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Postconsumer plastic scrap and mixed paper imports into China will cease in 2018 as the country ramps up domestic collection and processing capabilities, according to speakers in the Export: National Sword session at the 18th annual Paper & Plastics Recycling Conference, Oct. 11-13, 2017, in Chicago.

In his presentation “Insight of National Sword Impacts,” Steve Wong described China’s administrative power and growth over the last several decades. Wong is chairman of Hong Kong-based plastics recycling firm Fukutomi Co. Ltd., executive president of the China Scrap Plastic Association (CSPA) and a member of the Bureau of International Recycling’s (BIR’s) Plastics Committee and Waste Electrical and Electronic Equipment Committee.

“In China, the administrative power is strong compared to other countries,” Wong said.

Supply-demand imbalance

With this power, China announced in August 2017 that some 24 types of materials will be prohibited from entering China starting in 2018, including several types of postconsumer plastic scrap, one grade of unsorted paper, several types of used textiles and metal slags containing vanadium. (Prior to this, in February 2017, China launched National Sword, a customs clearance program to fight against the smuggling of various items, such as solid waste, particularly from the plastics industry, into the country.)

Steve Wong of Fukutomi Co. Ltd. speaks at the Paper & Plastics Recycling Conference. Photo: Keith Griner

The Aug. 16, 2017, announcement issued by the Ministry of Environmental Protection (MEP), the Ministry of Commerce, the Development and Reform Commission, the General Administration of Customs and the AQSIQ (General Administration of Quality Supervision, Inspection and Quarantine) is known as Announcement No. 39 of 2017. It spells out 24 scrap items that will move from being restricted to being outright prohibited but leaves other types of scrap off that list.

Aug. 24 MEP released newly drafted limits on prohibitive materials in scrap shipments. The MEP draft proposes tightening the thresholds for “carried waste” (contaminants and prohibitives) to 0.3 percent for all incoming scrap materials. The current level is 1.5 percent. (China modified its initial proposed limits in mid-November. For more information, visit www.RecyclingToday.com/article/china-proposes-contaminants-thresholds.)

Wong recognized material of this quality will not be widely available and therefore less scrap will be imported into China in 2018. He said a supply-demand imbalance situation will last for the foreseeable future. Over the next few years, Wong said a supply gap of more than 5 million tons of recycled plastic materials within China is anticipated.

Developing domestic supply

One of the goals of the policy change in China is to raise the recovery and reuse of domestic recyclables and promote the circular economy, Wong said.

“One of the goals of the policy change in China is to raise the recovery and reuse of domestic recyclables and promote the circular economy.” – Steve Wong

As a result of China’s proposed policies, Wong said he believes the trend will be toward more domestic recycling of plastic scrap in the U.S. going forward. Within two years’ time, he said he believed more than half of the previously exported plastic scrap from the U.S. would remain in the U.S. He predicted more sorting will be done at the front end of recycling facilities. “More and more recyclers are setting up their plants for sorting to recycle material either for domestic consumption or for exports,” Wong said.

He added, “With this government policy, what we need to look at is … evaluating what we can do. In plastic scrap, there’s more than 7 million tons imported into China.”

Some shipping companies stopped accepting loads of plastic scrap as early as August 2017, he said. He added that he didn’t think China would ever accept imports of scrap plastic again.

Imported plastic scrap has been used by Chinese manufacturers as raw material in their production processes for cost reasons and to reduce carbon emissions, Wong writes in the Fall 2017 issue of Plastics Recycling. “The use of imported plastic scrap also can help to balance the quantity and quality gaps that exist in the country’s domestic scrap supply,” Wong writes in “New world order,” available online at www.RecyclingToday.com/article/national-sword-china-plastics-recycling.

China boosting its investments in infrastructure is a “very good thing,” said speaker Billy Johnson, chief lobbyist for the Institute of Scrap Recycling Industries (ISRI), Washington.

Johnson said, “[China is] trying to build up their own infrastructure. We think it’s a very good thing that China is looking into it.”

He said the United States has been the largest exporter of scrap for many decades. Of the 130 million metric tons of recyclables processed in the U.S. annually, one-third is exported. These U.S. exports are valued at $16.5 billion, Johnson said. In 2016, the U.S. recycling industry exported $5.6 billion of scrap to China.

“This gives an idea of why China is so important for recovered fiber; China is by far our most important market,” he said.

Johnson shared that ISRI has met with members of Congress on Capitol Hill to discuss the effects of China’s National Sword, import ban and proposed 0.3 percent limit. ISRI President Robin Wiener had plans to meet with China’s President Xi in November 2017, Johnson said.

Quality pays

While U.S. recyclers are really feeling the effects of China’s most recent moves, speaker Lai En said the policy is nothing new. En is president of Cycle Link International Holdings Ltd., one of the wholly owned subsidiaries of Anhui Shanying Paper Industry Co. Ltd., which is one of the largest industrial papermaking enterprises and packaging board manufacturers in China. The firm is based in Hong Kong.

The current supply chain in China is not sufficient, En said.

“In 2013, [President] Xi said we need to change,” he said. “The current policy isn’t a sudden one, it’s been there. To be honest, they did give enough time to prepare.”

In mid-October, En said his company had not moved any material for nearly a month at that point because of a limited number of opportunities resulting from import licenses not being renewed.

Lai En of Cycle Link International Holdings Ltd. speaks at the Paper & Plastics Recycling Conference. Photo: Keith Griner

Speakers shared that the delay in or total lack of reissuing import licenses in China has had lingering effects.

“It’s a difficult time,” En said, adding, “Quality is getting worse and worse.”

With so much material of questionable quality, he continued, consumers would pay for good quality.

“Who will pay for the better quality?” En asked. “The end user.”

The 2017 Paper & Plastics Recycling Conference was Oct. 11-13 at the Chicago Marriott Downtown Magnificent Mile.

The author is associate editor of Recycling Today and can be contacted via email at mworkman@gie.net.