The Chinese Communist authorities recently spent billions of dollars to establish the first state-owned enterprise dedicated to resource recycling, which has been described as a “super waste recycling station.” The authorities also emphasized the advancement of the construction of a unified national market. Experts believe that the establishment of this giant enterprise may be due to the Chinese Communist Party preparing for the worst-case scenario under the situation of complete disconnection from the world and laying the groundwork for internal recycling.
China Resource Recycling Group Co., Ltd. (referred to as China Resource Group) was officially established on October 18 in Tianjin. This enterprise is China’s first state-owned enterprise dedicated to resource recycling, with a registered capital of 10 billion yuan (RMB), headquartered in the Sino-Singapore Tianjin Eco-City, specializing in resource recycling covering various key categories of recycled materials.
The first Party Secretary and Chairman of the Chinese Resource Group is Liu Yu, and Zhu Jianchun serves as the Deputy Party Secretary and General Manager. Liu Yu previously served as the Chairman of Luneng Group and China Green Development Investment Group, while Zhu Jianchun was the General Manager of Baowu Group Environmental Resources Technology Co., Ltd.
The equity structure of the enterprise indicates that the State-owned Assets Supervision and Administration Commission of the State Council, China Baowu Steel Group Corporation Limited, China Petroleum & Chemical Corporation, and China Resources (Holdings) Co., Ltd. each hold 20%, and China Aluminum Group Corporation Limited and China Minmetals Corporation each hold 10%.
Resource recycling refers to the process of recovering, processing, and reusing useful materials from waste, with a particular focus on electronic waste at present.
Chinese state media stated that China Resource Group will become a comprehensive solution provider integrating functions such as warehousing, processing, distribution, exchanging old for new, and standard setting for exports.
China is facing a large-scale retirement of electric vehicles, wind power, and photovoltaic equipment, leading to an increased demand for the disposal of waste materials. Additionally, Zhao Chenxin, Vice Chairman of the National Development and Reform Commission of China, revealed last month that a large amount of waste materials will be generated from large-scale equipment upgrades and the exchange of old for new consumer goods in the future, requiring recycling and recycling treatment. According to CCTV reports, China Resource Group’s annual utilization of scrap steel will reach 260 million tons in the future, helping alleviate China’s steel industry’s reliance on iron ore.
Dai Zhiyan, Deputy Research Fellow at the Institute of International Economics of the Chung-Hua Institution for Economic Research in Taiwan, stated to Epoch Times that waste recycling, especially the recycling and refining of materials used in battery production, is a global trend. However, the recycling of a large number of electric vehicle batteries in China presents a challenging problem. “First of all, they are not as small as household batteries; secondly, some vehicle batteries have a significant energy capacity. If not handled properly, there may be pollution or explosions.”
Chinese state media cited statistics from the China National Resources Recycling Association, indicating that the output value of the resource recycling industry is expected to exceed 4 trillion yuan this year. It is projected that by 2025, the output value of the resource recycling industry will reach 5 trillion yuan. Currently, the largest waste disposal company in the world is Waste Management Inc. in the United States, with a total market value exceeding $89.9 billion, showing a consistent trend of growth over the past decade.
Dai Zhiyan noted that there is still a gap between such projects in China and Western countries. In reality, this industry, from an environmental perspective, may not necessarily boost the domestic economy but could potentially pose a hindrance.
He gave an example of Japan having a specific recycling facility for fluorescent tubes. Traditionally, when it comes to recycling fluorescent tubes, the practice involves crushing them, separating the materials, remelting the glass to make new tubes. However, Japan has a technology that extracts faulty circuits or light-emitting components from both ends of the tube, remelts them, then utilizes inflation technology to reinsert the new light-emitting and power-generating components, all while keeping the glass intact. This kind of technology lacks economies of scale, so in practice, the cost of a recycled fluorescent tube is almost the same as a new one.
Dai Zhiyan believes that convincing people to spend the same amount of money on a refurbished fluorescent tube that has been repaired is not easy in China’s current economic state. From an economic perspective, this recycling and reutilization may not be able to replace the energy of existing manufacturers and could instead become a barrier to the so-called internal circulation economy.
