5 Reasons Why China is the 1 Billion pound panda in the Circular Economy movement

Sound like a surprise? Based off the news, you'd think that most of the action around the Circular Economy was occurring in Europe and with Western multinationals and foundations. But the world's most populous country has devoted considerable time and resources to the Circular Economy model.

Here are 5 important points that you need to know.

The Circular Economy has been a key priority of the Chinese government for TWENTY years!

Since 1998, the concept of the Circular Economy was introduced in Chinese academic circles as a way to promote both economic development while reducing pollution impacts. In 2002, the Chinese government formally adopted Circular Economy principles and in 2009, China becomes the third country in the world (after Germany and Japan) to create Circular Economy promotion laws. It's important to note that the Chinese do not see the Circular Economy through a particularly environmental lens, but view it as key to long-term economic development. This helps keep the Circular Economy in the forefront of all national policy.

To give a sense of how seriously the government views the Circular Economy, the same agency that is tasked with developing China's 5-year economic development plans also has responsibility for Circular Economy strategy.

China is driven by a TOP DOWN approach focused on industrial parks and cities

Given the Chinese government's focus on the Circular Economy, it's not surprising that the promotion of Circular Economy principles has been led by government mandate as opposed to non-profits or private business interests. With the backing of the government, China focuses on the development of Eco-Industrial Zones as well as entire Circular Cities. The foundation of these Eco-Industrial Zones is based off China's creation, since the 1980's, of Special Economic Zones to create incentives for the development of regional manufacturing and industrial clusters. For a sense of scale, there are currently 1600 of these SEZ's in China and they account for 70% of the country's energy use and 72% of the country's carbon emissions! (Read: Circular economy: Lessons from China)

About 15% of China's current SEZ's are already, or in the pilot stages of becoming Eco-Industrial Zones. This makes perfect sense as the proximity of businesses within each zone helps to facilitate the development of truly closed loop models for materials. And from an economic perspective, this utilization of what was previously "waste" helps to decouple China's reliance on overseas commodities. It's great national policy!

NOW is the time to focus on the development of China's domestic Infrastructure

Why? Because as of the start of this year, China has implemented the #NationalSword policy and stopped taking in the majority of foreign trash due to environmental concerns. (Read: China's waste ban goes into effect — No more 'foreign garbage')

While this has been terrible news for most of the rest of the world, this means that China can no longer rely on foreign material to feed the needs of its manufacturing industry and has the incentive to spur the development of their own domestic collection industry. Already, there are municipal sorting targets in place for 2020 and Chinese based companies are looking to develop more infrastructure. Because most of China's municipal sorting infrastructure is still informal, China has the ability to leapfrog the many challenges that we face in the West because of the need to adapt old methods of waste and materials management for a more sustainable system. I also think there is a huge opportunity for technology and knowledge transfer cross borders as China develops this infrastructure. (Msg me if interested in learning more!)

How China's foreign waste ban has spurred the recycling industry

Private Companies are Getting Involved

Some 7.5 billion plastic bags, 10 billion cardboard boxes and 17 billion metres of wrapping tape were used to ship China’s parcels in 2015. ‘In China, an average of 57 million packages were delivered each day in 2015 - compared to the US average of 35 million,’ reports the Cainiao Network. It estimates this figure will reach 145 million by 2020.

While the government has been the leading driver of the Circular Economy, in recent years, Chinese companies have also started taking note. In March of last year, Cainiao, the logistics arm of Alibaba, together with 6 of China's largest logistics companies, announced the formation of the Green Alliance Foundation to focus on how to more sustainably deliver, reuse, and recycle packaging waste.

This January, the Consumer Goods Forum also announced the opening of their first China office with the support of key Chinese corporations including COFCO, China's largest food processor, and national retailers Hualian, BubuGao, and WuMart.

So all this is interesting, but why is China so important? Let's look at the numbers.

China has a current population of 1.37 Billion and their GDP per capita went from $5k in 2005 to $10k in 2010, and is forecasted to double again to over $20k in 2022. Compare that to the EU-28 with a population of 500 Million and a GDP per capita of $30k and to the United States with a population of 300 Million and a GDP per capita of $57k.

If you agree with the theory that GDP per capita is a good predictor of the utilization and consumption of resources, as China becomes more affluent, with a population that is already double the EU and the United States combined, what is going to happen with global resource use and environmental degradation? That's right. If the Chinese follow our Western habits of consumption and resource depletion, we really are going to need 4.5 Earths to support everyone!

How many Earths do we need?

That is why understanding China's take on the Circular Economy is extremely relevant to all of us working to promote the Circular Economy and sustainable economic development. We need to make sure our dialogue and strategy include what is already the world's largest global economy.

About the Writer

Gina Lee is the Founder of Circular CoLab, an organization focused on empowering the creation of the Circular Economy.  She has over 15 years of experience working in Corporate Social Responsibility and Social Impact in the United States, China, and Germany and believes strongly in the power of collaboration and innovation to create change.

Want to collaborate? Email her at gina@circularcolab.org.