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  • Ru Chen

The Role of SMEs in China's Circular Economy Transition

According to data from OECD, the number of Chinese SMEs in 2020 reached over 140 million. These SMEs contribute to more than 60% of GDP, 50% of tax income, 70% of technological innovation as well as 79% of job positions. A report from a Chinese research organization estimates that the distribution of SMEs will continue to climb even if at a limited speed. However, SMEs also cause significant environmental issues. According to the national environment ministry, Chinese firms accused of environmental regulation violations were fined a total of 15.28 billion yuan ($2130 million) in 2018, most of the penalty being incurred by SMEs. At the same time, tens of thousands of SMEs were closed because they underperform the environmental standards.

Instead of making up for their negative impact on the environment, SMEs could contribute better by actively participating in the Circular Economy (CE) transition. The potential of the CE business model in improving the situation is already emphasized by China's environmental policies. In addition, the vital technology innovation in Chinese SMEs can strongly support CE transitions like green energy. When it comes to the CE transition in China, limited attention is paid to fundamental development and the involvement of businesses, NGOs and individuals, whose power could be better utilized to synergise the implementation at policy and micro levels. Notably, Chinese SMEs are featured with constrained financial resources but enormous vitality in technology innovation. They have more advantages than larger companies and SOEs in terms of being flexible and open to CE practices.

This white paper investigates the role of Chinese SMEs in China's CE transition by looking into the development characteristics of Chinese SMEs, how SMEs can contribute to China's CE transition, and what the related implications for SME-related policies and management are.

Read the white paper to learn more:

The Role of SMEs in China's Circular Economy Transition
Download PDF • 4.81MB


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