Sustain Sci (2007) 2:95–101

DOI 10.1007/s11625-006-0018-1

OVERVIEW ARTICLE

Putting a circular economy into practice in China

Feng Zhijun Æ Yan Nailing

Received: 24 June 2006 / Accepted: 11 October 2006 / Published online: 12 January 2007
Ó Integrated Research System for Sustainability Science and Springer 2007

Abstract Promoting a circular economy has been Introduction

identified as China’s basic national policy, according to
the recently enacted 11th five-year plan for China’s The recently enacted 11th five-year plan identifies
economic and social development. Because of the economical use of resources as China’s basic national
importance of the development strategy used for this policy to promote a circular economy, preserve the
purpose, an implementation framework is proposed in environment, establish a resource-saving and environ-
this paper. First, a program is suggested for practically mentally friendly society, and achieve a harmonious
implementing a circular economy in China to serve as a balance of economic growth, population, resources,
demonstration, beginning at the level of enterprises, and the environment.
then industrial parks, then expanding to cities and The circular economy, which is a mode of economic
regions, thus enabling accumulation of experience to development based on ecological circulation of natural
facilitate reasonable decision-making at each succes- materials, requires compliance with ecological laws
sive step. Legislation is also urgent. Certain issues and sound utilization of natural resources to achieve
involving legislation, for example the rules the law economic development. It is, essentially, an ecological
requires, maneuverability, public involvement, and economy that follows the principles of ‘‘reducing re-
referencing of developed countries’ experiences, must source use, reusing, and recycling’’, with the objectives
be effectively addressed. Finally, a scientific and of reducing the resources that enter the production
effective assessment system should be developed to process, effecting multiple use of the same resources in
obtain accurate information and improve guidance. different ways, and reusing waste from one facility as a
Assessment indices should include an economic resource for other facilities. In this mode, with mate-
development index, a green development index, and a rials going through a feedback process of ‘‘resource–
human development index. product–renewed resource’’, the ultimate objective of
optimum production, optimized consumption and
Keywords Circular economy
Practice in China
minimum waste can be achieved in production (Feng
Legislation 2004).
‘‘Reducing resource use’’ means achieving the
objectives set for production and consumption by using
minimal raw materials and energy and by cutting
pollution at the very outset of economic activity. In
F. Zhijun
National People’s Congress, Environment and Resource production, this principle tends to be reflected in
Commission, Beijing, People’s Republic of China compact and lightweight products, simplified packag-
ing, and maximization of product functions, all with a
Y. Nailing (&)
view to reducing waste discharge. ‘‘Reusing’’ refers to
China Executive Leadership Academy, Pudong,
Shanghai 201204, People’s Republic of China the reuse of a product at other facilities after its initial
e-mail: [email protected] consumption rather than letting it become toxic waste.

