China's plastic recyclers go abroad as
import ban bites
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[June 26, 2018]
By David Stanway
TAICANG, China (Reuters) - In a
smoke-filled plant about 50 miles northwest of Shanghai, masked workers
feed sacks of plastic scrap into shuddering old machines that transform
them into pellets used to make a range of manufactured goods.
But while the factory, operated by Taicang Jinhui Recycling Co, remains
a hive of activity, the company has been moving much of its capacity to
Malaysia following Chinese restrictions on recycled plastic imports that
came into effect this year.
The curbs on imported trash have deprived recyclers of about half of
what they need to produce the plastic pellets they sell to manufacturers
of products ranging from office furniture to sheathes for fiber-optic
cables. And with domestic supply hard to come by, many have had little
choice but to move abroad to stay alive.
"Here in our industrial park we are the only company still producing -
another 22 enterprises have stopped operations and just do warehousing
or whatever, and all their staff have disappeared," said Jinhui's
chairman, Thomas He.
Jinhui has laid off 250 workers from its workforce of around 400 people
since the restrictions came into force, though it has hired another 600
in Malaysia. The Malaysia plant was set up almost entirely with Chinese
equipment and technology.

The company is one of more than 1,000 recycling enterprises - a third of
China's total - to relocate its expertise, equipment and waste supply
chains to Southeast Asia, according to the China Scrap Plastic
Association (CSPA), with total investment so far estimated at around 10
billion yuan ($1.54 billion). The association did not provide a
breakdown.
China's decision last July to stop importing 24 kinds of foreign waste,
including plastic, was part of an effort to upgrade its economy and
tackle the growing volumes of domestic trash clogging its rivers or
sitting untreated in sprawling landfills that encircle major cities.
Now, countries in Southeast Asia, already struggling with their own
domestic waste problems, will have to grapple with the same issues as
trash imports increase.
The Chinese ban disrupted a global supply chain that saw more than 7
million tonnes of scrap plastic, mainly from Europe and the United
States, delivered into Chinese ports every year.
As that supply dries up for Chinese recyclers, they have created 4
million tonnes of new capacity outside China in operations that can
receive imports from countries like the United States and the United
Kingdom, said Wang Wang, CSPA's chairman. But it is not yet enough to
offset a supply shortfall of about 6-8 million tonnes of recycled
plastic.
"As far as our companies are concerned, they just don't have enough raw
materials," Wang said.
DOMESTIC WASTE
Efforts to have recyclers take on more domestic waste have been
progressing slowly; only 5 percent of domestic recycling firms have so
far been able to switch to local sources of scrap, according to CSPA
figures.
"Handling imports and handling domestic material are two very different
channels and it will take time to switch," said Jinhui's He.

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Plastic scrap is seen at Taicang Jinhui Recycling Co., in Taicang,
Jiangsu Province, China June 5, 2018. Picture taken June 5, 2018.
REUTERS/Aly Song

Recyclers said the government's abrupt ban gave the sector no time to
adjust, and crucially, China has not devised policies required to scale
up and standardize treatment of domestic waste, which is usually handled
by small backstreet operators.
With foreign material still the best option, companies hoped moving
to countries like Malaysia and Thailand would enable them to deliver
processed foreign scrap to China in a higher-grade form, but their
shipments have faced delays.
Customs are under pressure to ensure not only that imported pellets
meet exacting standards, but also that containers are not being used
to smuggle illegal low-grade waste, and cargoes are under far
greater scrutiny, He said.
MORE RESTRICTIONS?
The shift to Southeast Asia has alleviated some of the disruptions
caused by the ban for companies in Europe.
"We are continuing to export significant volumes, but to different
destinations," said Roger Baynham, head of the recycling division of
the British Plastics Federation.
But as foreign trash piles up in countries like Thailand and
Vietnam, China's recyclers face more risks.
"No one wants this trash and the industry is worried these other
countries will impose their own restrictions," said a China-based
executive with an overseas recycling firm who did not want to give
his name.
CSPA said Thailand was tightening regulations and raising import
taxes, with one China-invested importer already forced to close.
Malaysia also temporarily suspended new import permit applications
in mid-May.
Jinhui's He said he was worried that importing rules were likely to
get tougher across the region amid environmental concerns.
"There's no way China will import this sort of stuff again," he
said. And Southeast Asia "will become more standardized and regulate
more stringently".

Ultimately, bans in China and restrictions elsewhere could force the
countries of origin to step up their own recycling efforts, said the
British Plastics Federation's Baynham.
"The irony here is that the impetus for this has come from China, as
opposed to economies such as the United Kingdom, which has been
happy to accept a get-out-of-jail card in terms of its recycling
strategy," he said.
"Now is the time for the developed world, and the United Kingdom in
particular, to step up."
($1 = 6.5025 yuan)
(Reporting by David Stanway; Editing by Philip McClellan)
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