
    Table 4: The Key DMI and relevant indicators in China (2000-2004)
                                   2000        2001    2002    2003    2004
       Key DMI(billion tons)       2.491       2.745   3.110   3.663   4.264
        Population(billion)        1.267       1.276   1.285   1.292   1.300
 Per capita Key DMI(tons/person) 1.97          2.15    2.42    2.83    3.28
  GDP(billion US$,2000 price)      1201        1301    1419    1561    1719
    GDP productivity(US$/ton)       482        473     456     426     403
  Source:“World development indicators 2002”

  The Key DMI and relevant indicators in China shown in Table 4 indicate that in
recent years the tendency of Key DMI appears as rapidly increasing. Through
2001 to 2004 the Key DMI increased annually by 10.20%、13.26%、17.79%、
16.41% compared with previous year,respectively, and the growth rates were
higher than the GDP.
  In correspondence the key resource productivity, defined as the ratio of GDP
to the Key DMI, was graduate decreasing in recent years. It means that the GDP
per unit of Key DMI was graduate decreasing by 4.36% annually. In terms of
2000 price, the Key DMI in 2004 was reduced to 403 US$/ton from 482US$/ton
in 2000. It indicates that the GDP growth depends on large amount resource
inputs even more.

            Table 5: The composition of Key DMI(2000-2004)
                                            2000 2001     2002    2003    2004
                        Coal      ic        998    1161   1380    1667    1956
                                   Import 2.18     2.66   11.26   11.10   18.61
        Fossil                     Domest
       fuel              Oil      ic        163    163.96 167.00 169.60 175.00
                                   Import 94.31 87.69     98.73   128.61 160.60
                       Nat. gas
                                  ic        19.43 21.64   23.36   25.00   29.64
              Iron minerals       ic        222.60 217.01 232.62 262.72 319.76
                                   Import 69.97 92.31     111.49 148.13 208.09
                                  ic        87.30 87.00   100.20 108.80 120.30
                                   Import 5.25     7.84   9.46    11.82   12.46
                    Rare earth
                                  ic        0.48   0.59   0.65    0.71    0.84
        Non-met                    Domest
       al                         ic        19.37 21.01   23.01   24.47   26.17
        minerals                   Domest
                    Iron pyrite   ic        9.67   9.95   9.26    8.71    10.66
                                   Import 2.82     3.38   4.09    4.99    6.77

                                                                 ic         796.69 869.45 938.50 1091.30 1219.01
         Key DMI(Mt)                                                        2491 2745     3109    3663    4264
             Increasing rate                                                        10.20% 13.26% 17.79% 16.41%

                                                     Productivity change trend in GDP (primary) resources
                                                                      during 2000-2004
            GDP resource productivity (USD/tonne)



                                                                2000        2001         2002      2003          2004
       Fig.5: The change of Key DMI productivity through 2000-2004 in China
   In 《The Policies on Accelerating Circular Economy Development》published
by China State Council, the targets are set through a great efforts to achieve
reducing the resources productivity of 15 key DMI by 25% in 2010 compared with
that in 2003. It means that the growth rate of resource productivity of 15 key DMI
will increase by 3.5% annually. But in actual performance, in recent years the
resource productivity of the 15 key DMI was even reducing as mentioned above.
Therefore, to realizing the targets of increasing key resource productivity by 25%
before 2010 set by China State Council will be facing big challenges.
   (1) At present, the per capita resource consumption in China is about

1/2-2/3 of the level of industrialized countries. From this point of view, the per
capita resource in China only has very limited space for increasing;
    (2)It will inevitably be necessary to consume accumulatively large amount
resource in order to realize future industrialization infrastructure establishment in
China. UK, US and Japan such developed countries have accumulatively
consumed 22, 20 and 17 tons of steel per capita, respectively, during their
industrialization. In contrast China only has accumulatively consumed 2.35 tons of
steel per capita up to 2005. Assuming no major changes in material use efficiency
and that China follows the same industrialization patterns, implies that China will
be necessary to accumulatively consume large amount steel to achieve
industrialization. What happens if you consider that it is not in per capita but
absolute terms and look at the implications for iron ore demand and supply
globally and changes in total pollution? In similarity, the copper consumptions of
US and Japan have accumulatively consumed 400kg and 220kg per capita,
respectively. In comparison, China only has accumulatively consumed 26kg of
copper per capita up to 2005.
    In another consideration of the peak annual consumption, China has still a big
gap with developed countries such as:
      Steel: 440-900kg in developed countries and 230kg in China;
      Copper: 10-29kg in developed countries and 2.35kg in China.
    (3)The resource productivity in China is far away behind the developed
countries by more than one order. In order to achieve the industrialization, at that
time the resource productivity in China should at least reach to the corresponding
level of developed countries at present time. It implies that the resource
productivity in China will be necessary to increase by keeping similar step with
GDP growth.