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Recycling, the third principle of the circular economy, efficiency and equality, immediate interest and long-
means the use of a product many times in its primary term welfare, the parts and the whole.
state rather than one-off use. Meanwhile, products and Nations in the twenty-first century, whether devel-
components in a product series and their packaging oped or developing, are faced with significant problems
must be compatible with one another to enable their regarding development. China, the largest developing
reuse when they are upgraded. These principles, as nation on earth, needs to answer some fundamental
parts of the whole, occupy different places in terms of questions about development. There is, in fact, a
importance, with reduction of resource use as the movement away from the creed that ‘‘development is
leading principle within a circular economy system. of overriding importance’’ to one that ‘‘development is
As the largest developing nation in the world, China, the top priority’’ and thence to ‘‘overall, balanced and
with its low per-capita resources and environmental sustainable development’’; this trend is gradually giv-
capacity, still has a long way to go before it can be ing birth to a scientific philosophy of development
called a generally well-off society. To achieve harmo- specific to China. That is indeed the reasonable choice
nious relationships between human beings and the for China, facing as it does several problems including
environment, it is essential for China to further reform resource and energy shortages, environmental issues,
its economic structure and even to shift to a new and how to boost national competitiveness and safe-
growth model. Otherwise, natural resources, the envi- guard national security.
ronment, and the national competitiveness and security
of China will all be threatened. Under these conditions, Resource problems
China must prepare itself for a long and narrow road
that adheres to circular economy practices now and for With severe shortages in aggregate and per-capita re-
many years to come. sources, the growing demand for resource consumption
in China is breathtaking. In terms of aggregate re-
sources, China has 1.8% of the world’s total oil re-
The importance of a development strategy serves, 0.7% of natural gas, 9% of iron ore, 5% of
copper ore, and 2% of aluminum. With regard to per-
People’s opinions of development are very important. capita resources, one Chinese owns half the world
Different opinions of development determine different average in mineral resources, one-third in arable land
development paths, models, and strategies. and grassland, one-fourth in water resources, one-fifth
In the five decades since World War II, humanity in forest, one-seventh in energy, and only one-tenth in
gained much insight into development. In the 1950s, oil (Information Office of the State Council 2006).
some economists (e.g. Lewis 1954) equated develop- In terms of resource use in China, from 1990 to 2001
ment with economic growth. Some developing coun- oil consumption increased by 100%, natural gas by
tries, for example Brazil, Mexico, and South Africa, 92%, steel by 143%, copper by 189%, aluminum
replicated this theory in their own development, by 380%, zinc by 311%, and ten non-ferrous metals by
resulting in such phenomena as ‘‘growth without 276%. Steel consumption is currently 250 million tons,
development’’ and ‘‘negative development’’. In the equal to the combined total of the USA, the European
late 1960s, Gunnar Myrdal (1968) pointed out that Union, and Japan, and accounting for 40% of the
growth does not equal development and that economic world’s total; cement use has reached 800 million tons,
development is a combination of economic growth and almost half the world total, and electric power use is
social reform. In the 1980s, the United Nations intro- now second only to the USA Current known reserves
duced the concept of ‘‘holistic, endogenous and over- of oil and natural gas in China can last ten years only.
all’’ development by French economist Francois All in all, domestic resources simply cannot sustain
Perroux (1983). The UN also introduced the Human industrial growth at a traditional pace (Information
Development Index (United Nations Development Office of the State Council 2006).
Programme 1990), which takes into account not only
economic factors, but also such factors as social Environmental issues
advancement and environmental harmony. As a result,
the HDI incorporates a per-capita life expectancy in- China faces daunting environmental challenges.
dex, education index, and income index. This work Desertification affects 2.674 million km2 of land, 27.9%
demonstrated that the UN advocates balanced and of the nation’s total land area, and is increasing at an
harmonious relations between the economy and ethics, annual rate of 10,000 km2; 471 counties in 18 provinces

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or 400 million people are threatened by desertification. development and will expand the world’s selection of
China discharges 43.95 billion tons of wastewater, development theories.
more than 82% of the environmental capacity; 40.9% Developing a circular economy is a shift of growth
of the water in seven major rivers is seriously polluted models and a new road to industrialization, and a
and 75% of lakes suffer from eutrophication. Of 600 guarantee for bringing about an overall well-off society
cities, 400 have insufficient water supplies, and 360 and a nation’s modernization. Achieving such an
million rural people have no access to clean and safe economy requires practical implementation of a sci-
water. Annual discharges of sulfur dioxide amount to entific development philosophy.
19.27 million tons, smog 10.13 million tons, and
industrial dust 9.41 million tons, severely damaging
human health. China’s environment simply cannot af- Pilot and demonstration programs
ford to continue on the current industrial course
(Information Office of the State Council 2006). Miti- Practical implementation of a circular economy has
gation of pressures on the environment and reversal of many aspects. Vertically it involves enterprises,
environmental degradation have become urgent industrial parks, cities, and regions; horizontally it in-
necessities. volves industries, urban infrastructures, the cultural
environment, and the social consumption system. To
put a circular economy into practice, there is a need for
National competitiveness
expanded pilot and demonstration programs and for
exploration of effective circular economy models that
With WTO membership come demands to adhere to
ultimately facilitate the overall development of such an
strict international rules and standards. Trade barriers
economy.
stand in the way of efforts by China’s businesses to go
The circular economy should be implemented first at
global. In recent years environmental considerations
the level of enterprises, then in industrial parks, then in
have gained increasing prominence in international
cities and regions, moving from the micro to the macro
trade, resulting in a situation in which China faces
level. Each of these levels serves as the basis for the
many ‘‘green barriers’’ leading to reduced competi-
next level above, and as a platform for the level
tiveness. For Chinese firms to go global, there is a need
immediately below.
to adopt technical standards and rules in compliance
At the enterprise level, firms set up ecological
with environmental requirements, and to introduce
industrial chains by in-house circulation of materials
‘‘green passport’’ documentation including energy-
and energy, and yield profits by endogenous growth
saving certificates, energy efficiency marking, compul-
and intensive operations that maximize resource use
sory recycling of packaging, and mutual certificate
and minimize pollution. In production, stress is on
systems.
economy of raw materials and energy, on phasing out
of toxic materials, and in reduction of the quantity and
National security toxicity of waste; for products, the emphasis is on
minimization of adverse effects resulting from a prod-
Energy is the basis for human survival and develop- uct’s entire life cycle, from extraction of raw materials
ment, and energy issues concern national security. In to its disposal; for services, environmental consider-
China, high-energy-consuming industries still have a ations should be integrated into service design and
major role to play in the near future, but shortages of delivery.
domestic resources make energy conservation the only At the industrial park level, material flow and en-
choice for China’s energy and economic security. ergy flow must be redesigned in line with the principles
Sound development in China will also add impetus of the circular economy. Within a park, wastes or by-
to and have an effect on world development. Reduced products of one facility should become raw material or
energy and resource consumption resulting from input for another by means of waste exchange, clean
China’s sound development will contribute to healthy production, and other measures, achieving the closed-
development of the world at large. Sound development circuit circulation of materials and the multi-level use
in China will also hasten overall development of other of energy, forming an interdependent ecological
developing countries, thereby helping to narrow the industrial system, maximizing use of materials and
north-south gap. China’s scientific development phi- energy, and minimizing discharge of wastes, all adding
losophy, based on a variety of development theories, value to the overall resources and energy within the
also serves as example for those striving for overall park. Such parks feature horizontal coupling, vertical

