While China's rapid growth rates have been widely admired, they have been accompanied by extensive pollution and waste. It is therefore unsurprising that China has adopted as its development model the Circular Economy (CE), encompassing notions of industrial ecology and resource reduction, reuse and recycling. This article analyses and appraises China's capacity to implement such a strategy. The article engages in a discussion of what China means by a CE and whether the policies of eco-industrial development being pursued actually fit with this general goal. We also offer our own econometric update on China's progress towards a CE. The article tests the conjecture that China is able to link its ‘compressed development’ strategy with industrial ecology ideas – seeing the CE as not only a source of competitive advantage, but also pointing towards a solution to global resource depletion and waste accumulation and devastation. While it must be understood that China faces enormous obstacles in implementing the CE idea, and starts from a very low base in doing so, nevertheless it has certain latecomer and administrative advantages in putting its economy on a new, closed-loop footing, as compared with more advanced countries with established industrial systems.