Remember when American consumers griped about the quality of Chinese goods? Now it鈥檚 China鈥檚 turn. Beijing is fed up with the quality of a key U.S. export 鈥� scrap paper and plastics 鈥� and it is flexing its market muscle to do something about it.
By the start of next year, China is expected to ban imports of 24 types of recycled materials, including mixed paper and various plastics. Beijing聽notified the World Trade Organization about the ban聽in July, an announcement that has shaken up world recycling markets and triggered fears of leftover scrap being dumped in U.S. landfills.
But there may be an upside to the import ban, which Beijing has dubbed 鈥淐hina National Sword 2017.鈥� It could prompt U.S. consumers to be more careful about what they discard in recycling bins, reducing the 鈥渃ontamination鈥� that is triggering China鈥檚 ire. It also could benefit some U.S. companies by providing them with a new, low-cost supply of scrap paper, which can be used domestically to make cardboard and other products.
鈥淭his is a good wake-up call,鈥� said Mark Murray, executive director of Californians Against Waste, a nonprofit that championed many of the state鈥檚 recycling programs. 鈥淲e should have been investing in utilizing this material domestically from the get-go.鈥�
Brent Bell, vice president for recycling for Waste Management Inc., the nation鈥檚聽largest waste hauler and recycler, said that China鈥檚 ban has hurt the company鈥檚 recycling revenues and forced it to seek alternative markets. WMI collects and sells 10 million tons of recycled items yearly, with about 30 percent of that going to China, he said.
But while export recyclers will suffer, some U.S. paper mills will benefit from the ban, Bell said. One of these is Georgia-based聽Pratt Industries, one of several U.S. companies that uses leftover paper as pulp for the making of cardboard and other products.
鈥淪ome of these mills lost a lot of business to China,鈥� said Bell. 鈥淪ome of them will now regain market share and get some of that back.鈥�
Although few U.S. consumers may realize it, China has long been the world鈥檚 largest purchaser of materials they drop in recycling bins. The Chinese countryside is dotted with villages and businesses dedicated to separating plastics, paper, electronic waste and textiles, and then sending that material to factories for reprocessing.
Last year, the United States sent more than $5.2 billion worth of scrap to China, according to the聽Institute for Scrap Recycling Industries. Much of that was valuable mixed paper 鈥� such as used office paper, envelopes and junk mail. Chinese companies use that paper as pulp to make cardboard, some of which returns to the United States as packaging for televisions, iPhones and other Chinese-assembled products.
Yet for the last decade, Chinese inspectors have regularly opened cargo containers to find unacceptable U.S. exports of scrap. Shipments have included rotting garbage, or worse, hazardous materials such as propane canisters. 鈥淐learly they are fed up with us dumping our junk on them,鈥� said Jock O鈥機onnell, a trade economist based in Sacramento.
The Chinese government is also trying to transform the country鈥檚 ad-hoc system of trash collection and recovery into a coordinated system, said Joshua Goldstein, a University of Southern California history professor and expert on China鈥檚 recycling industries. 鈥淭he entire waste management sector is going through a sea change,鈥� he said.
In addition, China鈥檚 recycling enterprises have been the focus of unflattering international attention, including Wang Jiuliang鈥檚 鈥淧lastic China,鈥� a documentary that went viral by revealing how foreign plastics end up in the country. 鈥淭here is some sense that folks high up in the (Chinese) government have seen this and are disturbed by it,鈥� Goldstein said.
Arguably, the cross-Pacific trade in scrap material has been beneficial for both countries. It blossomed because of China鈥檚 cheap labor and ingenuity, but also because of favorable shipping costs, O鈥機onnell noted. As the trade deficit between the two countries widened, cargo ships carrying Chinese goods were returning to China empty, prompting the shipping industry to offer discounts on the 鈥渞eturn haul.鈥�
U.S. recycling brokers benefited from these discounts by loading American scrap onto what otherwise would be empty ships.
With China鈥檚 announcement in July to ban on U.S. scrap imports, those shipments are dropping. In September, exports of scrap paper from West Coast ports fell 17 percent, compared to the same month in 2016, according to O鈥機onnell, citing U.S. Census Bureau trade data.
Prices have declined even more for U.S. recyclers trying to market the mixed paper. In October, mixed paper in the Southwest, which includes California, fetched a price of at least $20 a ton, compared to $80 a ton in July, according to聽RecyclingMarkets.net.
Although the China import ban doesn鈥檛 officially take affect until January, Waste Management Inc. decided in July to immediately look for alternate buyers for mixed paper, Bell said. By September, China had stopped renewing licenses for Chinese companies that previously imported mixed paper from abroad, further depressing markets.
Recycling programs in western states are disproportionately feeling the national ripple effect. That鈥檚 because states such as California, Oregon and Washington have a high recovery rate for recyclables, and in the past benefited from their proximity to China.
According to the Washington Department of Ecology, China鈥檚 import ban will likely have 鈥渟ignificant鈥� impacts. 鈥淚n the short term, more potentially recyclable materials are likely to go to the landfill because no market is available for them,鈥� the department聽said in statement.
China鈥檚 ban includes restrictions on a range of plastics, including high-grade PET used in water bottles and other drink containers. The West Coast is well-positioned to manage this new source of supply, since it is home to several plants that recycle PET, including one聽touted as the world鈥檚 largest, in Riverside, California.
But the ban also applies to lower-grade plastics 鈥� those marked numbers 3 through 7 on the bottom of restaurant take-out boxes, clam-shells and other containers. There is little domestic processing for these so-called 鈥�3-7 plastics,鈥� which could end up being dumped or warehoused until markets perk up.
An聽estimated 40,000 U.S. workers聽have a stake in the scrap export trade, and business has been rough the past three years. Since 2013,聽some 800 recycling centers聽in California have been shuttered because of depressed prices and the state Legislature鈥檚 refusal to renew subsidies.
Within the shipping and recycling industries, there is internal debate on whether Beijing is serious or merely applying pressure to clean up U.S. scrap exports. 鈥淭his might be a shot across the bow,鈥� said O鈥機onnell, noting that a full export ban would deprive China of raw materials to make cardboard and other products.
Bell, the Waste Management vice president, isn鈥檛 so sure. Chinese leaders seem determined to crack down on contamination. Regardless, 鈥淭his is an issue we will have whether the material goes to Vietnam, or India or even to Louisiana,鈥� he added.
Murray agrees. People will now need to be more careful than ever about what they buy at the store and put in the bin, he said. 鈥淎s consumers, we need to take greater responsibility in identifying what is truly recyclable.鈥�
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