Circular Economy: China's Inevitable Choice

As a country with less than half of the world's average natural resource per capita, China's major resources are also poorly recycled. In developed countries, the recycling rate of scrap steel, scrap copper, and waste rubber has reached 90%, while the recycling rate of scrap steel in China is only 45%, the recycling rate of scrap copper is 30%, and the recycling rate of waste rubber is 40%. For China, where natural resources are relatively short-lived, it is an inevitable choice to develop a recycling economy and establish a renewable resources industry.

The so-called circular economy, Professor Ye Wenhu, director of the China Center for Sustainable Development at Peking University, explained that it refers to the economic growth model of “resources, products, and renewable resources”. It is different from the linear economy of "resources-products-waste" in the traditional industrial society. It exploits and consumes resources with high intensity and destroys the ecological environment with high intensity. The circular economy can solve the problem of shortage of resources and environmental pollution facing humanity and improve the quality of economic development.

The regeneration of resources is the most crucial part of realizing a circular economy. However, at present in China, renewable resources are still far from forming an industry. The scale of business operations is small and the benefits are low. In Japan, where resources are also scarce, the output value of the renewable resources industry has reached 48 trillion yen (about 3 trillion yuan). In 2002, the total output value of China's renewable resources was estimated at only 10 billion yuan.

Experts, government agencies, and related business people said in an interview with reporters that from the point of view of material properties, most of the waste is a renewable resource, but the cost of reducing waste into usable secondary resources is high. The economy is relatively poor. Simply relying on profit-driven, it is difficult to promote the rapid growth of the industry. The birth of China's renewable resources industry requires government support policies. It requires the enterprises' own efforts to become bigger and stronger. It also requires the people to establish a circular economy.

The renewable resources industry has a certain charity, and the government should have the necessary capital investment. In the 1970s and 1980s, in order to support the development of the renewable resources industry, the state had invested nearly 200 million yuan in technological transformation and equipment upgrading. After the withdrawal of the State Material and Materials Bureau, there has been little investment from the national and local governments in the renewable resources industry since the 1990s. At present, most of China's renewable resource companies have very old equipment, there is almost no increase in large-scale scrap processing equipment, and there are few mechanical sorting equipments for waste paper. Most scrap recycling and dismantling companies do not have formal assembly lines and equipment. Due to insufficient input, scientific research projects are difficult to carry out. Even if scientific research results are available, it is difficult to popularize them due to the lack of supporting funds.

Long Shaohai, secretary-general of the China Material Recycling Association, said that the renewable resources industry in developed countries is not a very profitable industry. The reason why it can develop into a large-scale industry is, to a certain extent, rely on government policies. In countries such as Japan and Germany, the government collects waste disposal fees from companies and individuals that generate waste, and concentrates on setting up special funds to subsidize enterprises that deal with waste. He believes that China can also collect and set up similar funds to subsidize waste processing companies and make them profitable. When China’s color TV companies export color TVs to Japan, they have to pay the Japanese government waste disposal fees, but they do not have to pay domestic sales.

In addition to the government’s support, enterprises engaged in renewable resources should also operate the industry as a very promising large industry and continue to expand the scale of the industry. Due to the large variety of waste materials, the classification and processing and extraction and recycling require large investment in equipment and scientific research. From the perspective of developed countries, the resource recycling industry can only realize profitability by achieving large-scale operations. One of the reasons for achieving scale management is to scale up the recycling system, and secondly, to scale up the processing and processing. Due to the unbalanced economic development in various parts of China, traders who purchase waste products are often driven by profits to divert waste products they have received to economically backward areas and re-enter the circulation field, resulting in inadequate supply of renewable raw materials for resources and difficulty in achieving large-scale production. Long Shaohai believes that the state should introduce relevant policies to enforce the deadline for the retirement of some products, and does not allow wastes to enter the circulation field again. This can ensure the quantity of wastes recovered. As for the increase in the scale of processing and processing, on the one hand, it is necessary to raise the barriers to entry for the renewable resources industry in terms of funding size, environmental protection requirements, etc., in order to achieve centralized treatment of waste materials. On the other hand, renewable resource companies need to develop and expand their scale and achieve large-scale production through mergers and acquisitions and attracting investment. The reporter learned from the interview that there are already many companies outside the industry who are interested in investing in this area.

In addition, manufacturers, such as automobiles and home appliances, can also rely on the production companies to manage their own resources for recycling, and they can also achieve large-scale operations. Developed countries basically implement the principle of whoever produces and who is responsible for handling. Manufacturers are most familiar with the characteristics and production processes of the materials used in their products and are more conducive to recycling after recycling. In foreign countries, since these companies have taken into consideration the recycling problem before production, the utilization rate of waste recycling has gradually increased. For example, the recycling rate of Japanese air conditioners has reached more than 60%. The recycling rate of washing machines, refrigerators and other electrical appliances also reached more than 50%. This will not only recover the available resources, but also save a lot of costs for the company's production.

The experts also called for renewable resource companies to focus on R&D of related technologies and not rely solely on foreign technologies. On the one hand, due to different national conditions in different countries, the content of waste varies greatly, and imported equipment may not be suitable for China. Beijing Nangong Composting Plant is a regenerative resource company established by relying on equipment donated by Germany, and the equipment investment in the early stage has almost no cost. However, due to the different waste composition in China and Germany, the fertilizer produced by the German technology is not effective and the market has not yet opened up. On the other hand, the cost of foreign technology input is too high. According to Wang Zhixing, director of the waste battery processing plant of Beijing Donghua Xinxing Company, if foreign technology is introduced, it will require more than 7 million yuan to process equipment investment. However, the total investment is only 5 million yuan in cooperation with domestic research institutions. In this way, the plant can achieve profit, and the net profit per ton of waste batteries is about 400 yuan.

Feng Liang, deputy director of the Department of Comprehensive Utilization of Environment and Resources in the National Development and Reform Commission, believes that the development of renewable resources industry must also increase public awareness of resource regeneration. Since most residents have not yet treated waste according to the nature of their resources, renewable resource companies have to pay a large part of their costs to classify wastes and affect their efficiency.