Prepared within the project ‘Policy Reinforcement for Environmentally Sound and Socially Responsible Economic Development in China (PRODEV)’.

Deliverable of Activity 3 ‘Policy Framework Study and Identification of Areas for Policy Reinforcement’.

Jointly prepared by:

Michael Kuhndt, Andreas Villar UNEP/Wuppertal Institute Collaborating Centre on Sustainable Consumption and Produc-tion (CSCP)

Zhou Guomei State Environmental Protection Administration China (SEPA)

Zhao Wei, Xu Lizhen United Nations Environment Program – Division of Technology, Industry and Environment (UNEP-DTIE)

Policy Framework Study

Policy Reinforcement for Environmentally Sound and Socially Responsible Economic Development in China (PRODEV)

The project ‘Policy Reinforcement for Environmentally Sound and Socially Responsible Economic Development in China (PRODEV)’ is sponsored by the Commission of the European Communities within the Asia Pro Eco Programme.

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Content

Content.....................................................................................................................................2

1 Introduction.......................................................................................................................4

2 The need for a Circular Economy in Europe and China.............................................6

2.1 Background .....................................................................................................................6

2.2 The case for Europe........................................................................................................7

2.3 The case for China..........................................................................................................8

3 Approaches for Circular Economy in Europe and China.........................................11

3.1 Activities related to Circular Economy in Europe.........................................................11 3.1.1 Approaches in Germany ..........................................................................................................12

3.2 Activities related to Circular Economy in China...........................................................15

4 Circular Economy at the Regional Level: The case of Guiyang..............................18

4.1 Activities related to Circular Economy in Guiyang.......................................................19 4.1.1 Guiyang City regulation on the establishment of a Circular Economy based ecological city

.................................................................................................................................................19 4.1.2 Activities and tasks of Guiyang Government..........................................................................22

4.2 Surveying the level of Implementation of Circular Economy in Guiyang: Methodology applied........................................................................................................................26

4.3 Survey findings..............................................................................................................28 4.3.1 Awareness and understanding on Circular Economy ............................................................28 4.3.2 Barriers for Circular Economy .................................................................................................28 4.3.3 Priority identification .................................................................................................................29 4.3.4 Policy tools................................................................................................................................30 4.3.5 Institutional arrangements and stakeholder involvement.......................................................30 4.3.6 Expressed expectations and conclusions for the training program.......................................31

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5 Result assessment of the questionnaire ....................................................................33

6 Appendix .........................................................................................................................36

6.1 Interviewed persons and departments.........................................................................36

6.2 Template of the survey questionnaire..........................................................................38

6.3 Major development plans for Guiyang .........................................................................45

7 References ......................................................................................................................46

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1 Introduction

The project Policy Reinforcement for Environmentally Sound and Socially Responsible Economic Development in China (PRODEV) aims to improve the policy framework and promote a more integrated decision-making process in local government to foster environ-mentally sound and socially responsible economic development, referred to as the Circular Economy. The project focus is to build institutional and technical capacities among Chi-nese policy makers to integrate sustainable development principles into the policy system, and where necessary, to develop policy interventions to forge a path to alternative urban development.

The project is taking place in Guiyang, a city in south-western China that has been desig-nated as a pilot city to develop and implement a Circular Economy. Harmonizing and inte-grating economic, environmental and social aspects in innovative urban development and planning at the local level and strengthening private sector development while considering environmental and social issues will result in multiple benefits for a sustainable urban and regional development and improve Guiyang’s regional and national competitiveness. The knowledge and experiences gained from the project at the local level will be disseminated to other cities in China and to cities in other Asian countries.

PRODEV is being carried out in partnership between the United Nations Environment Pro-gramme (UNEP) – Division of Technology, Industry and Economics, the UNEP/Wuppertal Institute Collaborating Centre on Sustainable Consumption and Production (CSCP), the Chinese State Environmental Protection Administration (SEPA) and the Guiyang Munici-pality Government. It receives major funding support from the European Commission. The project began in December 2005 and is anticipated to finish in June 2007.

As part of the project activities the project partners jointly conducted a detailed policy fra-mework study during March and April 2006. The aim of the study was to assess and identify the priority and opportunity areas for policy reinforcement in order to establish a Circular Economy in Guiyang. In the first phase, the policy framework study entailed a desktop study analysing needs and exploring existing approaches for Circular Economies in Europe and in China. In the second phase, a survey questionnaire was developed with the aim of interviewing all institutions connected to establishing a Circular Economy in Gui-yang. CSCP and SEPA officials conducted the interview-based survey during the period of 17th – 21st of April 2006 with officials of relevant municipal departments in Guiyang. The aim of the questionnaire-led survey was to assess the specifics of the current state of Cir-cular Economy implementation in Guiyang and to identify capacity building opportunities

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among the respective departments and bureaus that play a significant role in developing the Circular Economy in Guiyang.

This report summarises the main findings of the study and provides an outline of current Circular Economy approaches in Europe and China. It further analyses the current state of policy design and implementation status of a Circular Economy in Guiyang and identifies opportunities for policy reinforcement and/or modifications to support its development. This material will also form the basis for content development of an eventual training program to disseminate this knowledge in other Asian countries.

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2 The need for a Circular Economy in Europe and China

2.1 Background Worldwide there is increasing competition for oil, steel, copper, and alumina, cement and other basic commodities for industrial production and for construction of urban infrastruc-ture and industrial plants. In many countries the basic resources of land and water are also constrained resources at risk. At the same time supply constraints due resource depletion are developing, which add significant increases in costs.

Demand for resources is driven not only by new development but also by the need to re-place or restore decaying industrial infrastructure as well as commercial and residential buildings in urban and rural areas. Industrial ‘rust belts’, for instance, exist in developed and developing countries alike.

Sustainable development in both developed and developing countries requires the setting of very high objectives for efficiency in the use of all resources, as one part of a broader strategy to avoid future crisis. This calls for systemic planning and action to multiply effi-ciency, not just make incremental improvements. Gains in efficiency must be achieved across the whole product life cycle, not just in production. Rapidly increasing consumption is already overwhelming many improvements in manufacturing productivity, a phenomenon known as the “rebound effect”. For instance, the global consumer class (users of televi-sions, telephones, and the Internet, along with the culture and ideals these products con-vey) totals some 1.7 billion people—more than a quarter of the world. Almost half of this class now lives in developing countries, which is also where there is the greatest potential to expand the ranks of the consumer class.

Some initial responses to the objective of achieving such high efficiency in resource use include the Circular Economy (China) and the Recycling Economy (Germany), eco-industrial parks and networks, closed-loop production and consumption systems, and sus-tainable agriculture. All major economic sectors have a role to play in achieving the re-quired gains in efficiency, not just heavy industry. These include land use planning and development; transportation, design and construction of the built environment, commerce, the design and operation of municipal infrastructure, agriculture, and households all have a share in the responsibility. Similarly, gains must be made at every stage of the life cycle from resource extraction to final recovery or disposal.

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2.2 The case for Europe The European model of wealth is based on a high level of resource consumption in the form of energy and materials. Current material consumption in industrialised countries is between 31 and 74 tonnes per person per year (total material consumption) with the most significant from an environmental perspective being the consumption of materials for hous-ing, food and mobility. The average material intensity in the EU-25 is slightly less than in the United States, but twice as great as that of Japan. The picture is similar for energy intensity, however the efficiency of the Japanese economy is even more pronounced.

There are large differences between EU countries. On average, resource and energy pro-ductivity in Western Europe is several times higher than in the new EU Member States in central and Eastern Europe. Material intensity varies from 11.1 kg/EUR of GDP in Estonia to 0.7 kg/EUR in France.

In relative terms, there has been a decoupling of economic growth and material and energy consumption in many EU countries over the past decade. This did not necessarily lead to an absolute decrease in environmental pressures, because absolute resource use has generally remained steady over the past two decades. In part, this decoupling may be ex-plained by increased imports of natural resources, substituting for their declining production or extraction in Europe.

Graphic 1: Decoupling economic growth from resource consumption

Human wealth is based on the use and consumption of natural resources, including mate-rials, energy and land. However, continued increases in resource use and the related envi-ronmental impacts can have a multitude of negative effects leading to ecological crises and security threats. For instance, high use of natural resources increases the pressure on the source of resources (e.g. maintaining the availability of supplies and ensuring sustainable yields) and on sinks (e.g. managing the environmental impacts of resource use, and whether ecosystems can absorb discharges).

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It is generally accepted in Europe that there are physical limits to continuing economic growth based on resource constraints. The sustainable use and management of natural resources have therefore come into focus and have been the subject of many policy dis-cussions over more than a decade, beginning with the summit in Rio de Janeiro in 1992. The EU has been putting increasing emphasis on this topic, especially since the adoption in 2001 of the EU Sustainable Development Strategy and the Sixth Environment Ac-tion Program (6EAP), which expressly calls for 'breaking the linkages between economic growth and resource use' (see box below).