    China has become the second largest energy consumption country and in the
 other hand China is also the country with poor energy resources. Therefore,
 energy saving is crucial for the future development of China. China government
 has set the energy consumption intensity of GDP as a constraint indicator in
 social economy development planning and the target of reducing the energy
 consumption intensity of GDP by 20% during 2006-2010. It means that the
 average energy consumption growth rate should be less half of GDP growth rate.
    In energy sector two indicators within the circular economic indicators have
been adopted such as: energy consumption intensity of GDP, that is the energy
consumption per ten thousands Yuan of GDP and the specific energy
consumption per physical output for high energy intensive products.
    Table 6 shows the energy consumption intensity of GDP through 2000-2004.
From 2000 to 2002 the energy consumption intensities of GDP were decreasing
and reversely from 2002-2004 were increasing, and it in 2005 was almost same
as 2004. The economic performance in the first half year in China indicated that
the energy consumption increasing was exceedingly than the GDP increasing and
corresponding energy consumption elasticity of GDP was 1.08. It means that the
energy consumption intensity of GDP was not as expected to decrease and
reversely to increase.
     Table 6: Energy consumption intensity of GDP during 2000-2004
                                       2000    2001    2002    2003    2004    2005
   Total primary energy consumption    1.386   1.432   1.518   1.750   2.032   2.225
               (billion tce)
     GDP(billion,2000 price)           9920    10740   11720   12089   14200   15600
 Energy consumption intensity of GDP   1.40    1.33    1.29    1.36    1.43    1.43
     (tce/ten thousands Yuan)

    Two factors could affect on the energy consumption intensity: technological
factor and economic structure factor. The structure factor appears more crucial
and would have the important impact on the sustainable development in long term.

      At present, the energy consumption intensity of GDP of China in terms of
      exchange rate is about 4 times of the average level of OECD countries and 9
      times of Japan level. The 80% of the contribution is attributed to the economic
      structure factors, which include macro economic structure, the sub-sector
      structure within industrial sector, as well as the products composition within a
      sub-sector. The technological factor is characterized by physical energy
      efficiencies such as specific energy consumption per unit physical output, the
      power generation efficiencies and the fuel economies per km travel. The
      technological factors could only contribute a small proportion. For instance, the
      specific energy consumptions per unit physical output for most high energy
      consumption intensive products in China are around 20-30% as high as that in
      developed countries shown in Table 7. The structure factors characterized by
      economic benefits such as the value added of products. There are a big difference
      between China and developed countries.

           Table 7: The comparison of specific energy consumption of products
                         between China and developed countries
                                                       China                  The     world The
                                                                              advanced      difference
                                       2000   2001     2002    2003    2004        2003
Comparable energy consumption          781                     726            646(Japan) 17.2% high
per ton steel( kgce/ton)
Comprehensive energy consumption       1200                                   970(US)    19.2%
per ton of ammonia(kgce/ton)                                                             high
Comprehensive energy consumption       181.0                   181.0          128(Japan) 29.3%
per ton of cement(kgce/ton)                                                              high
Ethylene( kgce/ton)                    1212                    890            629(Japan) 29.3% high
Fuel rate of power generation in grid  392     385     383     380     376    312(Japan) 17.0%
(gce/kWh)                                                                                high
Comprehensive energy consumption       1277 1079       1016    957     1056
per ton of refined copper (kgce/ton)
Comprehensive energy consumption       1212 1180       1155    1109    1023
per ton of alumina (kgce/ton)
Comprehensive energy consumption       721     685     607     607     633
per ton of refined lead(kgce/ton)
Comprehensive energy consumption       2307 2050       1888    1890    2013
per ton of electrolytic zinc(kgce/ton)
            Source:China Energy Statistical Yearbook

    Through 1980-2001,the energy consumption intensity of GDP in China
reduced by two thirds and in corresponding the average annual energy
consumption growth rate was less half of average annual GDP growth rate. The
economic structure improvement made the most contribution and the technical
improvement was in the second place. Since the economic reform initiated from
1978, the manufacturing industries as whole have been upgraded through the
introducing new technologies and advanced management experience from
developed countries. It brought the value added of most products upgrading and
the specific energy consumption reducing significantly.
   But since 2002,the tendency of energy consumption intensity reduction has
been reverse and the energy consumption increasing rates have been over the
GDP increasing. What is the reason making the tendency reversed? Obviously, it
was not owing to the technological factors. During the recent years the specific
energy consumptions for most high energy consumption intensive products were
reducing shown in Table 7. It could be attributed to that the industrial structure
changes towards to heavy industries derived by demand structure changes and
the foreign trade rapidly increasing in extensive way.
   A lot of experts consider that China is experiencing a progress towards heavy
industry proportion increasing on the evidence of heavy industry proportion
increase in total industry by five percentages through 2002-2004. The heavy
industries are the high energy consumption intensive sectors and the heavy
industry proportion increasing would bring the energy consumption intensity of
GDP increasing. The heavy industry proportion increasing was derived by the
demand structure changes in recent years.
   ①High capital investment proportion
   Due to insufficient residential expenditure demand the capital investment has
to become the main option to derive the economy growth in China.
   The consumption proportion in GDP use decreased from 61.1% in 2000 to
53% in 2004 and the capital investment proportion in GDP use increased from

