Can China kickstart its circular economy and kick its smog?

15 january 2014

There are signs that the Chinese government and industry are looking into more restorative economic models including the circular economy, which encourages manufacturers to design products and systems such that they can be returned and the materials recycled, reused or remanufactured.

It is about being smarter on a number of fronts: increasing resource productivity, good water management, designing products with healthy materials and designing out waste. The negative environmental impact of fast industrialisation is plain to see. Take air pollution: in Beijing last year the concentration of particles with a diameter of 2.5 microns was 40 times the level recommended by WHO, according to the Economist.

In terms of wildlife, some 40% of China’s mammals are classified as threatened species. Water resources are also under strain. Severe water stress is defined as access to less than 1,000 cubic metres of water per person per year. In China, it is 450 cubic metres3. Most of China’s energy comes from burning coal. By 2014-15 it is expected to emit twice as many carbon emissions as the US.(Economist).

The biggest challenge for China, therefore, may be reversing some of these environmental trends fast enough. Developing complex, circular economy systems takes time. However, the country already is seeing signs of rapid growth in the popularity of this concept.

As Peter Lacy, who leads Accenture‘s strategy and sustainability practice in the Asia Pacific, puts it:

With demand for resources in China growing more than twice as fast as the world average, we see disruptive innovation in circular approaches to production and consumption and the emergence of new business models. Our research shows that in the coming decade between 6m and 7m jobs will be created in the circular economy in China alone. And we are only just beginning.

China has established industrial parks to recycle waste, such as the Tianjin Ziya Circular Economy Industrial Park in south-west Jinghai County, near the Hebei province. Opened in 2006, the park houses 120 companies with a capacity to recycle 1m to 1.5m tons of waste, including electronics, vehicles, rubber and plastic. Every year, it can supply 400,000 tons of copper and 150,000 tons of aluminium, among other materials.

Other Chinese companies have found innovative ways to fully utlize their raw materials. Shanghai-based steel company Baosteel, for example, has – through its subsidiary Baosteel Magnetic – found a way to make use of the metals, including rust (or, more properly, red [ferric] iron oxide and iron oxide scales) and zinc residue, that accumulate on magnetic materials. Products made from those metals are used in computers, green lighting, high-definition displays and automotive electronics fields, among other things. The company also has developed iron oxide material suitable for phosphate-acid-iron-lithium batteries.

Click here for the full article published in the Guardian newspaper online in January 2014. This article was part of a series of articles on the circular economy published by the Dialogue business journal.