6EAP and sustainable use and management of natural resources

Objectives and priority areas for action on the sustainable use and management of natural resources and wastes in the 6EAP are as follows:

“...aiming at ensuring that the consumption of resources and their associated impacts do not exceed the carrying capacity of the environment and breaking the linkages between economic growth and resource use. In this context the indicative target to achieve a percentage of 22% of the electricity production from renew-able energies by 2010 in the Community is recalled with a view to increasing drastically resource and energy efficiency;

achieving a significant overall reduction in the volumes of waste generated through waste prevention initia-tives, better resource efficiency and a shift towards more sustainable production and consumption patterns;

a significant reduction in the quantity of waste going to disposal and the volumes of hazardous waste pro-duced while avoiding an increase of emissions to air, water and soil;

Encouraging re-use for wastes that are still generated: the level of their hazardousness should be reduced and they should present as little risk as possible; preference should be given to recovery and especially to recycling; the quantity of waste for disposal should be minimised and should be safely disposed of; waste intended for disposal should be treated as closely as possible to the place of its generation, to the extent that this does not lead to a decrease in the efficiency in waste treatment operations.”

Source: 6EAP.

2.3 The case for China As an emerging and rapidly developing country China is increasing demands for a wide range of natural resources on the world markets. Some facts illustrate this raw material demand: In the past 20 years, China’s consumption of oil has risen by 100%, natural gas by 92%, steel by 143%, copper by 189%, aluminium by 380%. During the last 12 years China has attained on average a 10 per cent growth rate per annum. China accounts for nearly 30 per cent of the world’s GDP increase since 1992. Despite some successful strategies regarding the decoupling of raw material demand from GDP increase and in-creased domestic mining activity, China is still the greatest importer of raw materials worldwide, e.g. of steel, copper, coal, cement. For crude oil imports, it is second only to the

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USA. Even if growth rates were to flatten (“soft landing”), it is very unlikely that Chinese resource demands will fall meaningfully in the coming years.

The Chinese government has established a development target of quadrupling Gross Do-mestic Product by 2020 while at the same time improving environmental quality, protecting natural resources and maintaining social progress. This target can only be achieved by employing alternative economic development options rather than pursuing conventional industrialisation models adopted by most developed countries.

With this rapidly changing economic climate, China has been active in pursuing alternative economic development strategies. The Circular Economy concept is one response to the challenge of de-linking economic development and environmental degradation. The Circu-lar Economy concept was inspired by the idea of closing the material cycles and is consis-tent with the 3R principle (reduce, reuse, recycle). The practice of the Circular Economy in China has been focused on three levels, so-called small-, medium and big- cycles. Small-cycles intend to promote cleaner production at the enterprise level; medium-cycles aim to promote the establishment of industrial ecology parks. Big-cycles aim to promote energy saving and an environmentally friendly society at the city or provincial level, an example being the pilot development of the Guiyang eco-city which is adopting Circular Economy approaches.

Although the Circular Economy concept contains similarities to concepts in other countries, such as the recycling-oriented society, the core objective of the Circular Economy is to establish sustainable consumption and production patterns at all cycle-levels mentioned above. The selection of concrete approaches for establishing the Circular Economy is very much aligned and adapted to China’s current economic situation and development trends.

Based on several years of practical and international experience, China takes the Circular Economy as a fundamental and practical approach to decoupling economic growth from natural resource depletion and environmental degradation. The basic aspects and ideas of Circular Economy in China are:

1. It deals with any activities linked to both production and consumption;

2. It considers to take natural resources and wastes into a account;

3. It focuses on changing traditional linear patterns of material-flows - “resources- prod-ucts- waste” - into new patterns of closed-loop processes of “resources-products-consumption-resource recycling”;

4. The core action of promoting the Circular Economy is to control the material and en-ergy flows of production and consumption, through the implementation of the 3R prin-ciples (reduction, reuse and recycle) depending on supports of government policies and market mechanisms;

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5. As a result, the Circular Economy helps to enhance the efficiency of resource and energy use, extends the chain of resources and energy utilization, and consequently helps to achieve a triple-win development that brings about simultaneous economic, environmental and social benefits.

Concluding, China is now at the experimental stage of development of the Circular Econ-omy. There remain many barriers and challenges to overcome, e.g. awareness, theory, technology, legislation and policy. Especially at the national level, environmental manage-ment policies and regulations for promoting development of the Circular Economy are still lacking. For example, the absence of adequate policy incentives has hindered the devel-opment of green consumption and “reuse-recycling” of resources; improvements are also needed in the management instruments of the existing Environmental Impact Assessment System to promote development of the Circular Economy in regions and enterprises. Fur-ther, there exist only few economic-technical policies for promoting circular economic de-velopment and there are very few clear and precise regulations that promote the Circular Economy. In order to resolve the above issues and promote the development of a national Circular Economy, there is an urgent need to establish key institutions, policies and regula-tions.

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3 Approaches for Circular Economy in Europe and China

3.1 Activities related to Circular Economy in Europe The concept of a Circular Economy and the introduction and implementation of concrete polices and activities supporting the establishment of Circular Economy have a longstand-ing tradition in Europe. As mentioned before, the EU Strategy for sustainable develop-ment and the 6th Environmental Action Program aim to provide strategic guidance and ensure policy coherence, affecting all policy making in the European Union. On a more detailed level, various policy initiatives influence Circular Economy activities.

For example, a variety of policy instruments are used to manage the use of resources. Some countries have introduced raw material taxes on the extraction of minerals (sand, gravel, limestone, etc). Taxes on raw materials should provide an incentive to optimise the use of such resources. Other policy instruments used to influence extraction include li-cences for the extraction of certain raw materials and legal limits to the quantities ex-tracted.

The Integrated Product Policy (IPP) is an example of an instrument targeting the produc-tion and consumption phase. The IPP aims to stimulate product designs with efficient use of raw materials in production, and perhaps increased recycleability of products. The direc-tive on the energy performance of buildings focuses on energy efficiency. Another example is the economic instruments used to manage demand for resources, with water pricing being a prime example.

Examples of policy responses aimed at the waste phase are emission standards for waste treatment facilities, for example the landfill and incineration directives. Other instru-ments are restrictions and taxes on the land filling of certain wastes, both of which provide incentives for increased waste recycling.

In 2005 the EU has introduced the Waste from Electrical and Electronic Equipment (WEEE) Directive aiming to tackle the fast increasing waste stream of electrical and elec-tronic equipment. Its main aim is to reduce the amount of WEEE going to landfill, by requir-ing all manufacturers and producers to take responsibility for end-of-life management and recycling of products they sell. This will provide incentives for more environmentally effi-cient and waste conscious design of electrical and electronic equipment. Consumers will be able to return their equipment free of charge. Accompanying the WEEE Directive is the Restriction of Certain Hazardous Substances (RoHS) Directive, which restricts the use of certain toxic substances, such as lead, in printed circuit boards.

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In December 2005, the European Commission released the Thematic Strategy on the Sustainable Use of Natural Resources, which is a new European strategy aiming at a more sustainable use of natural resources. The objective of the strategy is to reduce envi-ronmental impacts associated with resource use in Europe and globally in a growing econ-omy. The impacts of unsustainable resource use include e.g. climate change as a result of fossil fuel use and overexploitation of clean water, soil, minerals and certain fish stocks. The strategy is focusing on improving knowledge, developing monitoring tools and foster-ing strategic approaches in specific economic sectors, European Member States and inter-nationally.

The main objectives of the Thematic Strategy on the Sustainable Use of Natural Re-sources can be summarised as follows:

• More value - creating more value while using less resources (increasing resource pro-ductivity);

• Less impact - reducing the overall environmental impact of resources used (increasing eco-efficiency);

• Better alternatives - if cleaner use cannot be achieved, substituting currently used re-sources with better alternatives.

This is to be achieved over the whole life cycle of resource use, avoiding shifts in environ-mental impacts from one life cycle phase to another or to other regions or countries. Since waste represents the final phase in the life cycle of a resource, the resources strategy will generate important information for the thematic strategy on the prevention and recycling of waste, supporting it in reducing waste.

3.1.1 Approaches in Germany

Germany has for some time been one of the forerunners in the field of implementing Circu-lar Economy activities. As examples, the following paragraphs will introduce Germany’s waste management activities that have taken a very precautionary-focused approach aim-ing to avoid the generation of waste through increasing the efficiency of resource use.

The objective of the German government's policy on waste is to achieve a recycling-based economy that conserves resources and the environment. For instance, a major legal de-velopment in the area of waste management was the enactment of the Waste Disposal Act in 1972, which established the first standards and treatment measures for collection and elimination of waste within local districts in Germany. In 1986, the Waste Avoidance and Waste Management Act came into force and established the basic elements of a progressive waste management system including waste avoidance in terms of volume and hazardousness, as well as material recycling, energy recovery and proper final disposal.