36.4% in 2000 to 44.2% in 2004. It made the GDP use structure changed.
   ②Consumption composition upgrading
  China is experiencing residential consumption composition upgrading.
Especially, the demand for housing and car were increasing rapidly.
  Above both trends fostered the strong needs for steel, cement and non-ferrous
metal products supply and brought heavy industry proportion increasing.
   Actually, the foreign trade rapidly increasing in extensive way was the main
 factor causing the energy consumption intensity of GDP increasing in recent
 years of China.
    ① Foreign trade dependence increasing
    In recent years the total amount of import and export increased rapidly. In
2005 the ratio of total amount of import and export to GDP, called as foreign trade
dependence, reached 65% increased by 24 percentages compared to 2000.
    ②“Improvement trade” enlarged
    What implies the “improvement trade”?For instance, Nike is a well-know
shoes brand around the world. In actually, Nike Company itself does not make any
shoes at all. He only focuses on two things: product design and marketing. He
makes the most shoes orders to China factories in “improvement trade” mode.
In generally, a copy of shoes could be sell more 50 US$ in retail shop in US. But
the shoes manufacture factories in China could only get less 10 US$ for a copy of
shoes by “improvement trade” order and the value added created by making a
copy of shoes is even less. Almost all energy and material consumed for making
the shoes are available from China and most of value added in whole production
and marketing chain is obtained by Nike Company. In this “improvement trade”
way, the energy consumption intensity is near zero for Nike Company and in
reverse the energy consumption intensity in China would be magnified by times.
    ③ Export immiserzing growth
    Since China entered into WTO, China’s total amount of foreign trade has
increased from 500 to 1400 billion US$ in 4 years. But the profit earned from one
unit of product or one item of service was reducing in China. For example, the
gross profit earned from one meter of chemical fiber printing and dyeing has

decreased from 0.11 Yuan to 0.03 Yuan in 4 years.
   Table 8 and Fig.6 show the trend of energy consumption intensity in industry
during 1995-2004. It could be saw that the year of 2002 was the reverse point.
Before 2002, the energy consumption intensities of light industries, heavy
industries as well as industries as whole were decreasing annually in average by
8.7%, 8.3% and 10.2%, respectively. But after then average annual energy
consumption intensities of light industries and heavy industries were increasing by
5.4% and 1.8%, respectively. If the proportion of heavy industries in total industry
in 2004 could keep same as in 2002, the energy consumption of industry as whole
should increase by 3.68% instead of 4.6% in actually. The difference of 0.92%
was derived by the increase of proportion of heavy industries in total industry. It is
notable that through 2002 to 2004 the increases of energy consumption
intensities of light and heavy industries were accompanied with the foreign trade
dependence increasing. If it is assumed the increases of energy consumption
intensities of light and heavy industries could be derived totally by the foreign
trade dependence increasing, the foreign trade dependence increasing would
make 80% contribution to the total energy consumption intensity of industry as

       Table 8: The energy consumption intensity in industry during 1995-2004
                         unit: tce/ 10 thousands Yuan
         Intensity In      Intensity In      Intensity In     Heavy        Foreign
         whole industry    heavy industry    light industry   industry     trade
                                                              proportion   dependence
1995         8.6862            11.2461           4.1940       0.637            0.3865
1996         8.0528            11.1998           3.3323       0.6              0.3391
1997         7.2177            10.1866           2.8012       0.598            0.3415
1998         6.2523            8.6661            2.6012       0.602            0.3181
1999         5.6668            7.7867            2.3789       0.608            0.3334
2000         5.3056            7.1116            2.2956       0.625            0.3958
2001         5.0257            6.6914            2.2017       0.629            0.3847
2002         4.8393            6.4740            2.1031       0.626            0.4270
2003         5.0174            6.4886            2.1869       0.658            0.5189
2004         5.2951            6.7129            2.3371       0.676            0.5976
              Source:China Statistical Yearbook, China Energy Statistical Yearbook

Fig. 6: The trend of energy consumption intensity in industry during 1995-2004

     There are 2800 billion m3 water resource available annually in China, in which
829 billion m3 are available from underground. But in context of per capita water
resource China is only 31% of world average level, one fifths of US and one
fifteenths of Canada. The water resource per hectare of land in China is only 61%
of world average level.
    In context of circular economy three indicators relevant to water resource
utilization are adopted, which are water use per 10 thousands Yuan of industrial
value added, water recycling ratio in industry, as well as the average effective
utilization co-efficiency of agriculture irrigation.
    Table 9 indicates the water utilization situation in China during 2000-2004.
The total water use was 549.8 billion m3 in 2000 and 554.8 billion m3 in 2004. The
agriculture water use accounted for 64.6% in total national water use and industry
accounted for 22.2%, urban and rural residential use 11.7%, and ecological use
      Table 9: The water utilization situation in China during 2000-2004
                                                       2000    2001    2002    2003    2004
         Total water usage(billion m )                 549.8   556.7   549.7   532.0   554.8
         Agriculture usage(billion m3)                 378.4   382.4   377.6   343.1   358.4
           Industry usage(billion m3)                  113.9   114.2   112.7   117.6   122.6
         Residential usage(billion m3)                 57.5    60.1    59.4    63.3    66.0
          Ecological usage(billion m3)                   -       -       -      8.0     8.3
          Proportion in agriculture(%)                 68.8    68.7    68.0    64.5    64.6
           Proportion in industry(%)                   20.7    20.5    20.8    22.10   22.20
          Proportion in residential(%)                 10.5    10.8    11.2    11.90   11.70
       Proportion in ecological usage(%)                 -       -       -     1.50    1.50
              Industrial value added                   4003    4350    4784    5394    6015
            (billion Yuan,2000 price)
           Water use per unit industrial               288     262     239     218     205
                    value added
         (m3/ 104 Yuan,2000 price)
      Water recycling ratio in industry (%)                    69.6    71.5    72.5    74.2
  average effective utilization co-efficiency of       0.43                            0.45
             agriculture irrigation
          Water saving irrigation land areas           1639    1745    1863    1944    2035
                   (104 hectares)
  Effective irrigation land areas (104 hectares)       5382    5425    5436    5410    5625

        Source: China water conservancy communiqué.