He added that establishing such a super enterprise for resource recycling may not yield significant results in the next three to five years based on experiences from other countries. There is a long way to go, so whether these policies can adequately address the severe economic challenges in China, the prospects are challenging and may not progress as quickly and smoothly as imagined.
Professor Yao Yuan from St. Thomas University in the United States believes that the authorities’ emphasis on establishing a giant enterprise for resource recycling may also indicate an intention to shift focus from the current economic difficulties and demonstrate the development of another industry. However, achieving results in this industry will take a long time, which for the Chinese economy, may not be a timely solution.
The new state-owned enterprise under the Chinese Communist Party has been described by internet users as a “super waste recycling station.”
Dai Zhiyan commented that in the United States or Australia, there is a mandatory regulation in place for the production of engine oil sold in the market, requiring at least 2% of recycled oil to be included in the new oil. Manufacturers will formulate research and development based on this directive to ensure the lubrication effectiveness of the product, with the durability comparable to products that do not contain recycled materials. However, according to official reports from the Chinese Communist Party, the main concept presented is that of a recycling factory, merely re-exporting materials after recycling, using them as industrial support.
“Actually, there is a need for regulations to be promulgated, technological advancements, and convincing downstream small and medium enterprises and foreign users to carry out adjustments and corresponding actions. Otherwise, it can easily become a super recycling plant. Additionally, this project also involves environmental issues, which may trigger community backlash.”
Sun Guoxiang, Associate Professor at the Department of International Affairs and Business at Nanhua University in Taiwan, expressed to the newspaper that waste management companies in Western countries, such as the Waste Management Inc. in the United States, have become global leaders in solid waste disposal enterprises, boasting advanced technology and market operation experience. In comparison, China’s layout in this field is relatively late, with shortcomings particularly in technological innovation, industry norms, and market-oriented operations.
Yao Yuan told Epoch Times that the Chinese Communist Party invested heavily in resource recycling this time, painting a grand picture, but success is not guaranteed. For example, the recycling and reuse of electric vehicle batteries, as of now, has not yet had any breakthrough technology available in any country. The concentrated efforts by the Chinese Communist authorities in injecting a large amount of funding resemble placing bets on a new venture.
On October 18, Premier Li Keqiang presided over an executive meeting of the State Council, declaring the need to combine the promotion of the construction of a unified national market with comprehensive incremental policies to eliminate local protectionism and market fragmentation, remove obstacles hindering economic circulation, and promote the smooth flow of goods, factors, and resources on a broader scale.
Recently, Xi Jinping made consecutive visits to Fujian and Anhui. During his inspection in the Scientific City of Binhu in Hefei, Xi reiterated that high-tech is not something to be begged for or borrowed and must accelerate the realization of high-level technological self-reliance and autonomy.
Some analysts believe that Beijing may already be preparing to respond to the outcome of this year’s U.S. presidential election, anticipating an increase in the U.S.’s containment of China.
Sun Guoxiang stated that the speeches by Xi Jinping and Li Keqiang reflect concerns within the authorities regarding external technological and resource blockades. Thus, the current push for large-scale resource recycling may also be a long-term preparation to cope with global changes.
Dai Zhiyan mentioned that looking at the shareholder composition of China Resource Group, companies like Baowu Steel and Sinopec used to sell chemical raw materials and metal materials, which suggests not only a market-based approach to recycling and reuse but also consideration of strategic resource reserves in case of geopolitical competition and developmental changes.
“In the future, there may be problems in acquiring raw materials due to war or economic sanctions, and the reuse in a circular society may have some underlying motives, serving as a defense resource utilization to establish such a system to cope with possible escalations in foreign relations.”
Yao Yuan also suggested that the Chinese Communist authorities are worried that the trade war may intensify, leading to global disconnection from China, which could hinder access to specific resources. Thus, the initiation of preserving internal demand in the industrial chain, with a focus on current resources for recycling, is a possible consideration and a proactive measure for internal circulation. Whether it will develop to that extent in the future is uncertain.