In 1991 the German Federal Government passed the Packaging Ordinance (Ver-packungsverordnung), a prototype for legislation designed to close material cycles. The

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Packaging Ordinance generally requires manufacturers and distributors to take back pack-aging and to re-use it or recycle its constituent materials.

The economic agents affected (producers and distributors) have jointly established a "Dual Disposal System", which operates alongside the existing public waste disposal system. The Duales System Deutschland GmbH (DSD) organizes the curbside collection of waste packaging directly from private households, the sorting of this waste into material groups, and the recycling of these materials. A license label printed directly on packaging, the "Green Dot" ("Grüner Punkt"), documents that producers have paid fees for packaging management. The level of the fee is determined by the type and quantity of packaging material used. Since the introduction of the Green Dot System in 1993, more than 20 mil-lion tons of used packaging have been brought to recycling and annual consumption of packaging has been reduced by about 1.3 million tons compared to 1991 levels.

Germany passed the "Circular Flow Economy Waste Control Law" in 1994. This legis-lation made manufacturers responsible for the entire life-cycle of a product, from the mo-ment its materials leave the ground to the time it is recycled, including energy used for transportation. This law officially named the Act for Promoting Closed Substance Cycle Waste Management and Ensuring Environmentally Compatible Waste Disposal en-tered into force in 1996. Under this legislation the owners or generators of waste are in the first instance responsible for waste avoidance, recovery, and disposal. In order to promote an environmentally sound recycling-based economy, balance sheets for different sub-stances and materials must be drawn up. Based on this Act, the Federal government has issued a number of statutory ordinances and guidelines as well as voluntary agreements establishing requirements for waste supervision, transport licenses, specialized waste management companies and associations, waste management concepts, waste-life-cycle analysis and requirements for the disposal and recovery of wastes. Special legal regula-tions exist for the following goods: packaging, end-of life-vehicles, batteries, electric and electronic equipment, waste oil, waste wood, commercial wastes, biodegradable wastes, sewage sludge, and hazardous wastes. Voluntary agreements exist for construction and demolition waste and special paper. In addition, the Federal government has issued a waste incineration ordinance based on the Federal Emission Control Act. Thus, the Act establishes the consistent implementation of the polluter-pays principle in the field of waste.

Further progress has been made on the closed loop substance cycle and on product li-ability. A refundable deposit on drinks cans, which started on 1st January 2003, reduced the flows of single-use beverage packaging. A new Packaging Ordinance came into force in May 2005 simplifying the deposit on drink cans.

The policies mentioned above have enabled Germany to establish a modern waste man-agement and closed substance cycle with significant positive effects on the protection of resources, climate, soil, water bodies and human health. Today more than 240,000 people

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work in waste management - an economic sector with an annual turnover of some 50 bil-lion euro.

With the highest material recovery quotas worldwide, which also help conserve raw mate-rials and primary energy, demonstrate the contribution of waste management to a sustain-able economy in Germany. Almost 60% of municipal wastes and more than 40% of pro-duction wastes undergo recovery. For some waste types the recycling quotas are even higher – e.g. construction waste 86%, packaging 81%, batteries 77% and graphic paper about 82%.

The contribution of modern waste management to climate protection is also remarkable. Over the last 15 years the emission of greenhouse gas pollutants has been reduced by 30 million tonnes of CO2 equivalents annually.

The federal government's environmental target is to further develop waste management and the closed substance cycle towards materials management over the coming years. By strictly separating wastes, through pre-treatment, recycling and the recovery of energy, Germany aims to make full use of substances and materials bound in wastes and therefore make land filling of wastes unnecessary.

Lessons learned in Germany:

From Germany’s experiences representing several decades of policy evolution and major efforts by all involved stakeholders, the following major conclusions can be drawn:

• Tapping the potential of the general public can be highly effective. The majority of Ger-mans have proven to be both very responsive and cooperative in any measures that are being taken to reduce or recycle waste. Both individual citizens as well as non-governmental organizations have become major supporting factors leading to the suc-cess of policies.

• Involving relevant stakeholders and appealing to their responsibility is crucial. Achiev-ing active participation such as voluntary self-commitments has shown to be vital for waste policies. Proactive communication addressing pressure groups from industries and related associations is likely to generate substantial support. For instance, in 1997 the German paper industry established a voluntary self-commitment of increasing the rate of waste paper recycling. Following significant investments over several years, the utilization rate of recycled post-consumer paper in paper production reached 65% in 2001.

• Making use of market mechanisms and market-based instruments increases effi-ciency. Implementation of the polluter-pays-principle is instrumental in leading to re-duction at the source of any waste cycle. For example, a deposit fee system, intro-duced in early 2003 for one-way drink containers has proven to be very effective in re-ducing litter and has substantially shifted consumption to refillable containers.

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• Adjusting counterproductive regulations at an early stage reduces hazards and long-term costs. The Closed Substance Cycle and Waste Management Act, for example, gives a preference to recovery before disposal which led to the use of hazardous waste as fill at abandoned coal mines, technically a legal recovery method. Reacting to this development, the German government issued the 2002 Ordinance on Under-ground Waste Stowage that regulates in detail types of waste, rock formations and documentation with regard to underground stowage of waste.

• Applying Circular Economy principles also provides long-term economic benefits. Fo-cusing on efficiency reveals potential for cost reduction both in companies and across the whole economy. Additionally, the search for eco-efficient solutions in production unleashes innovative forces and creates business opportunities resulting in enhanced competitiveness not only domestically but also in international markets.

Considering some of Germany’s experiences summarized above might be helpful for Chi-nese decision makers to identify their own most suitable policies. Importantly however, the approaches outlined above must be carefully evaluated in view of the entirely different historical, societal and economic background in China.

3.2 Activities related to Circular Economy in China Following the recognition at the highest political levels to promote the establishment of a Circular Economy, the leadership role for development of the Circular Economy concept has been transferred to the National Development and Reform Commission (NDRC). Cen-tral and local governments have been asked to adopt the principles of a Circular Economy as guidance for making their development plans for the upcoming 11th Five-Year Plan (2006-2010). According to NDRCs proposal, a Circular Economy will be promoted through legislative, political, technical and financial measures, including government subsidies and tax reductions.

In the 11th Five-Year plan, clear objectives and targets for energy consumption and pollu-tion emissions have been established. By 2010 energy consumption per unit of GDP should be decreased by 20% and emission of key pollutants such as COD and SO2 should be decreased by 10% relative to 2005.

The Chinese government is planning to formulate laws and regulations for development of a Circular Economy. Since 1995, items on promoting cleaner production and comprehen-sive utilization of wastes have been integrated into environmental protection legislation. Requirements related to development of the Circular Economy are advanced in, among others, the “Law on Energy Conservation”, “Law on the Environmental Impact Assessment” and “Law on Renewable Energy”. In the 2004 revision to the “Law on Prevention and Con-trol of Environmental Pollution Caused by Solid Waste” there is a clearly stated objective

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“to promote Circular Economy development”. In addition, many local regulations are being promulgated by local governments to lay a solid foundation for promotion of Circular Econ-omy development according to the laws in China.

In July 2005, “Some Opinions to Accelerate Development of Circular Economy” was prom-ulgated by the State Council, which identified some guiding thoughts, objectives, tasks and corresponding policies and measures to guide Circular Economy development nationwide. The formulation and implementation of a series of policies and regulations indicates that legislative work on the Circular Economy has begun a systematic and standardized imple-mentation in China.

At present, legislative work for the “Law on Circular Economy” has been launched by the State. The Environmental Protection and Resources Conservation Committee of the Na-tional Peoples Congress (NPC) has established a Leading Group for drafting the “Law on Circular Economy”. Some key elements of the upcoming Circular Economy law include Extended Producer Responsibility requirements, financial supports from government, a strengthening of research and development activities, performance evaluation, information disclosure and public participation. It is anticipated that the legislative bill will be submitted to the Standing Committee of NPC for examination and approval in 2007.

The Chinese State Environmental Protection Administration (SEPA) has played a pioneer-ing role in the development and promotion of the Circular Economy approach. Pilot work on Circular Economy and ecologically adapted industry has been conducted by SEPA since 1999. Currently, the concepts and practices of a Circular Economy have been ap-plied in China at three levels: cleaner production in enterprises (small-cycle), industrial symbiosis in industrial parks (medium-cycle), and integrated resource-based planning and policies for regional development (big-cycle). Since the Circular Economy is still quite a new concept in China, further demonstration work is required to guide its development and establishment.

At the level of enterprises, the concept of the Circular Economy is being promoted through cleaner production methods. In 2003 a “Law on Promotion of Cleaner Production” was issued in China. Currently there are over 5000 enterprises comprising 20 industries in 20 provinces that conduct cleaner production activities.