    Through 2000-2004 the agricultural water usage reduced by 5.6%,
corresponding 20 billion m3. In reverse, the effective irrigation land areas have
increased by 5.5%, in corresponding from 53.82 million hectares in 2000 to 56.25
million hectares in 2004. The effective irrigation land areas account for about half
of culture land areas in China. Meanwhile, the water saving irrigation land areas
have increased by 24% from 16.39 million hectares in 2000 to 20.25 million
hectares in 2004. It implied that the new added effective irrigation lands were
almost water saving irrigation lands. In addition 1.5 million hectares of effective
irrigation   lands   were   reformed   into   water   saving   irrigation   lands.   In
correspondence the average effective utilization co-efficiency of agriculture
irrigation increased from 43% in 2000 to 45% in 2004. It indicates that the
increase of water saving irrigation lands might play a significant role in water
    Meanwhile, the industrial water usage increased from 113.9 billion m3 in 2000
 to 122.6 billion m3 in 2004 and the industrial value added increased by 50%. In
 correspondence the water consumption per 10 thousands industrial value added
 decreased from 288 m3 in 2000 to 205 m3 in 2004. Meanwhile, the water
 recycling ratio in industry increased from 69.9% in 2000 to 74.2% in 2004, which
 was the crucial factor leading the reduction of water consumption per 10
 thousands industrial value added in China.
    But the residential water usage is increasing and is expected to continue and
probably accelerate in rapidly urbanizing areas.

    For the metallic mineral resources, the comprehensive recovery ratio is
defined as the ratio of the actual recovery metal ore to corresponding metal
mineral reserve in the mine expressed as:
  Comprehensive recovery ratio = actual recovery metal ore / metallic mineral
                                       reserve in the mine
     The mineral recovery includes two processes of extracting and washing.
Therefore, the recovery ratio could be expressed as the product of extracting
recovery ratio multiplied by washing recovery ratio. In actually, the extracting
recovery ratio has different definition in terms of different reserve bases: the
reserve in mine or the reserve in prepared extracting area.
    The report of 《 The exploitation and utilization level and policy suggestions
of main mineral in China 》published by Department of Mineral Exploitation,
Ministry of Land and Resources in 2002 provides the comprehensive recovery
ratios of the main minerals in China obtained by investigation in 1999 shown in
Table 10. In the Table two of recovery ratios for coal are given in terms of coal
mine reserve basis and prepared coal mining area basis. The recovery ratios in
terms of prepared coal mining area reserve basis are higher than that in terms of
coal mine reserve basis.
    In actually, there is no availability of comprehensive recovery ratios of
non-ferrous metallic minerals in statistics data. But, the statistical data of ore loss
ratios in extracting and recovery ratios in washing are available in China
Non-ferrous Metal Statistical Yearbook. Therefore, the recovery ratios in
extracting are derived from ore loss ratios in extracting. Table 11 indicates the
comprehensive recovery ratios of bauxite, copper, lead and zinc minerals through
2000-2004. The comprehensive recovery ratios of non-ferrous metal minerals
were ranging 75%-83%.

   Table10: The comprehensive recovery ratios of main minerals in China (1999)
                               Large mining        Middle mining    Small mining
                               enterprises          enterprises     enterprises
              In mine          66.20                       59.67           47.09     56.29
              In mining area   77.54                       77.14           56.92     68.18
              In washing       54.46                       56.83           69.96     54.95
              Comprehensive    36.05                       33.91           32.94     30.93
   Oil        In oil field                                                           29.00
 Nat. gas     In gar field                                                           63.14
              In mine          92.31                       90.40           87.48     90.07
   Iron       In washing       78.61                       83.79           81.91     79.55
              Comprehensive    72.56                       75.75           71.65     71.65
              In mine          82.65                       80.33           71.38     75.88
Manganese     In washing       79.8                        67.20           72.85     76.72
              Comprehensive    65.95                       53.98           52.00     58.22
              In mine                                      94.00           91.95     92.73
Chromium      In washing                                                   84.97     84.97
              Comprehensive                                                78.13     78.79
              In mine          65.1                          68.1          40.00     58.40
 Tungsten     In washing       78.5                          76.5          63.60     74.50
              Comprehensive    51.1                          52.1          25.40     43.50
              In mine
Rare earth    In washing
              Comprehensive                                                          18.25
              In mine          73.17                       60.18           44.30      60.8
Phosphorus    In washing       81.50                         70.0                     81.0
              Comprehensive    59.63                       42.13                     49.25
              In mine          92.50                       77.62           43.01     67.20
Iron pyrite   In washing       79.22                                       74.01     78.20
              Comprehensive    73.28                                       31.83     52.55
              In mine          95.20                       92.89           65.40     74.70
 Bauxite      In washing
              In mine          87.46                       66.09           64.62     71.11
              In washing       77.58                       87.97           85.80     85.12