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closeness, regional integration, flexible structures, circular consumption mechanism. In this way, human
sharing of infrastructure, and smooth information demand for materials, ecological health, and mental
exchange. health can be satisfied while establishing a virtuous
At the city or regional (provincial) level, pollution cycle in the environment and in the social consumption
prevention becomes paramount; this is characterized system, thus enriching the content of circular economy
by material and energy circulation and has, as its ulti- practice.
mate objective, sustainable social, economic, and
environmental development, including maximum en-
ergy and resource use and reduction of waste dis- Indices and indicators for assessment
charge.
Circular-economy cities and provinces involve four Successful development of a circular economy requires
systems: the industrial system, the infrastructure, the a system of indicators for assessment; formulation of
cultural setting, and social consumption; the infra- these is a basis for quantifying economic development
structure serves as the basis for the rest, with the and providing key criteria for evaluating the soundness
industrial system affecting social consumption, and of economic development.
social consumption affecting the human habitation GDP, the traditional indicator of economic devel-
environment. Thus the four systems together constitute opment, plays a key role in showing the economic
a larger complex system. strength of a nation. It fails to indicate changes in the
First, there is a need to build a circular economy- wealth of a nation and in the welfare of its people,
based industrial system featuring industrial symbiosis however, or the negative impact of economic growth
and material circulation. In such a system people use on the environment. With the emergence of environ-
resources from the ecological system to manufacture, mental protections and sustainable development in the
distribute, and deliver products. The system provides 1960s, some economists and statisticians therefore at-
material and funding support for regional development tempted to integrate environmental considerations into
with its production functions, covering primary, sec- the national economic accounting system, leading to
ondary, and tertiary industries. the term ‘‘green GDP’’. As a modification of GDP, it
Second, infrastructure development is indispensable. represents the value of GDP after deducting capital
This includes the building of water-recycling systems, depreciation of products, loss of natural resources, and
clean energy systems, and clean mass transit systems. losses caused by pollution. Despite progress in green
A sound urban infrastructure guarantees circular eco- GDP research, controversy remains. Currently, no
nomic development. A circular economy-oriented ur- calculating system for green GDP is recognized across
ban infrastructure is based on circulation of materials, the globe, and no government ever releases official
efficient use of energy, and information sharing within green GDP figures, despite trials by some states.
the system, on integration of clean production, eco- Scholars around the world have made attempts to
industry and eco-agriculture, and on formulation of a establish a new system of national accounting, pro-
holistic strategy. posing indicators that stress balanced economic, social,
Third, a commitment to ‘‘green’’ planning, land- and environmental development, for example the hu-
scaping, and architecture is also needed. An eco- man development index (United Nations Development
friendly human habitation environment helps to Programme 1990), the index for sustainable economic
restore the ecosystem in cities and boost the quality of welfare (Daly and Cobb 1989), the genuine progress
life. To sustain the long-term health of ecosystems re- index (Daly 1996), subjective well-being (SWB)
quires that resource use, production, and waste dis- (Schwarz and Strack 1999), measure of domestic pro-
posal be conducted below the ecological threshold. gress (MDP) (Jackson 2004), the UN system of inte-
Fourth, green distribution and consumption should grated environmental and economic accounting
be encouraged and practiced. Within the framework of (SEEA) (United Nations 2000), and the net economic
a circular economy, consumption should be based on welfare indices (Nordhaus and Tobin 1972) among
harmony between humanity and nature, ensuring that others. The objective of most of these is to determine a
consumption by current and future generations can genuine growth rate after deducting ecological loss
move from simple to sophisticated levels. Consumer from economic growth. The price to be paid during
preferences, behavior, and patterns should be oriented economic development must be noted.
toward environmental protection, ecological balance, Because a circular economy stresses harmonized
and sustainable social development, with governments economic, social, and ecological relationships, an index
adopting policy measures to ensure the formation of a system for assessment should embody these three