At the regional level, SEPA began to promote and support the construction of the ecologi-cal industrial park Guiyang, Guangxi Province, in 1999. In 2003, on the basis of summariz-ing experience and improved theories, SEPA further introduced the concept of the Circular Economy and ecologically adapted industry into further economic development and high-tech zones by targeting high energy consuming and heavy polluting industries in particular.

At the municipal and provincial level, SEPA has named official pilot regions for Circular Economy implementation, including Guiyang Municipality, Liaoning Province and Jiangsu Province, Rizhao Municipality among others. Many more municipalities, provinces and

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industrial development zones have engaged themselves in this piloting effort. Within these pilot cities China has witnessed the Circular Economy develop from theory into practice. The pilot provinces and cities play a major demonstration role in the promoting the uptake of Circular Economy activities in other regions and enterprises.

At present, the National Development and Reform Committee, SEPA and other relevant ministries have identified a group of pilot industries and areas (units) for Circular Economy implementation. This includes the steel and iron, metallurgical, chemical and recycled re-sources industries in 13 industrial parks and development zones at the state and provincial level. Other units for Circular Economy implementation include centralized zones for heavy chemical industries and agricultural demonstration zones in 10 provinces and cities with an identified lack of resources or are burdened with a high density of industrial development. By focusing on pilot scale implementation of the Circular Economy and ecologically adapted industry has not only made direct contributions to the social, economic and envi-ronmental development, but has also provided invaluable knowledge and experience for further implementation of the Circular Economy concept China.

As an emerging country, the situation in China differs from the developed countries with regard to the level of economic and social development as well as resource and environ-mental conditions. Hence, China has its own characteristics regarding development of the Circular Economy and promotion of the 3R principle. Key differences can be summarized as follows:

1. Chinese Circular Economy development places emphasis on production processes, (in Japanese, also referred to as “artery industries”) with a coordinated development of “artery industries” and “vein industries”(which means sectors for reuse and recycle of wastes).

2. The management and operating pattern of the Circular Economy is characterized by combining “governments as the leading role, market promotion, regulation control, and public participation”.

3. A “3+1” pattern of Circular Economy is shaped, which means to promote the Circular Economy at the level of “small circulation”, “medium circulation”, “large circulation” combined with reuse, recycle and appropriate disposal of wastes. This “3+1” pattern has been applied widely throughout the country.

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4 Circular Economy at the Regional Level: The case of Guiyang

Guiyang City, located in the southwest part of China is a region with strong development dynamics. The population of Guiyang is in great need of economic growth, jobs and better living conditions. So far, the economic growth has largely been based on extracting and processing coal, phosphorus, and bauxite resources. While there has been an impressive 10.4% yearly economic growth in recent years, the level of pollution and natural resource degradation has increased at a similar rate. Furthermore, urban unemployment is growing and high levels of poverty persist.

The economic development of Guiyang in the past 25 years has been characterised by close correlations between economic development, population growth, and increases in resource consumption and polluting emissions. From 1978 to 2002, the GDP of Guiyang increased 9.6 times, increasing at an annual rate of 10.4 percent. Over the same period, however, the consumption of resources increased by a factor of 3.3, representing an an-nual growth rate of 6.3 percent. The model of resource-intensive development has resulted in large-scale and in some cases irreversible damage to the local environment, including loss of biodiversity and degradation of natural resources, most notably water and soil. Like the rest of China, Guiyang faces a major challenge in finding a new model of development that decouples expansion of the local economy from resource consumption and pollution discharges. If such a decoupling is not achieved, short-term economic gains for Guiyang residents will be unsustainable in the medium to long-term.

As in many parts of the world there is an urgent need in underdeveloped regions of China to alleviate poverty through environmentally sound and socially responsible economic de-velopment. This need has been clearly manifested in Guiyang, a city in southwest region of China where:

• The average income of rural population (more than half of total population) is US$ 0.74 per day and 520,000 people are living with less than US $0.50 per day.

• While the GDP growth rate has exceeded 10% for the past 10 years it has been achieved through low-efficiency mining and mineral processing.

• 36% of the rainfall is acid contaminated, 17% of the land is suffering from desertifica-tion and 32.5% of the land is suffering from soil and water loses (erosion).

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• More than 400,000 surplus labours live in Guiyang’s surrounding rural areas are in need of jobs and income. Of these 20,000 move into urban areas every year which contributes to an already increasing urban unemployment problem.

4.1 Activities related to Circular Economy in Guiyang In May 2003, Guiyang was designated by the Chinese State Environmental Protection Administration as the first pilot city to become an ecologically sustainable city through the development of a Circular Economy. In response to these challenges, the Guiyang gov-ernment has taken an initiative to adopt a Circular Economy development strategy to iden-tify alternative economic development models. The Guiyang government is very committed to a long-term strategy of Circular Economy development. A master plan has been devel-oped and adopted by the municipality in 2003 aiming to improve the efficiency of resource use through a system approach in industry, agriculture, tourism, urban development and ecosystem restoration. The city has also established a Circular Economy office to facilitate the implementation of the strategy.

4.1.1 Guiyang City regulation on the establishment of a Circular Econ-omy based ecological city

The People’s Congress of Guiyang has developed the Regulation for Guiyang to build a Circular Economy and environmentally friendly city. The Regulation on Construction of the Eco-city of Guiyang for Circular Economy, which was adopted September 25, 2004 and took effect on November 1, 2004, is the first circular economy regulation at the local level in China. It provides a legal basis for the promotion and development of the circular econ-omy in Guiyang City.

The Regulation comprises four Chapters: general provisions, planning, implementation and legal liability.

A: General Provisions

The general principles and managerial system for the development of the circular economy in Guiyang City are stipulated in the first Chapter of the Regulation. It is prescribed that the People’s Government of Guiyang Municipality is tasked with providing unified leadership on construction of the eco-city for a circular economy throughout the city. The People’s Governments at the county level are charged with organising construction of the eco-city for a circular economy within their administrative fields and the relevant administrative de-partments are charged with implementation and construction of the eco-city for a circular economy in accordance with their respective responsibilities. Social groups, enterprises and institutions, and grass roots organizations are also responsible for supporting the initia-tive where appropriate.

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B: Planning

How to set down planning for the circular economy development is also clearly stipulated in the Regulation. The overall planning for construction of the eco-city for circular economy should remain consistent with the development planning for the national economy and society, as well as the general plan for the city, the general plan for environmental protec-tion, and the general plan for the land utilization. With the legal status of the planning iden-tified, it is also put forward that the overall objective for building an eco-city for a circular economy should be divided into short-term, mid-term and long-term goals.

• The short-term goal is to address prominent issues obstructing construction of the eco-city for a circular economy and to begin demonstration projects with high efficiency and great effects.

• The mid-term goal is to complete the establishment of circular economy industries, an ecological guarantee, human resources development, and institutional & infrastructure construction.

• The long-term goal is to achieve establishment of the circular economy system and build a circular economy eco-city with a sound ecology, rational layout and harmonious development of human society and nature.

C: Implementation

The strategy and tasks for implementation of the circular economy are the key contents of the Regulation. The key tasks to boost circular economy development are put forward in the fields of production and consumption and in the aspects of industry, agriculture, the service industry and the industry for comprehensive waste utilization.

In the field of production, it is stipulated that the overall planning should be conducted in the new development parks or industrial parks according to requirements of the eco-park. The existing development or industrial parks should adopt industrial structure adjustment policies for, give priority to construction projects for building a circular economy eco-city, and gradually develop into the eco-industrial parks.

The criterion for prohibition of new construction projects is specifically formulated in the Regulation. Prohibited projects are:

• Projects not conforming to industrial development planning;

• Projects with low energy- or resource-efficiency and high pollution loads;

• Projects with ecological damage and environmental pollution;

• Other projects prohibited by explicit order of the State.

The criterion for prohibition of reconstruction projects and expansion projects is shown as follows:

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• Projects without technological innovation by cleaner production measures;

• Projects without environmental impact assessment and analysis demonstrating re-duced use of raw materials, consumption of resources, generation and disposal of pol-lutants and increased recycling of resources;

• Projects not meeting requirements of rational energy utilization and energy conserva-tion.

For enterprises, the requirement of cleaner production is also put forward. It is stipulated that enterprises should adopt the following measures in favour of circular economy devel-opment in the whole production process:

• Cleaner production should be promoted within enterprises. Highly polluting raw materi-als and energy sources should be substituted with raw materials and energy within prescribed time limits;

• Improving the utilisation of readily recyclable wastes should be a priority to increase efficiency of the use of resources, by-products and wastes;

• Recyclable, disposable and dissolvable packaging should be adopted for products to reduce overuse of packing materials and the generation of packing waste.

Industrial integration and optimised integration of materials and energy use are encour-aged among enterprises to prolong industrial chains and form ecological industrial chains.

