China’s recent announcement that it would cut export quotas for rare earth minerals, which are critical to modern goods from electric cars and electronic equipment to military hardware, could be the latest sign of growing scarcity in a global economy hungry for materials. Peak oil, rising commodity prices, farmland grabs—all of these suggest (although they do not prove) that a world of greater scarcity lies ahead.
Fortunately, export controls are the least important Chinese response to its perception of scarcity. Recognizing the large and growing consumption appetite of its huge population, the pollution that that appetite creates, and the real possibility of a material- and energy-constrained future, the government has made a strategic choice to build a “circular economy” that promotes the reduction, recycling, and reuse of materials by decoupling energy and materials use from economic growth. Pilot projects were launched in 2005 in seven key industrial sectors in 10 provinces or cities, an effort that was expanded in 2007 and 2008. And an experimental Circular Economy Evaluation Indicators System was created with two types of indicators—some at the level of the industrial park and a second set at a more macro level. The effort is too young to document serious, economy-wide gains, but by all accounts the government initiative is a serious one.
China is following in the footsteps of Germany and Japan, both of which have recorded successes in reducing materials flows through their industrial economies. Germany, for instance, has set a goal to achieve “almost complete high-quality recovery” of municipal waste by 2020. In Japan a law that was passed in 2000 established these goals for 2010: to increase resource productivity by 60 percent, increase recycling by 40–50 percent, and reduce waste disposal by 60 percent. As of 2008, Japan was estimated to be on track to meet its goals: resource productivity had increased 37 percent, municipal waste levels were down 40 percent, and disposal of non-municipal waste was down 55 percent.
The lesson: rational responses to growing scarcity are available to governments with the vision, creativity, and will to look for them.