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dimensions by including an economic development approaches into their R&D of new products and pro-
index, a green development index, and a human cesses, to boost their innovative capacity.
development index. Of the three, the economic Research attention and governmental input should
development index should include economic strength be devoted to (Xie 2002):
indices, for example per-capita GDP and growth rate
– processes that feature energy saving, material saving,
of GDP, and economic efficiency indices, for example
and reduced or no pollution, including clean pro-
CPI, the industrial mix Index, and the ratio of invest-
duction processes;
ment in fixed assets to GDP. The green development
– technologies that boost the lifespan of materials;
index should include:
– research into new materials as alternatives to toxic
and polluting materials;
1. reduction indicators, for example land-output – resource-renewing technologies to boost energy
ratio, annual reduction ratio of material con- efficiency, for example those that recover resources
sumption per 10,000 output value, energy con- from used household electrical appliances, batteries,
sumption per ten thousand output value, water and computers;
consumption per 10,000 output value, and waste – development of forecasting models to determine the
discharge per 10,000 output value; correlation among such factors as economic gains,
2. reuse indicators, for example reuse ratio of water recycling rates, costs for renewing resources and
for industrial purposes, reuse ratios of products pricing for products;
and energy, and urban sewage-treatment ratio; and – development of new cost-benefit analysis methods;
3. resource indices, for example utilization ratios of and
waste industrial gases, solid wastes, and urban – development of sound and steady eco-chains among
domestic wastes. enterprises and industries.
The human development index should encompass:
Promoting legislation
1. a human habitation environment index, including
urban air pollution indicators, sanitation indicators Barriers exist at the initial stage of China’s attempts to
for drinking water, per-capita green space, and per- achieve a circular economy, barriers that require
capita road space; and administrative and legal means to remove. Legal
2. a social index, including unemployment rate, social measures are formal, consistent, compulsory, open, and
security coverage, and Engel coefficient. authoritative, thus playing an indispensable and irre-
These circular economy indices and indicators placeable role. Legislation is therefore needed for
should also be incorporated into performance evalua- circular economy development.
tion systems for government officials. In July 2006, the Standing Committee of the
National People’s Congress of China initiated legisla-
tion procedures to draft a proposal concerning the
Proprietary technological innovation as backup circular economy. The drafting group is now in oper-
ation. The outline of the 11th Five-Year Plan for the
economic and social development of China also sug-
Technology is a key factor in the development of a
gests and supports legislation regarding a circular
circular economy. Each of the three circular economy
principles already mentioned requires advanced tech- economy. It seems the government is committed to a
circular economy by legislation.
nology and the development and updating of facilities
and equipment.
The government needs to continue its support for Legislative principles
the major technologies necessary for a circular econ-
omy, identifying key technological areas and projects Circular economy legislation must take the principles
in line with current and long-term requirements for the below into account.
economy and lending support to research into energy
saving, alternatives, and recycling, thus boosting the Compliance with a scientific development philosophy
nation’s capacity in proprietary technological innova-
tion. Enterprises, the key players in this respect, need According to the scientific development philosophy of
to incorporate circular economy philosophies and China, which focuses on overall, coordinated, and