For agriculture, the People’s Government above the county level has a number of respon-sibilities. These include following the adjustment for the structure of the agricultural econ-omy, giving priority to development of hazard-free products, green products and organic products, building the corresponding bases, setting up a recycling system for agricultural wastes, and supplying and guaranteeing a system for clean agricultural energy.

In the field of consumption, a waste classification system is to be encouraged or supported. The people’s government at all levels is to adopt various measures to encourage environ-mentally-friendly consumption, actively foster a green market system, vigorously promote green procurement and sustainable consumption, and advocate moderate consumption. For government offices and public institutions funded by financial allocations from the State treasury, energy conservation and water saving & recycling products should be given prior-ity for procurement. New construction projects and urban facilities should be equipped with energy-saving and water-saving products. Other organizations and individuals should also be encouraged and guided to make use of energy saving and water saving & recycling products.

D: Legal Liability

In terms of legal liability, the regulation provides for fines of between RMB 10,000 Yuan and RMB 100,000 Yuan for non-compliance with the regulation.

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4.1.2 Activities and tasks of Guiyang Government

The main activities and tasks of Guiyang Government for promoting the Circular Economy can be summarised as following:

Graphic 2: Main activities and tasks of Guiyang Government for promoting CE

A: Objective Setting and Development of Master Plans

In the outline of the 11th five-year economic and social development plan of Guiyang, a series of objectives has been established. It is expected that the GDP growth rate will ex-ceed 13% annually. Compared with 2005, per capita GDP of Guiyang will be doubled, reaching about 3,600 USD in 2010. Within the same time, the energy consumption per unit of GDP should be decreased by 20% in 2010, relative to 2005.

The elaboration of the master plans for Circular Economy development in Guiyang city is a key element of the Circular Economy Strategy in Guiyang. The 11th-five year plan of eco-nomic and social development of Guiyang is the guiding master plan for all activities of Guiyang. The master plan for constructing the eco-city by promoting eco-economy or Circular Economy of Guiyang is a kind of specific plan for achieving sustainable consump-tion and production patterns. The material flow analysis approach has been used to set up realistic objectives for Circular Economy development in Guiyang. The priorities for devel-oping the Circular Economy have been identified in the master plan.

Besides the master plans for a Circular Economy in Guiyang, a series of sectoral plans and/or specific plans have been made. These include the Cleaner Production Plan, Municipal Waste Management Plan, Eco-industrial Park Construction for phospho-rus chemical sectors, among others. All plans provide strong guidance and support for the Circular Economy in Guiyang.

In accordance with the Regulation on Circular Economy Development in Guiyang City, the master plan for constructing an eco-economy city is being formulated by Guiyang Mu-nicipality. At present, a draft version has been developed and is being discussed. The overall planning clearly identifies the major tasks of developing the circular economy and building an eco-economy city in Guiyang.

The overall strategic objective for circular economy development in Guiyang is put forward in the Regulation:

“During the eleventh five-year plan period, the framework for the eco-economy city with core elements shall be formed; all the development processes shall be ev-

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evolved towards an eco-economy city; the relevant mechanism for development of eco-economy city shall be put into full practice, which is a prerequisite for further development of an eco-economy city in the future. The urban features of the eco-economy city shall come into being and be recognized by the domestic and inter-national community. Afterwards, with ten to twenty years’ efforts, Guiyang City shall be built into a well-known and creditable eco-economy city with special char-acteristics that should be accepted extensively at home and abroad. By 2020, so-cial and economic development level of Guiyang City shall be substantially im-proved and the competitiveness of Guiyang City shall be strengthened constantly. By that time, Guiyang City should be of sound environment, sound ecology and perfect infrastructure and Guiyang City residents should have a comfortable life which would lay a solid basis for Guiyang City to become an eco-economy city with a developed economy and beautiful environment in 2050 in real sense.”

The overall strategic objective should be embodied in the following five aspects:

1. Social and economic mechanisms with coordination between environmental protection and social and economic development should be formulated, which would provide a mechanism for achieving the overall objective of constructing an eco-economy city through systemic innovations. They should include: a government decision-making mechanism, a public participation mechanism, a mechanism of supervision by public opinion, a cross-sectoral coordination mechanism, a capital flow mechanism and an in-formation sharing mechanism.

2. Give top priority to leapfrog towards environmentally sound and socially responsible economic development. The annual rate of GDP growth should be kept at 13% during the eleventh five-year plan period and the gross output should be increased in the list of similar cities. With the increasing of gross output, the industrial structure must be upgraded simultaneously. The proportion of value added manufacturing should be steadied and the proportion of the value added service industry should be increased through accelerating development of tourism and material flow industries.

3. Improve the quality of the ecological environment. In order to further control urban pollution, the targets set for being classified as a national best-case example of urban environmental protection should be reached. The following measures should be adopted to achieve this objective: 1) Strengthening industrial pollution control and promoting industrial enterprises to realize “zero pollutant discharge” in a staged man-ner is emphasised; 2) Reduce agricultural non-point pollution; 3) Further strengthen management in the Nanminghe River Basin; 4) Enhance protection of drinking-water sources such as Hongfeng Lake, Baihua Lake and others; 5) Increase forest cover rate, control soil and water erosion and prevent stony desertification; 6) Further im-prove construction and management of urban infrastructure.

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4. Clearly improve efficiency of resource utilization. Specifically, this should include: 1) Improving the resource recovery rate and protecting resources from uncontrolled ex-ploitation; 2) Improving the added-value of resource based products; 3) Reducing the unit consumption of energy, electricity and water consumption for products; 4) Reduc-ing costs of material flows; 5) Reducing energy consumption per 10,000 Yuan GDP by about 20% during the eleventh five-year plan period.

5. Develop and strengthen a security guarantee for the urban ecological economy. The guarantee measures should be formulated at three levels: 1) The fundamental position of the ecological system should be identified and strict planning for ecological rehabili-tation should be drafted at the macro-strategic level; 2) Specific prevention and control measures should be formulated aiming at water protection and soil erosion, stony de-sertification, shortage of water and land, geologic hazards and other unrecognised challenges for ecological security at the mid-strategic level; 3) Specific technical re-quirements for ecological rehabilitation projects should be formulated at the micro op-erational level. In accordance with risk assessment results, the serious unrecognised challenges for ecological and economic security would be given priority in elimination.

In order to achieve the above mentioned strategic objectives and to implement measures for circular economy development that have been brought forward in the Regulation, Gui-yang Municipality has put forward the following key strategic tasks: to vigorously develop circular economy demonstration projects; to take measures to improve resource and en-ergy utilization efficiency in key industries; and to promote development of recycling indus-tries and safe disposal and treatment of wastes.

B: Conducting Circular Economy Demonstration Projects in Guiyang

Circular Economy demonstration projects of in Guiyang include:

• Cleaner production at the enterprise level. The implementation guidance for pro-moting cleaner production in Guiyang has been issued, including some financial poli-cies. The principles of energy saving, pollution reduction and efficiency improvements have been adopted. By 2010, implementation of cleaner production activities is ex-pected to reach 80% of key enterprises in Guiyang.

• Eco-industrial park demonstration. The sectors of phosphorus chemical industry, aluminium industry, coal chemical industry, metallurgy industry, power plants and building materials industry have been identified as key sectors for conducting demon-stration projects.

• Development of Eco-tourism and organic agricultural sectors.

In the regulation, it is stipulated that circular economy demonstration projects shall be con-ducted to solve prominent issues. Therefore, experimental demonstration projects are im-

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plemented to push forward the construction of the eco-economy city at steady steps in Guiyang City. In combination with actual conditions of Guiyang City and overall strategic deployment for constructing an eco-economy city, experiments of eco-economy city con-struction are being undertaken in the eco-industrial parks, enterprises, counties and vil-lages and towns, and social communities. Pilot eco-industrial projects are mainly concen-trated on industrial parks in the phosphor chemical industry, aluminium industry, chemical industry, coal chemical industry and the pharmaceutical industry. Pilot work is also being conducted in the chemical, electric power, metallurgical, and construction materials indus-tries with respect to improved energy utilization efficiency.

In addition, circular economy pilots are also being conducted in the eco-tourism and herbal medicine industries and in agriculture with a focus on industrial development with local characteristics.

C: Improving Material-, Resource- and Energy-Efficiency

Setting clear and realistic targets for energy and material consumption, and improving o-verall energy and material use performance of key economic sectors in Guiyang is one of the most important activities of the Circular Economy development. The main priorities for improving efficiency include energy-saving, water-saving, raw material saving and inten-sive land resources utilisation.

The following measures should be adopted to improve the efficiency of energy and re-source utilization:

1. The energy utilization efficiency of energy-intensive industries should be substantially improved. This includes electric power, steam, production and supply of hydrothermal water, production and supply of coal gas, non-ferrous smelting and calendaring, chemical materials and products manufacturing, non-metal mineral products, ferrous metal smelting and calendaring, rubber manufacturing and transportation vehicles manufacturing.

