China's circular economy has made notable progress since the 21st century and shaped various industry segments. Among these, ship recycling has been particularly outstanding as it evolved exceptionally fast and assumed an internationally leading role. In this article, we present field survey findings on recycling standards and recovery capacities regarding the material flows at Chinese shipbreaking yards, which overall perform comparatively sustainable. However, recent policy and market developments have induced the sector's decline, which at present seems to threaten the very fundamentals of circular economic management for obsolete vessels in China. Given these limited prospects for traditional recycling approaches in the near future, the article proceeds to evaluate alternative circular economy management options for Chinese ship recycling facilities to manage end-of-life vessels. Based on quantifications of hidden potentials in ship supply, value and material contributions to the domestic circular economy, technical and market specific conditions for material recovery as well as other circular economy practices, we find that ship repair and refurbishment may offer the most promising alternative to recycling for Chinese shipbreaking yards.