                                Large mining          Middle mining     Small mining
                                enterprises            enterprises       enterprises
             Comprehensive      67.85                          58.14            55.44       60.53
             In mine            87.46                          66.09            64.62       71.11
   Zinc      In washing         78.51                          84.07            89.94       83.84
             Comprehensive      68.66                          55.56            58.12       59.62
             In mine            89.36                          92.73            82.23       83.06
   Tin       In washing         68.80                          75.80            53.24       65.06
             Comprehensive      61.48                          70.28            43.78       54.04
             In mine                                           79.11            62.03       68.66
 Antimony    In washing                                        88.14            83.56       85.33
             Comprehensive                                     69.73            51.83       58.59
             In mine            83.55                          79.36            74.36       76.91
   Gold      In washing         89.99                          86.03            85.43       86.19
             Comprehensive      75.19                          68.28            63.52       66.29
             In mine            95.76                          99.30            86.54       95.50
  Nickel     In washing         86.34                          83.90            76.93       85.42
             Comprehensive      82.68                          83.30            66.58       81.58
             In mine            89.93                          76.94            62.76       84.63
  Copper     In washing         86.69                          86.71            88.21       86.86
             Comprehensive      77.96                          66.72            55.37       73.51
             In mine            89.37                          83.08            42.48       83.47
Molybdenum   In washing         86.13                          81.64            82.13       85.28
             Comprehensive      76.97                          67.83            34.89       71.29
             In mine            60.00                                           59.33
Potassium    In washing         83.00                                           59.00
             Comprehensive      50.00                                           35.00       41.60
  Source:《The exploitation and utilization level and policy suggestions of main mineral
              in China》

    Table 11: The comprehensive recovery ratios of the main non-ferrous
                  metal minerals in China through 2000-2004 ( % )
                                      2000    2001    2002    2003    2004
        Open pit      In extracting           93.09
                      Comprehensive   82.6    83.4    83.89   83.92   82.93
        Mine          In extracting           86.57           90.41   89.94
                      In washing              88.30           87.67   87.94
                      Comprehensive   73.28   72.57   76.9    76.6    76.71
        Open pit      In extracting           97.98           97.97   98.16
                      In washing              88.30           87.67   87.94
                      Comprehensive   83.06   83.32   83.15   83.00   83.28
                      Lead & Zinc
        Mine          In extracting           92.88           92.01   91.97
                      In washing              87.47           86.88   87.01
                      Comprehensive   74.93   75.18   75.88   74.92   75.01
        Open pit      In extracting           95.25           97.68   98.38
                      In washing              87.47           86.88   87.01
                      Comprehensive   78.16   77.09   78.39   79.54   80.24

   The waste recycling is the crucial issues in circular economy establishment.
The recycled wastes to be reutilized would minimize the resource consumption
towards sustainable development. China has the needed to import large amount
of iron, copper and bauxite minerals, because these minerals are of low grade as
well as the domestic bauxites are to be difficultly refinery with high energy
consumption intensity.
   Therefore, promoting the scraps of steel, copper and aluminum to be recycled
might have important significance in China.
   The scrap steel recycling could reduce the original mineral resource
 consumption as well as energy consumption. Recycling one ton of scrap could
 conserve the ores containing 1.03 tons of iron elements and 0.6 tons of coal, and
 50kg of limestone.
   Thanks to the magnetic property of steel, the scrap steel is easy to be handled

and separated from other wastes. Therefore, the scrap could be recovery at high
rates. According to the report of 《The Steel: Foundation of a Sustainable
Future---Sustainability Report on the World Steel Industry 2005》 prepared by
International Iron and Steel Institute, an investigation on global in recently
indicates that recovery rates of scrap steel could reach 63% in average and 85%
in some countries.
    The reutilization of mineral products in developed countries such as US,
Japan and Waste Europe Countries has reached very high level. In these
countries the infrastructure has been established and large amount of scrap steel
are generated annually, which are near to the annual consumption level. As well
as there are very high recovery rates in these countries, In US the recovery rates
of building structure steel reach 95%; automobiles 95%; packages 58% and
electric appliances 84%.
    The scrap steel is grouped into three types according to its source. These are:
home scrap from the steel mill itself, prompt scrap from the production of finished
goods, and obsolete scrap from steel products at their end-of-life. The return cycle
of scrap from steel products varied with scrap types. Home return to the steel mill
within several months, prompt scrap returns within several months, but the return
cycle of obsolete scrap depends on the lifetime of the products. The steel is made
either by the basic oxygen furnace route, main from pig iron (molten iron) or by the
electric arc furnace route, mainly from recycled scrap steel. Pig iron is made from
iron ore, coal, and limestone in a blast furnace. Therefore, it is easy to account the
scrap steel recycled rates in terms of the different steel making furnace routes.
    Although the recovery rates of scrap steel could reach very high level in
theory and could not in actually. On average, the steel scrap currently arising from
the construction sector was produced 25-30 years ago; some of it is even older.
Today the steel outputs in worldwide are 50% higher than that in ten years before.
Because the steel products have long life cycles, there are not sufficient amount
of scrap steel, even 100% scrap steel recycled, to meet the steel production
demand in today. The iron ore supply is still needed.
    According the definition of International Iron and Steel Institute:
    Recycled rate of steel = recycled steel / crude steel production

