Abstract:The idea of a circular economy (CE), which differs from traditional linear economy with a high consumption of natural resources and pollution, has captured much interest and attention. This paper uses a CE system of coal power and cement in Kongtong District, Pingliang City, Gansu Province, China as a case study to analyze the comprehensive effects of CE paradigm. Our simulation results, based on system dynamics (SD) modeling, infer that the transformation of manufacturing towards a CE system can prominently help coal power and cement enterprises reduce waste emission and increase economic profits. Through solid waste exchanges, a power plant can achieve over RMB 80 million of additional revenue per year at the highest level. CE also contributes to the reduction of regional pollution, saves mineral resources, and improves the atmospheric environment, an accumulated total of 14.11 million t of natural gypsum and 22.67 million t of coal can be saved. This sets a promising example for coal power and cement plants worldwide. Effective regulatory measures and further optimization towards a circular economy system are essential in maintaining the stable development of a CE system due to the risk of surplus production of upstream industries and other defects.