2. Technological equipment and technical levels should be improved through technologi-cal innovations to guarantee a high starting point for later incremental improvements and reformed capital stocks.

3. Systematic design and overall planning should be strengthened. The energy efficiency should be achieved through system optimization with emphasis on technological de-velopment in industrial parks and in the urban transportation field.

4. Management of energy performance monitoring, examination and costs accounting should be further strengthened.

5. Industrial structure upgrading should be accelerated to prolong industrial chains, im-prove the level of processing and value added, influence manufacturers to extend link-

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ages between research and development, design, management and between supply chains and marketing to achieve optimization and upgrading.

D: Promotion of Material Reuse and set-up of Recycling Sector for Wastes

Reuse and recycling of wastes is one of the key components of the Circular Economy de-velopment in Guiyang. By 2010, the comprehensive utilization rate of industrial wastes is expected to reach around 60% (in 2005, the rate is 48%). Comprehensive utilisation of steel scraps, plastics scraps, used tyres, used home appliances and used vehicles has been identified as a major priority. A classified waste collection system shall also be estab-lished in Guiyang.

Emphasis should be put on maximising waste recovery and recycling in a number of sec-tors, including the phosphor chemical industry, aluminium chemical industry, coal chemical industry and pharmaceutical industry. By 2010, the comprehensive utilization rate of urban industrial solid wastes should be greater than 60%. A specialized industrial solid waste disposal system focussed on phosphor and aluminium wastes should be established and developed to address mine refuse and furnace cinder wastes through backfilling of aban-doned mines and a comprehensive utilization of manufacturing construction materials.

There should also be development of comprehensive utilization of non-renewable re-sources such as waste metal, waste plastics, waste electromechanical products, waste tyres, waste household appliances, electric wastes and waste vehicles.

Treatment of urban domestic wastes should be improved with settlement of classified col-lection and disposal of wastes. Barren mountains and wastelands could be used to estab-lish landfill plants for domestic waste sorting and treatment to reduce waste disposal costs. Establishment of a pilot program for production of organic fertilizer by intensive utilization of domestic wastes should be established and expanded gradually. Further, a pilot electricity and heat generation program through waste incineration should also be established and gradually expanded.

4.2 Surveying the level of Implementation of Circular Econ-omy in Guiyang: Methodology applied

For surveying the level of implementation of Circular Economy in Guiyang a survey ques-tionnaire (English and Chinese versions) was developed jointly by CSCP and SEPA (for the entire questionnaire please refer to the appendix). The questionnaire is structured in two parts. The first part of the questionnaire focuses on general aspects and understanding of the Circular Economy. The second part focuses on exploring the activities and current status of implementation of the department or bureau targeted for interviewing (for a list of the interviewed departments and bureaus please refer to the appendix). The questionnaire

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includes multiple choice answers, text and comment boxes and also provides space for respondents to express aspects that are seen as particularly important for inclusion in the content development of the training program.

Graphic 3: Overview of surveyed departments and applied methodology

The Chinese Version of the questionnaire was sent to the targeted departments and bu-reaus two weeks in advance of the face-to-face interviews. During the week of April 17th - 21st, 2006 the CSCP and SEPA jointly conducted face-to-face interviews with representa-tives of the relevant institutions in Guiyang. During these interviews specific elements of the questionnaire were discussed in detail and opportunities for capacity building were identified.

In addition to the face-to-face interviews, all interviewed institutions provided written re-sponses to the questionnaire. A summary of the main survey findings and its implications for the development of the training program is given in the following chapter. However, as some questions provided multiple-choice options a statistical analysis of these is provided in the Appendix.

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4.3 Survey findings

4.3.1 Awareness and understanding on Circular Economy

• The survey participants have a high awareness on the Circular Economy concept. The need for aligning economic growth with environmental protection is well known among the interviewed respondents in Guiyang. The survey participants highlighted that sev-eral measures have to be considered to effectively implement Circular Economy activi-ties.

• The understanding of the Circular Economy is closely related to the 3R-Principles (Re-duce, Reuse, Recycle). The focus of many respondents understanding is on the reuse and recycle aspects and there is a need to increasingly raise awareness on opportuni-ties and benefits of reducing resource and raw material consumption.

• Respondents are aware and possess knowledge on solid waste management in urban areas. There exist opportunities for providing latest technical knowledge and for raising awareness on material and resource efficiency opportunities and benefits in different production and consumption phases. Further, there are opportunities to further en-hance and promote knowledge on life-cycle-thinking.

• Many respondents perceive the concept of the Circular Economy as being closely linked to the establishment of Eco-Industrial Parks (EIPs). Whereas EIPs present an essential part in the Circular Economy concept a number of opportunities exist to build knowledge on the integration of production and consumption systems on a regional basis as well as the circulation of industries and urban systems.

• The majority of the survey respondents have a good understanding of the interrelation-ship of environmental protection and the quality of human life. There exists high inter-est in further exploring the mutually reinforcing linkages between environmental serv-ices and poverty alleviation as a means to long-term improvements in quality of life.

• Many respondents noted that the general public awareness of the Circular Economy is rather low and that the concept has so far not been sufficiently communicated and ex-plained to the wider public. New information measures and programs by the Circular Economy Office and other relevant departments can help to increase public knowledge and communicate the role of consumers in applying the Circular Economy concept at the household and neighbourhood level.

4.3.2 Barriers for Circular Economy

The survey has identified a number of barriers that the participants see as most challeng-ing for successfully implementing a comprehensive Circular Economy that are listed in the following paragraphs:

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• Survey respondents feel that funding sources are insufficient to support and enable successful implementation of Circular Economy activities. Opportunities exist to sys-tematically explore funding mechanisms that have been successfully applied for driving Circular Economy activities in Europe and assess weather they can be transferred and applied in China, and especially in Guiyang.

• Many participants highlight the need for technical innovations (e.g. new and more effi-cient technologies) to make substantial progress in reducing, reusing and recycling materials and natural resources. This finding implies that opportunities exist to promote the establishment of technology platforms and foster international technology transfer mechanisms. Further, it implies opportunities for organisational innovation (e.g. man-agement systems).

• Knowledge and guidelines on clear and comprehensive planning procedures for de-signing and implementing the Circular Economy are weak or lacking. It is apparent that there exists lack of clarity as to how the Circular Economy approach differs from stan-dard environmental protection planning.

• Many participants feel that Circular Economy needs to be enforced by legislation on the national level in order to support and drive regional implementation. Besides en-forcing regulatory approaches, a number of opportunities exist to further introduce and adequately integrate market-based solutions for implementing the Circular Economy concept.

4.3.3 Priority identification

• The current Circular Economy activity focus lies on heavy polluting industries. Achiev-ing a broader Circular Economy however, demands a whole system guidance frame-work for policy setting, methods of planning, economic sectors, and stages of the pro-duction-consumption cycle. This implies to further extend Circular Economy activities to new economic sectors such as for example organic farming, herbal medicines and sustainable tourism.

• The majority of current Circular Economy activities focus on state-owned enterprises. Awareness exists that private enterprises and specifically Small and Medium sized en-terprises (SMEs) need to be increasingly integrated into Circular Economy planning and activities. To accomplish this, specific SME targeted approaches and policy in-struments need to be introduced.

• Strong focus lies on the potential for creating eco-industrial parks in the region. How-ever, the definition of EIP used in China in many cases does not extend beyond "an eco-chain where one company uses the waste of another." Such exchanges are only one of many strategies through which eco-industrial parks can further the Circular Economy's goals of optimizing resource use and lowering waste and pollution.

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• First efforts at using indicators for assessing resource status and consumption in the region have been designed. However, many participants highlight the need for com-prehensive and easy to apply indicator sets that provide the basis for sound policy planning and development concerning Circular Economy activities.

4.3.4 Policy tools

• Respondents have an understanding and knowledge of a number of policy instruments that can be applied to steer and set the framework for the Circular Economy. Most of the participants see regulatory instruments (e.g. legislative measures, norms and stan-dards) and to some extend economic instruments (e.g. tax-breaks, eco-taxes) as major instruments to successfully drive the Circular Economy.

• A number of the interviewed municipal departments and bureaus apply other policy instruments such as informational and educational instruments. However, the overall and broad-based application of these instruments thus far is believed to play a minor role.

• The understanding of effective linkages and reinforcing interrelationships of combining several policy instruments (e.g. regulatory, economic, educational, informational and cooperation instruments) into sound policy mixes can further be explored and featured among decision makers.

• The interest in getting more knowledge of the benefits and application modes of eco-nomic instruments (e.g. tax breaks, subsidies) is high. Further, there exist many oppor-tunities to intensively introduce and mainstream innovative informational instruments (e.g. reporting, labelling, green marketing) across all departments and bureaus so as to effectively spread and implement the concept of Circular Economy.