    In 2004 the total recycled scrap in worldwide was 440 Mt and the crude steel
production was 1,067Mt, in correspondence the recycled rate of steel was 42.3%
shown in Table 12.
         Table 12: The scrap steel recycled in main countries in 2004
                            Crude               Recycled       Recycled rates
                            steel ,Mt           steel, Mt             (%)
                US               99.7                 67             67.2
                Japan            112.7                53.4           47.4
                German           46.4                 22.2           47.8
                Korea            47.5                 18.4           38.7
                World            1067                 440            42.3
                                             ,International Iron & Steel Institute
                 《World Steel in Figures 2006》

    In recent years, the steel production and consumption in China were
increasing rapidly. Before 10-20 years the steel consumptions were in much low
level and it causing the scrap steel production and recycle in China relatively low.
Table 13 shows the scrap steel recycled in China. In 2004 the amounts of scrap
steel and crude steel production are 54 and 283 Mt,respectively, and the
corresponding recycled ratio was 20.1%.
                  Table 13: The scrap steel recycled in China
                                        2000       2001      2002     2003    2004
            Recycled rates, %           23.49      22.40     21.04    21.11   20.10
            Recycled steel, Mt          29.2       34.4      39.2     49.43   54.26
                 Domestic               24.1       24.61     31.35    38.91   44.07
                 Imported               5.1        9.79      7.85     10.52   10.19
            Crude steel, Mt             129        152       182      222     283
            Source:China Scrap Steel Association

    Aluminum is an important material used for making transportation equipment,
 buildings and beverage cans, which accounts for 28%、21%、12% in total world
 aluminum consumption, respectively.
    Aluminum is one of metals and made from bauxite resource. The bauxites
extracted domestically in China are to be difficult for refinery with high energy

consumption intensity. China has to import large amount of bauxite from the world
market. The bauxites ore is refined into alumina, which is then converted into
metallic aluminum using electrolysis. The production of aluminum metal is an
energy intensive process and uses a lot of electricity. The aluminum scrap
recycling could not conserve the bauxite resource and reduce energy
    In terms of International Aluminum Institute definition, the aluminum scrap is
grouped into two types: new scrap and old scrap. The new scrap is scrap arising
from the production of aluminum and its alloys, and from the fabrication of
semi-fabricated (mill) products and end-products: within the context of this report,
it excludes run-around scrap, that is new scrap re-melted in the same company or
integrated company group where the scrap has been generated. Old scrap is
scrap arising from the disposal of products after they have been used.
    Therefore, in terms of International Aluminum Institute definition, the new
scrap re-melted in the same company or integrated company group where the
scrap has been generated is excluded from the recycled scrap.
    In 2005 the total aluminum production was 23.45 Mt and recycled aluminum
was 2.86Mt, and corresponding recycled rate was 12.2%.
    Table 14 shows the aluminum scrap recycled through 2000-2004, the data are
available in China Non-ferrous Metal Statistical Yearbook. The recycled rate of
aluminum scrap in 2004 was much high as 20.27%, which was higher than the
world average level. It could be explained by different definition of scrap recycled
scope, in China the recycled scrap might include the new scrap re-melted in the
same company or integrated company group where the scrap has been
             Table 14: The recycled scrap aluminum in China
                                         2000     2001     2002     2003     2004
Recycled ratio                           6.53     5.72     4.21     6.96     20.27
Recycled aluminum production, 10 tons    19.52    20.44    18.98    41.51    170.00
Refinery aluminum production, 104 tons   298.92   357.58   451.11   596.22   838.88
    Source:                                             ,2001~2005
           《China Non-ferrous Metal Statistical Yearbook》


   The copper used for building construction accounts for 40% of total copper
consumption around the world, then the electric and electronic appliances,
transportation equipment, industrial machinery and equipment, which account for
27%、12% and 11%, respectively.
   The copper scrap is reutilized in two ways: one is the recycled way, in which
 the copper scrap is re-melted through electrolyze; second one is directly re-used,
 that is the copper scrap is directly reformed into the copper products or the
 copper alloy products through strict classifying and separating, and preparation.
 The second way is not only energy saving, but also could use the alloyed metals.
     The copper scrap recycling includes the new scrap generated in smelting
 and processing and old scrap generated from the discarded products after their
 lifecycle. The recycled rate is defined as the ratio of recycled refined copper
 production to the total refined copper production. In 2004 the refined copper
 production was 15.77 Mt and the recycled refined copper production was 1.97 Mt.
 That is the recycled rate of cooper was 12.5%.
    Table 15 shows the copper scrap recycled rates through 2000-2004 in China,
in which the recycled copper scrap included the generated domestic and imported.
Table 16 indicates the aluminum and copper scrap recycled around the world. The
non-ferrous metals recycled rates in China seem rather higher in compared with
the world average level. It could be explained by the enlarged scope of recycled
scrap in China, including the new scrap re-melted in the same company or
integrated company group where the scrap has been generated.

