This is standard practice in most major cities in the developed world. But China is catching up. Translated from Beijing Daily:
Partly in order to make the target of 50% sorted trash collection for the city of Beijing by 2008, the Olympics host is promoting the Western-standard practice of handling everyday trash across 3,000 government agencies and companies in Beijing.
Sorted trash collection started as early as 2002 in 120 party and government agencies in the city, but it mostly dealt with waste paper. This time, the trash sorting campaign will sort waste into recyclables and other trash for office and public spaces, and sort restaurant-derived waste into recyclables, food trash and others.
After July 2008, the campaign will be further expanded to cover colleges, schools and other for-profit and non-profit organizations. [Full Text in Chinese]