Beijing prioritizes the development of China’s circular economy, with planned goals to maximize the use of resources and the life cycle of products. These will have direct consequences for companies engaged in the manufacturing sector and will create new market opportunities for green companies.
China recently released a new multi-year plan to develop the country’s circular economy, hoping to increase resource efficiency, boost innovation and meet climate commitments.
On July 7, 2021, the National Development and Reform Commission released the Circular economy development plan in the 14e Five Year Plan Period (the “Plan”). The Plan, which covers the widest 14e The 2021-25 five-year plan period aims to develop the circular economy through various initiatives, such as the promotion of recycling, remanufacturing, green product design and renewable resources.
What is a circular economy?
The circular economy is an economic model that emphasizes the importance of maximizing the use of resources and the life cycle of products, with an emphasis on integrating these concerns from the design phase of the products. products. This contrasts with the “linear economy”, where resources are extracted to make single-use products or products that are disposed of after use.
China’s sustainable goals
Developing the circular economy – now a national priority over the 2021-25 period – will be important for China to clean up the country’s environment, meet its international climate goals and encourage green innovation.
The circular economy will impact virtually all companies doing business in China, but especially manufacturers who use resources for production and create waste.
The plan also aims to increase opportunities for companies involved in areas such as green technologies, waste management and recycling technologies.
China’s circular economy goals for 2025
The Plan contains a number of goals that China must achieve by the end of the 14e Five-year plan period in 2025.
By then, China is expected to have a fully implemented circular production method, widely promoted green technology and production, and significantly improved use of resources.
In addition, China should have its circular economy “fundamentally established”, improve its resource recycling system to cover the whole country and increase the use of renewable resources.
In addition, the plan sets a number of strict quantified targets for the government to achieve by 2025. These include:
- 20% increase in resource productivity from 2020 levels.
- Reduce energy consumption and water consumption per unit of GDP by 13.5% and 16%, respectively, from 2020 levels.
- Achieve a utilization rate of 86 percent for crop stems, 60 percent for solid bulk waste and 60 percent for construction waste.
- Using 60 million tonnes of waste paper and 320 million tonnes of scrap metal.
- Production of 20 million tonnes of recycled non-ferrous metals.
- Increase the output value of the resource recycling industry to 5,000 billion RMB (773 billion US dollars).
Main tasks China will undertake to achieve a circular economy
In addition to the development goals, the Plan lists three key tasks to be accomplished during the period. These tasks are largely guidelines that regional governments must interpret and implement according to local conditions. The key tasks are mentioned below.
Build an industrial resource recycling system and improve the efficiency of resource use
- Promote green product design, including by improving green design policies, guidelines and classification;
- Strengthen clean production, in particular through compulsory and voluntary audits, accelerate innovation and modernization of clean production, and establish incentives and sanctions;
- Promote the circular economy in industrial parks, in particular by encouraging an increased use of resources, the construction of green factories and the creation of eco-industrial demonstration parks;
- Strengthen the overall use of resources, including by promoting efficient extraction and use of resources, increasing research and development in the use of various wastes and using reusable materials in industries such as ecological restoration, green building materials and transport engineering; and
- Promote co-treatment of urban waste, including by improving policy mechanisms and regulatory standards, developing market-based payment methods, waste treatment and coordinating the disposal of low-value organic waste.
Building a waste recycling system and fostering a recycling-oriented society
- Improve the waste recycling network, including integrating recycling facilities into land use planning, standardizing the construction of the recycling network system and improving rural recycling networks according to local conditions;
- Improve the level of processing and use of renewable resources, in particular by developing an industrial cluster of renewable resources, standardizing the recycling of various products, such as electronic products and end-of-life vehicles, and strengthening regulatory oversight environmental;
- Normalize the development of the second-hand goods market, including by improving relevant laws and regulations, encouraging internet commerce and increasing regulation of offline markets; and
- Promote the development of the remanufacturing sector, including in industries such as auto parts, construction machinery, robotics and others.
Deepen the development of the circular agricultural economy and establish circular agricultural production
- Strengthening the use of agricultural and forestry wastes, including for products such as crop straw, livestock manure and other forestry wastes;
- Strengthen the recycling of agricultural waste, including by encouraging farmers to participate in recycling, building recycling facilities in villages and setting up regional waste disposal and use facilities; and
- Promote a circular development model for agriculture, in particular by creating industrial consortia of ecological agriculture, encouraging the use of clean energy and integrating disparate agricultural processes.
Other targeted projects related to the Plan
In addition to these key tasks, the Plan outlines several more limited or targeted projects to be completed by 2025. These projects are generally more industry-specific, affecting sectors such as automotive, electronics, e-commerce and logistic.
The Plan undertakes to act on the following projects:
- Construction of an urban waste recycling system
- Development of the recycling park
- Full use of bulk solid waste
- Use of construction waste resources
- Key technology and equipment innovation
- High-quality development for the remanufacturing industry
- Improve recycling and use of waste electrical and electronic products
- Vehicle life cycle management
- Plastic pollution controls
- Promote green packaging for shipping and logistics
- Recycling of used batteries
Beyond these different actions, the Plan calls for strengthening the legal and regulatory environment and the application of policies. More specifically, it calls for improving laws, regulations and standards relating to the circular economy, as well as the collection of statistics, fiscal and financial support and supervision of the industry.
China’s ambitious climate goals
The plan is an important part of China’s broader climate strategy, as the government has made it a priority to develop a cleaner environment after decades of unbridled economic growth.
In September 2020, Chinese President Xi Jinping announced that China would peak carbon emissions by 2030 and become carbon neutral by 2060. Achieving these goals will require societal and economic transformation. , because China emitted 27% of the world’s greenhouse gases in 2019 and has more installed coal capacity than the rest of the world combined.
Chinese policymakers hope the Plan will contribute to this transformation, along with other environmental and climate change policies included in the 14e Five-year plan. However, while the Plan proposes a wide variety of priorities for the development of the circular economy, it will largely be up to regional governments to define their own policies to achieve these objectives.
Therefore, foreign investors should keep abreast of upcoming policy announcements in the jurisdictions in which they operate, while local governments implement the tasks outlined in the Plan.
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