             Table 15: The recycled rates of copper scrap in China
                                           2000     2001     2002     2003     2004
    Recycled rates, %                      25.36    20.19    23.30    23.19    28.20
    Recycled refined production, 10 tons   34.77    30.75    38.03    42.58    62.00
    Total refined production, 104 tons     137.11   152.33   163.25   183.63   219.87
              Source:                                              ,2001~2005
                     《China Non-ferrous Metal Statistical Yearbook 》

                               Table16: The non-ferrous metal recycling in the world
                    Refined copper                        Refined aluminum                         Refined lead
          Total                                       Total                              Total
                    Recycled   Recycled   Direct                Recycled   Recycled                  Recycled     Recycled
       Production                                  Production                         Production
                      Mt       Rate (%)   reuse                   Mt       Rate (%)                    Mt         Rate (%)
           Mt                                          Mt                                 Mt
2000    14.814       1.902      12.8%     3.199     24.660       8.150       24.8%      6.737          2.856       42.4%
2001    15.379       1.751      11.4%     3.888     24.436       7.828       24.3%      6.397          3.047       47.6%
2002    15.365       1.740      11.3%     3.862     26.076       7.649       22.7%      6.721          2.962       44.1%
2003    15.245       1.766      11.6%     3.739     28.000       7.658       21.5%      6.903          3.058       44.3%
2004    15.907       1.927      12.1%     3.814     29.874       7.560       20.2%      7.380          3.455       46.8%

                    《World Non-ferrous Metals》


     DPO is defined as: the total weight of materials, extracted from the domestic
environment or imported, which have been used in the domestic economy, before
flowing to the environment. These flows occur at the processing, manufacturing,
use, and final disposal stages of the production-consumption chain. Included in
DPO are emissions to air, industrial and household wastes deposited in landfills,
material loads in wastewater and materials dispersed into the environment as a
result of product use (dissipative flows).

     Table 17 indicates the tendency of DPO of China through 2000 to 2004. The
DPO in 2000 was 3.026 billion tons and then were continuously increasing to
3.501 billion tons in 2004. In similarity, the analysis is made by a comparison
between China and other countries shown in Table 18 and 19.

Table 17: The tendency of China DPO and their composition during 2000-2004
                                        2000      2000    2002    2003    2004
      DPO)               Mt             3026      3070    3219    3371    3501
      Per capita DPO       tons         2.39      2.40    2.51    2.61    2.69
      DPO/GDP           kg/US$          2.52      2.36    2.27    2.16    2.04

      To air            Amount, Mt      7.76      8.40    9.61    11.14   11.36

                        Percentage,% 25.66% 27.35% 29.86% 33.05% 32.45%

      To land           Amount, Mt      5.60      5.49    5.81    5.92    6.77

                        Percentage,% 18.50% 17.90% 18.05% 17.57% 19.34%

      To water          Amount, Mt      0.05      0.05    0.05    0.05    0.05

                        Percentage,%   0.18%      0.17%   0.16%   0.15%   0.14%

      Dissipative       Amount, Mt      16.84     16.75   16.72   16.60   16.83

                        Percentage,% 55.66% 54.58% 51.93% 49.23% 48.07%
      Increase by
      above year                                  1.44%   4.88%   4.71%   3.87%

               Table 18: The comparison of per capita DPO between
                            China and other countries in 2000
                                 Per capita DPO, tons       DPO/GDP, kg/US$
                      Austria               12.5                     0.43
                      Netherl               13.1                     0.685
                      Germa                 11.2                     0.439
                      Japan                 18.1                     0.263
                          US                25.1                     0.917
                      China                 2.39                     2.52

               Table 19: The comparison of DPO composition between
                           China and other countries
 Unit: Mt    China DPO(2000)                   DPO in developed countries (1996)
                                          US                   Japan             German
             Amount       %          Amount         %       Amount    %       Amount   %
 DPO         3026         100%       2670           100%     496      100%     387     100%
 To air       776         25.66%     1810           67.8%    386      77.9%    221     57.1%
 To water       5          0.18%       10           0.4%      17      3.4%       3     0.8%
 To land      560         18.50%      430           16.1%     80      16.1%    117     30.2%
 Dissipative 1684         55.66%      150           5.6%      13      2.6%      46     11.9%
 Others                               270           10.1%

    In regarding the total amount, the DPO of China is much larger than that in
developed countries. It implies that the DPO has the impact on the environment
significantly in China. In considering the compositions, the emissions to the air in
developed countries are much larger owing to the large gaseous emission
contributed from fossil fuel combustion. The wastes discharged to the land are
mainly regarded as the municipal wastes and disposed industrial wastes. It
accounted as the large part in DPO in China. Up to now, most the municipal
wastes in China are not be treated using harmless and reductive disposals, in
which China has big gap with the developed countries and will put more efforts in
the future. For instance of Japan, the total amount of municipal wastes and
industrial solid wastes generated were 588 Mt, but finally reduced to only 53 Mt
for landfills in 2000. In contrast to China, the total amount carrying municipal solid

wastes were 149 Mt, of which only 2.5% were disposed using incineration in 2003 .
The solid wastes in landfills using harmless disposal only accounted for 50%.
    The dissipative wastes account for largest percentages in China DPO. It is
 attributed to the large amount of household wastes and livestock manure
 generated and not collected in vast rural areas, which would bring the severe
 impact on the rural environment.
Currently, the per capita DPO in China is rather small compared with developed
countries and only about one tenths to sixths of that in developed countries. But
the DPO per unit of GDP in China is rather higher than that of developed countries.
Therefore, China should make great efforts on reducing the DPO in future. In
context of circular economy development of China the increasing resource
utilization efficiencies and promoting the materials reused and recycled would pay
important role in reducing the DPO in China.

