Many stakeholders consider the signing of the first international agreement on circular economy ‘CE’ between China and the EU in 2018 a milestone towards global efforts to address pressing environmental problems of extraction, resource use and waste management. This analysis rebuts this expectation. Based on empirical analysis of 72 interviews with key stakeholders, 40 documents and participant observation at key international CE events, we show that optimistic win-win narratives on China-EU CE cooperation depoliticize cooperation goals, postponing deep-rooted tensions of identity, trust, negative competition and the scaling of environmental solutions. This prevents a paradigm shift towards a CE and will likely prevent fruitful cooperation on any other environmental paradigm. Traditionally, explanations for the challenges of international environmental cooperation have focused on issues of collective action and disparate interests. Our argument adds a different dimension to these explanations. It highlights the critical importance of identity, trust, negative competition and the scaling of environmental solutions. We propose more research on narrative strategies for identifying and promoting areas of trust, mutual identity building and shared conceptualizations of the scales of environmental governance.