By Shan Juan (China Daily)
Updated: 2007-08-27 10:14

The draft law on the circular economy, China's first of its kind, was submitted for deliberation yesterday to the Standing Committee of National People's Congress (NPC), China's top legislature.

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Based on the so-called 3R principle "to reduce, reuse, and recycle," the draft featuring low energy consumption, low emission of pollutants and high efficiency is expected to take effect next January, according to Feng Zhijun, vice-chairman of the Environmental and Resources Protection Committee of the NPC.

It includes the establishment of a circular economic system, a macro-control system to curb waste of resources and pollutant discharge, and a producer accountability system.

The draft also calls for the government to further strengthen the management of energy and water-consuming industries including those in steel, coal, electricity, petrochemicals, building materials, paper making, and construction.

Industries caught wasting energy and water face fines of up to 500,000 yuan ($66,000).

In addition to the mandatory administrative measures, incentives including favorable tax and investment policies will also be offered to bodies that take an active role in China's circular economy, the draft said.

Once enacted, the law covering all social and economic activities related to the economy, ranging from production to consumption, will provide a legal framework to encourage and guarantee the development of the circular economy.

The government has been pushing the development of circular economy to sustain its rapid economic growth under the increasingly heavy pressure of environmental degradation and shortages of natural resources.

"We must vigorously promote the development of circular economy to build an energy-saving and environment-friendly society," President Hu Jintao said at a national conference in March.

Although China has made more efforts to reduce energy consumption and pollution, energy consumption fell only 1.33 percent last year, well short of the annual goal of 4 percent.