Main conclusions of this study:
1. Policy relevance of circular economic indicators in China
   In the early two decades of 21 century, China is in the accelerating
development stage of industrialization and urbanization and facing the big
challenges of resource supply and environmental impact pressure. In order to
achieve the strategically development goal of building an all-round well-off society,
China government is vigorously promoting the circular economic development. It
is necessary to establish the circular economic indicators.
    The role of establishment of circular economic indicators in China is that: to
evaluate and analysis the situation of China circular economic development by
international comparisons, to set up the quantitative targets of circular economic
development, and to assess and monitor the progress of circular economic
development in China.
    The circular economic indicators should be emphasized on reflecting the
principle of “reduce, reuse, and recycle”. It is that to achieve maximizing the
economic benefits and minimizing the waste pollution by least resource
consumption and environmental costs. China is a big country but with relatively

poor resources per capita, especially in energy, water, iron, non-ferrous metal
    China government has set up the circular economic development goals and
relevant quantitative targets by 2010 (unpublished). This project study carried out
collection, preparation and account of data relevant to all circular economic
indicators, and finally provided the trends of all circular economic indicators
through 2000 to 2004 in China. These results have been submitted to Department
of Resource Conservation and Environment Protection of China NDRC to use for
making comparison with the relevant quantitative targets by 2010. Some valuable
conclusion and comments have been derived from the comparison and analyses。
    This project study pays a great attention to analysis on the reasons causing
the low benefits of resource utilization, especially the accelerating increase of key
resources consumption such as energy resources in recent years. The study
indicates that the structure change in demand side, as well as the accelerating
increase of foreign trade dependence is the essential factors bringing the
accelerating increase of key resources consumption. The officials from the
Department of Resource Conservation and Environmental Protection of NDRC
expressed that the point views were new findings and more valuable referring
to the energy conservation policy making in China.

2. The key indicators of circular economic indicator system

   7 aggregative national indicators and 15 sectional indicators are suggested in

China circular economic indicators in this project study. Among these indicators

two indicators of DMI and DPO could be considered as the key indicators in

context of practical monitoring China's progress with circular economy and

evaluating its eventual success. The DMI measures the direct material input for

whole social-economic activities and obviously is an important indicator for macro

economy-wide. Many other indicators such as resource productivity and resource
consumption in the aggregative national indicators are basically derived from the

DMI indicator.
  As well as the DPO is also a key indicator reflecting the national environmental
burden by the emissions, included in DPO are all emissions to air, industrial and
household wastes deposited in landfills, material loads in wastewater and
materials dispersed into the environment as a result of product use.

3. The data availability and measurability
   In this project study included in the DMI are about 40 categories of materials.
For most of them the relevant data are available from the statistics information.
But for some of them the relevant data are difficult to be accessed and have to be
estimated through relevant information and input-output relations, especially, for
building materials such sand, stone and limestone, as well as some renewable
   In order to make the DMI indicator to be sound and measurability, in the initiate
stage only direct inputs of some key materials are selected to be included in DMI,
such as fossil fuels, iron ore, non-ferrous metal ores and resource materials
making cement, called as key DMI.
   Included in DPO the emissions to the air and land are measurable and
relevant data could be accessed from corresponding statistics in China. But the
emissions to the water and dissipative wastes are not be measurable and have to
be based on estimations. In order to make the DPO indicator to be sound and
reliable, in the initiate stage only the emissions to the air and land could be
selected as the waste emission indicators.
  For the sectional circular economic indicators, the data are measurable and
almost available. But few indicators definition should be clarified: (1) For indicator
of mineral recovery ratios , the accounted mineral reserve should be clarified in
terms of what bases: mine reserves, or mining areas reserves or practical feasible
recoverable reserves; (2) For the indicator of recycled ratio of non-ferrous metal
scrap, in terms of International Aluminum Institute definition it excludes
run-around scrap, that is new scrap re-melted in the same company or integrated
company group where the scrap has been generated. But for the recycled ratio of

aluminum scrap published in China Non-ferrous Metal Year Statistics the
run-around scrap is included.

1.Iddo K. Wernick,Frances H. Irwin,Material Flows Accounts - A Tool for Making
Environmental Policy,WRI, Washington D.C., 2005
2. Matthews, etc, The Weight of Nations: Material Outflows from Industrial Economics,
WRI, Washington D.C., 2000
3. Noritoshi Ariyosh and Yuichi Moriguchi, The Development of Environmental
Accounting Frameworks and Indicators for Measuring Sustainability in Japan, OECD
Meeting on Accounting Frameworks to Measure Sustainable Development, OECD, Paris,
14-16 May 2003
4. Economy-Wide Material Flow Accounts And Derived Indicators - A Methodological
   Guide, Eurostat 2000
5. "Material use in the European Union 1980-2000: Indicators and analysis", Eurostat,
2002, Luxembourg
6. The Steel: Foundation of a Sustainable Future---Sustainability Report on the World
Steel Industry 2005, International Iron and Steel Institute, 2006
7. Wang Anjian, Wang Gaoshang, The mineral Resources and Nation Economy
Development, Earthquake Press, 2002
8. China Statistical Yearbook, 2000-2005
9. China Energy Statistical Yearbook, 2000-2005
10. Liu Bin,Study of the Index System of Circular Economy - Material Flow Accounting in
China 2000-2004 and Accounting Guideline Compilation, World Bank Report, 2006.


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