4.3.5 Institutional arrangements and stakeholder involvement

• Survey respondents mention that Guiyang government is very committed to a long-term Circular Economy development strategy. Guiyang is the first pilot local govern-ment selected by the State Environmental Protection Administration for Circular Econ-omy implementation.

• Respondents mention that Guiyang municipality has developed and adopted a master plan to implement the Circular Economy model of development in 2003 and the Ordi-nance of Building Guiyang Eco-city of Circular Economy was released in November 2004. It is the first local legislation directly addressing the Circular Economy and has provided a sound legislative basis for building a regional Circular Economy. Within the 11th five-year development plan (2006-2011) Guiyang has reinforced its commitment to building a sound Circular Economy in the region.

• In order to meet the requirements for promoting the Circular Economy, Guiyang Mu-nicipal Government has set up a Circular Economy Office that is under the direct aus-

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pices of the City Mayor. The office is responsible for promoting the Circular Economy concept and for coordinating activities of various other departments and bureaus that play a significant role in the establishment of the Circular Economy (see next bullet point).

• The main departments and bureaus for designing and implementing the Circular Ec-onomy at the municipal level are as follows:

- Circular Economy Office

- Development and Reform Committee

- Economy and Trade Commission

- Science and Technology Bureau

- Environmental Protection Bureau

- Urban Management Bureau

- Finance Bureau

- Municipal Administrative Bureau

- Policy Research Office

• In all surveyed departments and bureaus there exists knowledge on the stakeholder concept. Awareness exists that further governmental and non-governmental stakeholders need to be involved in Circular Economy planning and implementation activities. However, there exist opportunities to introduce methodologies to systemati-cally prioritize stakeholders and determine their concrete role and involvement in Cir-cular Economy activities.

• Many respondents seem to understand stakeholder involvement in Circular Economy activities as separated from each other. Good opportunities exist to introduce and promote the need for taking and integrated stakeholder approach and to build stake-holder networks to successfully implement Circular Economy.

4.3.6 Expressed expectations and conclusions for the training program

• During the interviews all respondents expressed their strong desire to receive more information on best cases and successful Circular Economy policies, activities and im-plementation projects in Europe. This finding will be reflected in the training program.

• Respondents highlighted that the Circular Economy cannot only be reached by effi-ciency in production patterns but also needs to be addressed in consumption patterns. The need for taking an integrated view on production and consumption and promotion of life-cycle thinking to successfully plan, design and implement the Circular Economy will be included into the training program.

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• Within the training program policies that support an integrated approach towards Circu-lar Economy and production and consumption issues will be introduced (policy tool-box). These instruments will cover a range from hard (e.g. regulatory instruments) to soft and supporting policies (e.g. cooperation and information instruments). Special at-tention will be drawn on how to effectively combine different policies in sound policy-mixes that effectively and multi-dimensionally address Circular Economy aspects.

• A major focus of the training program will lie in building capacity on how to systemati-cally plan, implement, monitor and evaluate Circular Economy activities in an inte-grated manner. Step-by-step guidance will be given on how to set up a sound action plan that is supported by above-mentioned instruments of the policy toolbox.

• The guidance for setting up an action plan will include sub-chapters on indicator devel-opment that would improve assessment and monitoring of resource and material con-sumption in production and consumption systems. The indicators will eventually pro-vide a scientific basis for sound policy making.

• The training program will further contain effective approaches for disseminating Circu-lar Economy activities and building information campaigns that effectively address dif-ferent target groups (e.g. business, finance, consumers) so as to engage a variety of stakeholders in building the Circular Economy system.

• A majority of respondents expressed concern that, while theoretical and conceptual approaches to Circular Economy are very valuable, there is a need to complement theory with first hand site-visits by Chinese decision makers to better understand the European experience. The project partners will evaluate the possibilities to conduct a study tour to Europe in 2007.

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5 Result assessment of the questionnaire

Beside the face-to-face interviews, 13 questionnaires have been filled out by relevant offi-cers from 8 departments in Guiyang, including: Development & Reform Committee, Policy Study Office, Environmental Protection Bureau, Municipal Administrative Bureau, Financial Bureau, Economy and Trade Committee, CE Office, Science and Technology Bureau.

The main findings of these survey questionnaires are summarized in Chapter 4. In the following a statistical analysis of the multiple-choice questions is given.

Types of tools applied by organisations for implementing CE (Question No. 8)

Policy Tools Results

Laws and regulations (legislative measures) 10

Cleaner production (auditing and implementation) 8

Economic instruments (tax exemption, favourable loans, etc.) 7

Development of master plans 7

Environmental management system 7

Educational and research tools (vocational trainings, funding supports) 6

Environmental performance evaluation 6

Capacity building measures 6

Technology Research and Development 4

Industrial ecology (eco-industrial parks) 4

Environmental indicators 4

Information sharing and disclosure to the publics 4

Green governmental procurement 3

Cooperational tools (e.g. Private Public Partnership, Voluntary Agreements) 3

Informational tools (Labels, Sustainability Reports, Consumer information) 2

Life cycle assessment 2

Green production (including eco-design) 1

Environmental labelling 1

Sustainable consumption tools 0

Others 0

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Key sectors which have great priorities for CE development in Guiyang (Question No. 10)

Sectors Results

Phosphorous chemical production 9

Coal chemical production 9

Aluminium process 5

Construction of rural area 3

Urban infrastructures 2

Industry 2

Medicine production 2

Supermarkets & marketplaces 1

Chemical plants 1

Power plants 1

Smelters 1

Construction 1

Environmental protection industry 1

Timbering production 1

Stakeholders involved in projects (Question No. 12)

Stakeholders Results

Governmental departments 11

State owned enterprises 8

Private sectors 7

Foreign NGOs 4

International Organizations 4

NGOs 3

Public 3

Foreign enterprises 3

Foreign governmental organizations 3

Other institutions/organizations -

Others -

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Main barriers for implementing CE (Question No. 15)

Barriers Results Remark

Be short of fund.

It is hard for small and medium-sized enterprises to get loans.

Practice resources sharing. CE Office provides a projects plan and appropriates funds.

Funding support 10

Government directs and explore varieties of financing chan-nels.

Technology is a key barrier.

Be short of independently innovation.

Set up committee of experts to tackle key technology issues

Technological 6

Technology transfer and International cooperation.

Policy 3 Not operational and difficult to carry out

Improve public participation by media, booklets and activities. Others 3

Government, manufactories, science and public should joint together.

Improve construction of implementing mechanisms Regulations and mecha-nisms

2

Establish CE coordination mechanisms among relevant departments, such as setting up regular coordination meeting regulations

Implementation capacity is limited.

Enhance publicity and education.

Capacity building 2

Improve specific training of CE practitioners.

National laws and regulations are absent. Laws & regulations 2

Power of policies is limited and can not standardize behav-iours of firms and public.

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6 Appendix

6.1 Interviewed persons and departments

Name Government Department Position Phone E-mail

Lin Donghai Development & Reform Commit-tee，Guiyang

Deputy director general

7989024

Liu Haiqian Development & Reform Commit-tee，Guiyang

Deputy director general

7989021 Lhq_63926@tom.com

Zhang-Guixiu

Development & Reform Commit-tee，Guiyang

Deputy director general

7989022 Qgx2004@tom.com

Yang Qing Policy Study Office, Guiyang Deputy director general

0851-7988351

Wang Dan Guiyang Environmental Protection Bureau

Deputy director general

Wu Bo Guiyang Environmental Protection Bureau

Deputy director general

5661581

Shuai Jiang Guiyang Environmental Protection Bureau

Engineer 5963279 Sj_1234@163.com, sj_j95@yahoo.com.cn

Yin Lu Environmental protection graduate school, Guiyang

Director of institute Yin-lu2@yahoo.com.cn Cheng Hua Municipal Waste Treatment Center,

Guiyang Senior engineer 6220443

Li Zhi Municipal Administrative Bu-reau，Guiyang

Deputy director 0851-6831839

Liu Xian-gyun

Inspection Branch, Guiyang Division chief 5980564

Zhang Ruixin

Guiyang Financial Bureau Staff 5806517

Li Jiarong Guiyang Financial Bureau Deputy director 5806927

Bao Lian-gyan

Guiyang Financial Bureau Division chief 5806977

Tian Rong Guiyang Financial Bureau Secretary general of CPC

5806935

Liu Xiaoping Guiyang Financial Bureau Division chief 5806660

Rong Zhen Guiyang Financial Bureau Division chief 5806803

Bai Ping Guiyang Financial Bureau Division chief 5806535

Lu Qin Guiyang Economy and Trade Commit- Division chief 7989042

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tee

Huang Yaping

Guiyang CE Office Director Gy-ce8128@126.com Chen Hep-

ing Science and Technology Bureau, Gui-yang

Deputy director general

0851-7989263

chen-hep@tom.com

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6.2 Template of the survey questionnaire Survey on the Circular Economy (CE) concept in Guiyang City, China The project aims to improve the policy framework and promote a more integrated decision-making process in the local government to foster environmentally sound and socially re-sponsible economic development, referred to as Circular Economy, in Guiyang City. Through harmonizing and integrating economic, environmental and social aspects in inno-vative urban development and planning at the local level, foreign direct investments will be attracted. Enhancing and strengthening the private sector development while considering environmental and social issues, will result in multiple benefits for a sustainable urban and regional development and improve Guiyang’s regional and national competitiveness.

