Beijing is prioritizing the development of China’s circular economy, with planned goals to maximize resource use and the lifecycle of products. These will have direct consequences for businesses engaged in the manufacturing sector and create new market opportunities for green enterprises.
China recently released a new multi-year plan to develop the country’s circular economy, with the hopes of increasing resource efficiency, spurring innovation, and meeting climate commitments.
On July 7, 2021, the National Development and Reform Commission released the Development Plan for the Circular Economy in the 14th Five Year Plan Period (the “Plan”). The Plan, which covers the broader 14th Five Year Plan period of 2021-25, aims to develop the circular economy through various initiatives, such as promoting recycling, remanufacturing, green product design, and renewable resources.
The circular economy is an economic model that stresses the importance of maximizing resource use and the lifecycle of products, with emphasis on integrating these concerns at the product design phase. This is in contrast to the ‘linear economy,’ where resources are extracted to make single-use products or products that are disposed after use.
The development of the circular economy – now a national priority during 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 that use resources for production and create waste.
The Plan also stands to increase opportunities for companies involved in areas like green tech, waste management, and recycling technology.
The Plan contains a number of targets for China to meet by the end of the 14th Five Year Plan period in 2025.
By then, China should have a fully implemented circular production method, widely promoted green technology and production, and significantly improved resource utilization.
Further, China should have its circular economy be “basically established”, improved its resource recycling system to cover the whole country, and increased the use of renewable resources.
Additionally, the Plan sets a number of hard numerical targets for the government to reach by 2025. These include:
Besides the development targets, the Plan lists three key tasks to accomplish over the course of the period. These tasks are largely directives for regional governments to interpret and implement according to local conditions. The key tasks are mentioned below.
In addition to these key tasks, the Plan describes several more limited or targeted projects to accomplish by 2025. These projects are generally more industry-specific, affecting sectors like automobiles, electronics, e-commerce, and logistics.
The Plan commits to action on the following projects:
Beyond these various action items, the Plan calls for strengthening the legal and regulatory environment and policy enforcements. Specifically, it calls for improving circular economy laws, regulations, and standards, as well as statistics collection, tax and financial support, and industry supervision.
The Plan forms an important component of China’s broader climate strategy, as the government has made it a priority to develop a cleaner environment after decades of breakneck economic growth.
In September 2020, Chinese President Xi Jinping announced that China would hit peak carbon emissions before 2030 and become carbon neutral before 2060. Accomplishing these goals will require a society- and economy-wide transformation, as China emitted 27 percent of the world’s greenhouse gases in 2019 and has more installed coal capacity than the rest of the world combined.
Chinese policymakers hope that the Plan will contribute towards this transformation, along with other environment and climate change policies included in the 14th Five Year Plan. Nevertheless, while the Plan puts forward a wide variety of priorities for the development of the circular economy, it will largely be up to regional governments to form their own policies to reach these goals.
Accordingly, foreign investors should keep apprised of upcoming policy announcements in the jurisdictions where they operate as local governments implement the tasks described in the Plan.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at firstname.lastname@example.org.
Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.
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