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Steel in a circular economy: Global implications of a green shift in China

Author

Listed:
  • Nechifor, Victor
  • Calzadilla, Alvaro
  • Bleischwitz, Raimund
  • Winning, Matthew
  • Tian, Xu
  • Usubiaga, Arkaitz

Abstract

China is increasingly known for its ambitions towards an ‘ecological civilisation’ and a circular economy. Our article assesses the implications of an accelerated shift towards steel recycling in China. Given the relevance of steel for development worldwide as well as its environmental intensity, any such shift is likely to have implications for competitiveness in China and beyond. Recent findings suggest that China could take advantage of an increasing availability of obsolete steel scrap in the coming decades, moving towards more circular, and potentially greener, steel production. We assess such industrial restructuring from an economic perspective and address the competitiveness of China relative to other developing and industrialised regions. The analysis uses a novel global economy-wide modelling framework (ENGAGE-materials) to assess the aggregate and sector-level impacts of different scrap use options in China in the 2019–2030 time frame. The results show moderate GDP gains for China of cumulated USD 589 billion in GDP gains by 2030 despite a replacement of primary steel capacity. A more comprehensive industrial policy mix aimed at improved recycling practices and more adaptive downstream sectors could increase gains to USD 819 billion. The international implications are mixed, with losses for iron ore producers (Australia, Brazil and India) and gains for most developing countries benefiting from lower steel prices. Another result is an increasing demand for coal in electricity production if such a shift wouldn’t be aligned with an accelerated energy transition towards low carbon pathways. We discuss policy implications of such alignment, potential co-benefits, and a need for green international partnerships.

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  • Nechifor, Victor & Calzadilla, Alvaro & Bleischwitz, Raimund & Winning, Matthew & Tian, Xu & Usubiaga, Arkaitz, 2020. "Steel in a circular economy: Global implications of a green shift in China," World Development, Elsevier, vol. 127(C).
    • Handle: RePEc:eee:wdevel:v:127:y:2020:i:c:s0305750x19304243
    DOI: 10.1016/j.worlddev.2019.104775
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    2. Pin Li & Jinsuo Zhang, 2023. "China’s Inter-Provincial Energy Security Resilience Assessment over Space and Time: An Improved Gray Relational Projection Model," Energies, MDPI, vol. 16(7), pages 1-22, March.
    3. Martin Enilov, 2024. "The predictive power of commodity prices for future economic growth: Evaluating the role of economic development," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 3040-3062, July.
    4. Laura Tolettini & Eleonora Di Maria, 2023. "Structuring and Measuring Environmental Sustainability in the Steel Sector: A Single Case Study," Sustainability, MDPI, vol. 15(7), pages 1-26, April.
    5. Calzadilla, Alvaro & Winning, Matthew & Domenech, Teresa, 2022. "Synergies and trade-offs between climate and circular economy policies in the steel industry," Conference papers 333480, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Reyer Gerlagh & Etienne Lorang, 2024. "Material Source and Waste Taxes in Competitive Equilibrium," CESifo Working Paper Series 11091, CESifo.
    7. Feng Yu & Qiaomin Li & Jianfeng Ma, 2025. "Firm Survival in China's Steel Industry: The Impact of ICT," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 39(2), pages 90-103, November.
    8. Taghipour, Amirhossein & Akkalatham, Wareerath & Eaknarajindawat, Natnaporn & Stefanakis, Alexandros I., 2022. "The impact of government policies and steel recycling companies' performance on sustainable management in a circular economy," Resources Policy, Elsevier, vol. 77(C).
    9. Fevereiro, José Bruno R.T. & Lowe, Benjamin H., 2025. "Macroeconomic implications for the Global South of a green transition in the Global North," Ecological Economics, Elsevier, vol. 237(C).
    10. Hanspeter Wieland & Manfred Lenzen & Arne Geschke & Jacob Fry & Dominik Wiedenhofer & Nina Eisenmenger & Johannes Schenk & Stefan Giljum, 2022. "The PIOLab: Building global physical input–output tables in a virtual laboratory," Journal of Industrial Ecology, Yale University, vol. 26(3), pages 683-703, June.
    11. Yu Zeng & Nan Zhang & Andrey Karasev & Xiaojun Ning & Guangwei Wang & Jianliang Zhang & Chuan Wang, 2025. "Study on Numerical Simulation of Blast Furnace Injection of Low-Rank Coal by Hydrothermal Carbonization," Energies, MDPI, vol. 18(19), pages 1-18, September.
    12. Yuancheng Lin & Honghua Yang & Linwei Ma & Zheng Li & Weidou Ni, 2021. "Low-Carbon Development for the Iron and Steel Industry in China and the World: Status Quo, Future Vision, and Key Actions," Sustainability, MDPI, vol. 13(22), pages 1-28, November.
    13. Muhammad Sadiq & Khalid Mehmood & Mei Kei Leong & Usman Ghani & Muhammad Usman, 2025. "Industry 4.0 and Circular Economy: Examining the Role of Supply Chain Integration and Corporate Social Responsibility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(6), pages 8242-8257, November.
    14. Zhengke Du & Chengcheng Zhu & Yuxin Zhou, 2022. "Increasing Quantity or Improving Quality: Can Soil Pollution Control Promote Green Innovation in China’s Industrial and Mining Enterprises?," Sustainability, MDPI, vol. 14(22), pages 1-19, November.
    15. Ansari, Dawud & Holz, Franziska, 2020. "Between stranded assets and green transformation: Fossil-fuel-producing developing countries towards 2055," World Development, Elsevier, vol. 130(C).
    16. Pegels, Anna & Altenburg, Tilman, 2020. "Latecomer development in a “greening” world: Introduction to the Special Issue," World Development, Elsevier, vol. 135(C).
    17. Brieanne Berry & Jamie Haverkamp & Cindy Isenhour & Melissa M. Bilec & Sara Sophia Lowden, 2023. "Is Convergence Around The Circular Economy Necessary? Exploring the Productivity of Divergence in US Circular Economy Discourse and Practice," Circular Economy and Sustainability, Springer, vol. 3(3), pages 1597-1622, September.
    18. Marta Bottero & Federico Dell’Anna & Vito Morgese, 2021. "Evaluating the Transition Towards Post-Carbon Cities: A Literature Review," Sustainability, MDPI, vol. 13(2), pages 1-28, January.
    19. Wang, Hongtian & Shan, Jinghan & Zhang, Xuemei & Nie, Pu-yan & Wang, Chan, 2025. "Labor force allocation changes triggered by extreme heat events—Evidence from China," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 2142-2160.
    20. Calzadilla, Alvaro & Carr, Tony, 2020. "Land degradation and food security: impacts and adaptation options," Conference papers 333148, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
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