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China Economy - DOC

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									CIRCULAR ECONOMY IN CHINA

The Concept

China’s leadership, inspired by Japanese and German Recycling Economy Laws, has
formed a Circular Economy (CE) initiative that has major strategic importance
worldwide. China’s rapid economic growth demands major supplies of all basic industrial
commodities, in competition with other nations. China’s emissions cross boundaries and
oceans, impacting Korea, Japan, and North America. Its contribution to greenhouse gases
is rising rapidly, even as its energy crisis becomes more acute.

The Circular Economy approach to resource-use efficiency integrates cleaner production
and industrial ecology in a broader system encompassing industrial firms, networks or
chains of firms, eco-industrial parks, and regional infrastructure to support resource
optimization. State owned and private enterprises, government and private infrastructure,
and consumers all have a role in achieving the CE. The three basic levels of action are:

      At the individual firm level, managers must seek much higher efficiency through
       the 3Rs of Cleaner Production, reduce consumption of resources and emission of
       pollutants and waste, reuse resources, and recycle by-products.
      The second level is to reuse and recycle resources within industrial parks and
       clustered or chained industries, so that resources will circulate fully in the local
       production system.
      The third level is to integrate different production and consumption systems in a
       region so the resources circulate among industries and urban systems. This level
       requires development of municipal or regional by-product collection, storage,
       processing, and distribution systems.

Efforts at all three levels include the development of resource recovery and cleaner
production enterprises and public facilities to support realization of the CE concept. This
adds a strong economic development dimension through investment in new ventures and
job creation. As a result, CE opens opportunities for both domestic and foreign
enterprises.

The Benefits of the Circular Economy

The importance of CE in China is described by Pan Yue, Deputy Minister, State
Environmental Protection Administration (SEPA), “China can no longer afford to follow
the West's resources-hungry model of development and it should encourage its citizens to
avoid adopting the developed world's consumer habits . . . It's important to make Chinese
people not blatantly imitate Western consumer habits so as not to repeat the mistakes by
the industrial development of the west over the past 300 years.”

National leaders such as Xie Zhenhua, Minister of SEPA, are charting a fifty-year plan to
achieve sustainability. With the new vision, several developments in recent years
contribute to this planning:
      Growing recognition of the need to create a development path to meet the needs
       of a growing population at a higher standard of living without following the
       model of western consumerism, inefficient resource consumption, and pollution.
      Developing a Circular Economy model with high resource efficiency and low
       pollution.
      Passage and implementation of the Cleaner Production law.
      Commitment of US$1.2 billion in science and technology investment for
       sustainable development by the Ministry of Science and Technology.
      Entry to WTO and the need for China’s industry to become more competitive.
      Acceptance of the nearly universal consensus on climate change, reflected by
       China’s signing of the Kyoto Accords.

The Circular Economy concept has developed in China as a strategy for reducing the
demand of its economy upon natural resources as well as the damage it causes to natural
environments.

The Impact of the Circular Economy

The goals of the Circular Economy must be achieved within the unyielding constraints of
resource availability, environmental carrying capacity, and the limits of eco-efficiency.
Many non-renewable natural resources have limited reserves regionally, nationally, and
globally. The capacity for renewable resources to regenerate is compromised by pollution
and overuse, as with ocean fisheries. There are natural limits to eco-efficiency in human
systems, including the energy demand of resource recovery, the number of cycles through
which materials can be recycled and maintain value, and dissipative uses of materials
where they become unrecoverable by the nature of their use (e.g. particles from the
surface of tires dissipate along roadways).

It is very important to recognize the economic benefits of the Circular Economy, not just
its costs. Market-based mechanisms are crucial to the success of this initiative. They
enable the transformation to tap the creative entrepreneurial spirit of the new economy in
China, while still utilizing public planning mechanisms to assure balanced development.
If the movement toward a more Circular Economy succeeds, China’s companies will be
more competitive. China’s cities and development zones will develop new housing and
commercial space in a more affordable way. Entrepreneurs will create new ventures,
offering many new jobs. Households will enjoy improved quality of life.

For foreign producers, China’s success in the Circular Economy effort would set a new
level for competitiveness in the world economy. The issue of competitiveness gained
through resource optimization is synergistic with rapid development of regional trade
alliances and networks of joint ventures.

								
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