Abstract: According to the White Paper issued by China Household Electric Appliance Research Institute, China is entering a peak time of discarded electric and electronic products. In 2016, theoretical quantities of 14 major WEEE in China reach 378 million sets, and the total amount of treated e-waste is 75 million sets.The growing e-waste not only causes environmental pollution, but also leads to the waste of available resources. In order to regulate the recycling industry, China-WEEE has been published since 2009 and implemented since 2011.In 2012, the Ministry of Finance announced the fund system's implementation by promulgating the WEEE Processing Fund Collection and Subsidy Management. In accordance with 2012 fund policy, the government collects the funds from producers, and then subsidizes the corresponding recycling enterprises.However, the 2012 fund policy encountered a dilemma. The White Paper shows in 2016, the funds collected from producers were 2.61 billion yuan, but the subsidies to recycling enterprises were 4.714 billion yuan. The funding gap reached 2.104 billion yuan. Moreover, this policy incentivizes the recycling enterprises, but producers are lack of motivation to fulfill the environmental responsibility.
How to motivate producers for their environmental efforts (for example eco-design)? How to solve the funding gap? To explore the innovation mechanisms in WEEE, Fund Balance Policy and Fund Relief Policy are mainly studied. Cost functions associated with producer's efforts on eco-design, green production, etc. are construeted, and the profit models are built for producer and recycling enterprise. Based on the optimal decisions under different policies, the consumer surplus, environmental benefits, social welfare and government expenditure are especially evaluated.
The result shows the Fund Balance Policy can solve the funding gap,but this policy increases the fund collection standard. With the growing of WEEE treated, the collection standard rises significantly, which undoubtedly has a great negative impact on the producers. Compared with the 2012 fund policy, the Balance Policy still does not stimulate the producers' environmental efforts, but it leads to decreasing of producers'profits, consumer surplus and social welfare.
Fund Relief Policy is another policy studied in this paper. Under this policy, the government collects the fund from producers, and then refunds some fee to producers according to the actual quantities of WEEE processed by recycling enterprises. The result shows the Fund Relief Policy can play a positive role in stimulating producers to make more efforts to fulfill their environmental responsibilities. On the whole, this policy outperforms the 2012 fund policy, particularly in promoting WEEE recycling, increasing recycling enterprises' profitability, improving environmental performance and decreasing government expenditure.

Key words: WEEE, fund policy, environmental efforts, extended producer responsibility