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sustainable development, economic growth is just one Drawing on foreign experience

part of development. Development also stresses har-
mony between humans and nature and seeks to bring Environmental problems in one nation may have
about balanced regional, urban and rural, social, and something in common with those in others. China’s
economic development by use of domestic and foreign lack of experience in circular economy legislation
resources. A circular economy helps to integrate pop- makes it necessary to draw on foreign experience.
ulations, resources, and the environment, prevent Whatever works should be taken into account. For
environmental poverty, promote social justice at a example, the Chinese tendency toward generalized
higher level, and narrow the income gap, and is thus in legal clauses makes legislation difficult to enforce.
line with the scientific approach to development. Cir- China can learn from developed nations in taking a
cular economy legislation therefore requires the sci- more concrete and specific approach to drafting legal
entific approach to development as a guideline. clauses, taking into consideration expected problems
and countermeasures.
Due attention to the circular economy in other
legislation Public participation

To enhance circular economy legislation, attention Practices in many countries indicate that public par-
must be paid to the circular economy in other legisla- ticipation is indispensable to development of a circular
tion also. This is also a case in point for decision- economy. In circular economy legislation, public voices
making based on considerations of all the relative must be heard, their wisdom absorbed, and their
factors advocated in Agenda 21 China. motivation and creativity retained. The current prob-
lem is that despite hearings held by legislatures that
Consideration of economic measures produce sound suggestions from experts and the pub-
lic, legislators will ignore these suggestions when a
International practices reveal that economic measures conflict with departmental interests arises, making such
remain one of the most effective means of conserving hearings nothing more than formalities. It is high time
the environment and resources. In view of this, the to change course in this regard.
application of economic measures must be promoted Vital clauses
by inclusion in circular economy legislation. In addi-
tion to current measures, for example pricing, interest Circular economy legislation mainly consists of defin-
rates, and credit and loans, new measures must be ing the duties and responsibilities of the governments
explored, for example environmental taxes, financial and parties concerned, compulsory administrative
incentives, insurance for liability resulting from envi- measures, economic measures and incentives, and
ronmental damage, and environmental labeling, all of measures to encourage public participation. The ele-
which should be included in legislation, when appro- ments listed below are vital to circular economy leg-
priate, to better facilitate circular economy develop- islation:
ment.
1. The legislation must be implemented in coordina-
Issues to address tion with environmental planning, incorporated
into economic and social planning at national and
Enforceability regional levels, and provided with budgetary sup-
port.
Poor enforceability has been a serious problem in 2. The legislation should stipulate the responsibilities
Chinese legislation that must be solved. Clauses must of central and local government. In enacting and
be specific, well-defined, and unambiguous, and when implementing supportive regulations, governments
necessary, quantified terms should be included to avoid and departments must identify the responsibilities
generalization and abstractness. This requires respon- of concerned parties so that the circular economy
sibility on the part of legislators, with legal clauses can be implemented meaningfully.
drafted and examined on the basis of responsible and 3. The legislation must also force major polluting
scientific research. When legislators are confronted enterprises to adopt circular economic practices.
with tough problems, consultation with experts and the Such enterprises should be listed and required to
public is essential to solving them. Only in this way can adopt such practices with relevant penalties and
quality legislation be guaranteed. incentives in place.

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4. The legislation should encourage the application of development characterized by good productivity,
energy-efficient and resource-efficient processes quality of life, and an eco-friendly environment. To
and technology that are non-hazardous or less that end, China must alter its development philosophy
hazardous. Governments at all levels should put and approaches, generate new development models,
more resources into supporting businesses in cre- boost the quality of development, take the scientific
ative attempts to develop these processes and approach to development as a guideline for overall
technology. economic and social progress, and reflect this
5. The legislation should encourage the establishment approach in all aspects of the 11th five-year plan.
of diversified investing mechanisms, reward recy- Development of a circular economy offers a path to-
cling, and reuse efforts, and readjust corresponding ward solving environmental problems affecting human
taxes, credit and loans, and financial policies. health and social development, fostering a growth
6. The legislation should explicitly stipulate the model characterized by resource conservation, and
recycling and reuse of products and associated re- encouraging healthy consumption behavior, all via a
wards and accountability. In the design and pro- shift in growth models and protection of the natural
duction of a product, the enterprise should view environment. To build a resource-conserving, envi-
the possibility of reusing that product after con- ronment-friendly, economically efficient, and harmo-
sumption as a key indicator of its business perfor- nious society, China needs to be active in its practice
mance. of a circular economy.
7. The legislation should reflect intermediary service
regulations. Organizations of an intermediary nat-
ure should build up a network of businesses References
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