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The Next Economy
How the World’s Most Wasteful Country Is Leading the Shift to a Circular Economy

John A. Mathews and Hao Tan, both professors based in Australia, believe that the country that consumes the most resources in the world and produces the most waste also has the most advanced solutions. In a recent article for Nature, they summarized China’s progress on closing industrial loops to reduce its industries’ consumption of virgin materials and waste generation – in other words, the development of a circular economy.

China’s levels of consumption and waste are completely unsustainable, and its resource use is inefficient. The authors provide several statistics for context:

  • In 2011, it consumed more raw materials than the 34 countries of the Organisation for Economic Co-operation and Development (OECD) combined: 25.2 billion tonnes.
  • China requires 2.5 kilograms of materials to generate US$1 of gross domestic product (GDP) compared with 0.54 kilograms in OECD countries (in 2005 dollars, adjusted for purchasing power parity).
  • In 2014, China generated 3.2 billion tonnes of industrial solid waste, only 2 billion tonnes of which was recovered by recycling, composting, incineration or reuse. By comparison, firms and households in the 28 countries of the European Union generated 2.5 billion tonnes of waste in 2012, of which 1 billion was recycled or used for energy.

As public awareness of environmental issues grows and geopolitical costs rise, China recognizes that it must take action. Since 2005, the country has acknowledged the risks of its heavy resource exploitation and has mentioned the circular economy as a promising solution in public policy documents and legislation.

China’s National Bureau of Statistics analysed progress from 2005 to 2013 on four measures: resource intensity (resources used per unit GDP), which improved by 34.7 percent; waste intensity (waste per unit GDP), which improved by 46.5 percent; waste recycling and reuse, which improved by 8.2 percent; and the treatment rate of pollution, including sewage, the decontamination of urban residential waste and the reduction of major pollutants, which increased by 74.6 percent.

China achieved its resource intensity improvements by introducing taxation, fiscal, pricing and industrial policies, such as tax breaks for firms in the reuse sector and a fund allocated to supporting the eco-conversion of industrial parks. The government selected 13 industrial parks for a national circular economy pilot programme in 2005, some of which grew to involve over 10,000 enterprises and thousands of manufacturing firms facilitating the recirculation of resources, such as gold and copper for printed circuit boards or mining residues for the production of sulfuric acid and construction materials.

The government set targets for the coal, steel, electronics, chemical and petrochemical industries. In the country’s 12th Five-Year Plan (for 2011–15), the circular economy was upgraded to a national development strategy and objectives included reusing 72 percent of industrial solid waste by 2015 and raising resource productivity (economic output per unit resources used) by 15 percent.

In 2013, China’s State Council released a national strategy for achieving a circular economy — the first such strategy in the world, and two years ahead of the European Commission’s Circular Economy Package. Last year, China was ranked 25th – ahead of both the US (41st) and UK (48th) – in a Global Sustainable Competitiveness Index ranking of 180 countries.

To continue its success and – ideally – curb its consumption and waste in absolute terms, Mathews and Tan recommend that China takes several steps, including to create a national goal and road map to achieve a level of resource intensity that is similar to that of OECD countries (currently around 0.5 kilograms per dollar of GDP).

Some of their advice can likely be used by almost any country beginning or advancing their transition to a circular economy:

  • Champion regional achievements, such as by giving rewards to eco-industrial parks that perform best;
  • Report data regularly;
  • Set strong targets for recirculation for primary industries such as iron, steel and aluminium;
  • Assess secondary industries such as wind energy, battery production and biotech on the basis of their recirculation potential and performance over their whole life cycles;
  • Clarify (or develop) circular economy metrics and reporting guidelines;
  • Conduct case studies of industrial symbiosis; and
  • Integrate performance measures such as circulation of resources to create an interest in the real flow of resources that underpins abstractions such as income and wealth.