The reasons for conducting the survey are:

• To get a better insights of your needs and the current economical, social, environ-mental and political situation in Guiyang City;

• To stimulate your interest for environmental concerns • To exchange experiences • To close knowledge gaps and enhance a comprehensive mutual understanding • To guarantee a smooth collaboration • To boost a faster achievement of our mutual objectives • To initiate and facilitate wide reaching stakeholder dialogues • To improve the network of the involved project partner • To give you an impression about our approach • To formulate a policy framework for promoting circular economy development in Gui-

yang Governmental department .................................. Your position ...............................

Your name .................................. Date ......................................

Contact (address, phone number, e-mail)

................................................................................................................................................

................................................................................................................................................

General questions on Circular Economy (CE)

1. Do you know about the concept of Circular Economy (CE)?

Yes

No

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If yes, what do you know about it?

2. What is your understanding of the concept of CE?

The concept is easy to understand

Confusing

Useful for policy making

Other (please explain below)

No opinion

Please list the key points and key objectives about CE development in Guiyang?

3. Do you see any link between the concept of CE and the Chinese traditions?

Has connection to the Chinese traditions

There is no link

Fits the Chinese way of economic development

Doesn’t fit the Chinese way of development

Please explain your answer:

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Questions on the implementation of CE

4. Did you make any experiences with CE and with the implementation of CE re-spectively in the past?

Yes

No

If yes, please name and describe one of your most impressive experiences:

5. If you made experiences with CE, can you give an account of past best practice case studies?

Please name and describe at least one or two projects (case studies) in detail:

6. What are the thematic focus areas of your institution for implementing CE?

Please provide details on focus areas and name key projects of your institution:

7. Does your department or institution currently implement projects on CE?

Yes

No

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Please provide examples and describe at least one or two projects:

8. Does you institution apply any of the following tools for implementing CE (multi-ple choices are possible)?

Laws and regulations (legislative measures)

Economic instruments (tax exemption, favourable loans, etc.)

Educational and research tools (vocational trainings, funding supports)

Informational tools (Labels, Sustainability Reports, Consumer information)

Cooperational tools (e.g. Private Public Partnership, Voluntary Agreements)

Technology Research and Development

Environmental performance evaluation

Cleaner production (auditing and implementation)

Life cycle assessment

Industrial ecology (eco-industrial parks)

Environmental management system

Green production (including eco-design)

Environmental indicators

Environmental labelling

Information sharing and disclosure to the publics

Development of master plans

Sustainable consumption tools

Green governmental procurement

Capacity building measures

Others (please explain below)

None

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Please give reasons for your choice and explain which are the tools most used for your institution’s purposes:

9. Which policy tools are most important and needed for CE development?

Please list down policy tools that you believe are most important for CE development:

10. Please list the key sectors which have great priorities for CE development in Guiyang

Key Sectors for successfully establishing CE:

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11. Do the policies or projects of your institution explicitly address the business sector?

Yes

No

If yes, please name the sectors and describe by which means they are addressed:

12. Which of the stakeholders below-mentioned are you involving in your projects (multiple choices are possible)?

Governmental departments

Other institutions/organizations

Private sector

State owned enterprises

NGOs

Public

Foreign enterprises

Foreign governmental organizations

Foreign NGOs

International Organizations

Others (please explain below)

Please name at least one specific project in which you involve the stakeholders and de-scribe why and how you involve them:

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13. Does your institution promote awareness raising and information campaigns that focus on CE and on its implementation?

Yes

No

Please provide an example and name the medias used:

14. Is there a focal point within your institution that is responsible for the implemen-tation and the compliance monitoring of CE?

Yes

No

If yes, please describe its main responsibilities and name a contact?

15. Please identify the main barriers for implementing CE and what do you do / would you do to overcome these barriers? (including technological, institutional, policy, funding support, capacity building barriers etc.)

Please provide details and provide ideas and examples of how to overcome these barriers:

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16. In which thematic areas and business sectors do you see future opportunities for implementing CE?

Please provide details:

17. What do you think is specifically important for your institution to know / to learn about CE and its implementation process?

Please provide details:

6.3 Major development plans for Guiyang List of major development plans relevant for CE implementation in Guiyang summarizing the most important aspects (SEPA)

• The 11th-Five Year Plan of Economic and Social Development of Guiyang city;

• The master plan for building eco- economy city of Guiyang;

• The master plan for building eco-city by adopting Circular Economy approaches in Guiyang city;

• The master plan for promoting cleaner production in Guiyang;

• The master plan for municipal solid wastes management in Guiyang;

• The master plan for building Eco-industrial park in Guiyang: phosphorus-chemical industry.

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7 References

CEC Commission of the European Communities ((2002): Sixth Community Environment Action Programme; (6EAP) published in Official Journal of the European Communi-ties L 242 of 10/9/2002.

CEC Commission of the European Communities (2003): Towards a Thematic Strategy on the Sustainable Use of Natural Resources, COM(2003) 572 final, Brussels 2003.

CEC Commission of the European Communities (2003): Towards a Thematic Strategy on the Prevention and Recycling of Waste, COM(2003) 301 final, Brussels 2003.

CEC Commission of the European Communities (2003): Integrated Product Policy: Build-ing on Environmental Life-Cycle Thinking, COM(2003) 302 final, Brussels 2003.

CEC Commission of the European Communities (2004): Towards a Thematic Strategy on the Urban Environment, COM(2004) 60 final, Brussels 2004.

CEC Commission of the European Communities (2004): Stimulating Technologies for Sus-tainable Development: An Environmental Technologies Action Plan for the European Union, Communication from the Commission to the Council and the European Par-liament, COM (2004) 38, Brussels 2004.

Chen Demin (2004): The key point of circular economy is improving resource efficiency, In: Journal of Population, Resource and Environment, 2004.

China Council for International Cooperation on Environment and Development, Task Force of Circular Economy and Cleaner Production (2003): Strategy and mechanism study for promotion of Circular Economy and Cleaner Production in China, Beijing 2003.

European Environment Agency (2005): Sustainable use and management of natural re-sources, EEA Report, No. 9/2005, Copenhagen 2005.

German Government (1994): Act for Promoting Closed Substance Cycle Waste Manage-ment and Ensuring Environmentally Compatible Waste Disposal, 1994.

Guiyang Municipal Government (2006): The 11th-Five Year Plan of Economic and Social Development of Guiyang city, Guiyang, China 2006.

Guiyang Municipal Government (n.a): The master plan for building eco- economy city of Guiyang (Draft Version), Guiyang.

Guiyang Municipal Government (2006): The master plan for building eco-city by adopting Circular Economy approaches in Guiyang city, Guiyang, China 2006.

Illge, Lydia (2003): The Economy of Closed Material Cycles: Environmental-Economic Concepts and Policies, DIW Research Note, Berlin 2003.

Indigo Development (2005): China’s Circular Economy Initiative, 2005.

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Matthews, E., Bringezu, S., Fischer-Kowalski, M., Huetller, W., Kleijn, R., Moriguchi, Y., Ottke, C., Rodenburg, E., Rogich, D., Schandl, H., Schuetz, H., van der Voet, E., Weisz, H. (2000): The weight of nations: Material outflows from industrial economies. World Resources Institute, Washington 2000.

Moll, St., Bringezu, St., Schütz, H. (2005): Resource Use in European Countries: An esti-mate of materials and waste streams in the Community, including imports and ex-ports using the instrument of material flow analysis, Wuppertal Report, December 2005.

Ren Yong, Zhou Guomei (2005): Development Patterns and Policy of Circular Economy in China, Journal of Population, Resource and Environment, 2005.

State Environmental Protection Administration of China SEPA (2003): Selection of Circular Economy Legislation, Science and Technology Publication of China, Beijing 2003.

Task Force of Guiyang-UNEP Demonstration Project (2004): Summary Report of Guiyang-UNEP Demonstration Project of Sustainable Productin and Consumption – Local Government Capacity Building, 2004.

Xiaofei Pei (n.a.): Overview of the Circular Economy in China, Discussion paper.

Zhang Kai (2004): Rethinking the circular economy in China, In: Journal of Population, Resource and Environment, 2004.

Zhou Guomei, Chen Yanping, Ren Yong (2005): International Experiences on Promoting Circular Economy and Implications to China, Journal of Population, Resource and Environment, 2005.