China Finally Makes Its Peace With ‘Foreign Garbage’

Three years ago, China announced that it was done importing “foreign garbage.” Henceforth, countries like the U.S. and Japan, major exporters of old boxes, newspapers, and plastic bottles, would need to find somewhere else to ship their junk. The decision pummeled recycling programs and companies around the world. Now the government says it will complete the work and nearly eliminate such imports by the end of the year.

Except maybe it won't.

Even as regulators are vowing to ban foreign garbage, they’re issuing permits to import millions of tons of it. Steelmakers are pressuring the government to allow more, and officials are vetting a plan to permit certain “solid waste” imports to be reclassified as valuable raw materials. The politics of the policy change are complicated. But the economics are not: China’s manufacturers depend on imported raw materials to function. In trying to force this change, they’re not only improving their bottom lines, but potentially doing the world an enormous favor.

The global trade in recyclables dates back centuries, if not longer. But it was in the early 1980s that Taiwanese scrap metal and paper traders set up China’s first recycling companies. As the economy grew, so too did the demand for recyclables. By the late 1990s, the four wealthiest Chinese provinces — Guangdong, Jiangsu, Zhejiang and Shandong — were also the largest importers of scrap. In Guangdong, the proverbial “factory to the world,” imports of cardboard and paper were recycled into boxes that held the shoes, toasters and toys that were shipped to consumers around the world (who then shipped the boxes back for recycling). As recently as the mid-2010s, imported recyclable paper accounted for more than 50% of the raw material flowing into Chinese paper mills.

Of course, the industry was far from perfect. Until recently, Chinese recycling facilities often operated with little regard for the environment or human health, and the words “China” and “recycling” conjured images of exploitation. But that negative reputation started driving policy, especially under the nationalist leadership of President Xi Jinping. China’s domestic recycling industry, long frustrated by the need to compete with better-quality imports, preached the need for national self-sufficiency. That message, combined with the affront that some officials took at “foreign garbage,” inspired the ban on imports.

The harm that decision caused for American recycling programs is well known. Less documented was the pain imposed on China’s manufacturers. At the time of the restrictions, China relied on recycled paper for 67% of its fiber needs; of that, 41% was imported. As the rules tightened, mills adjusted by shutting down, moving operations to Southeast Asia, or even setting up shop in North America and boosting pulp production for export back to China.

It’s not just the papermakers who have problems. Restrictions on the import of scrap iron and steel have resulted in supply shortages and higher prices. During the first week of July, those mills were paying roughly $100 per ton more for scrap steel than were comparable Turkish mills. Meanwhile, China’s decision to restrict copper scrap imports — representing 10% of its supply — has forced the country’s highly lucrative processing industry to move overseas, where the metal is processed and then usually shipped for use in ... China. Worse, China’s nascent economic recovery has created new demand for the metal, even as Covid-19 disrupts mines in Chile and China’s own domestic scrap-collection networks.

The good news is that at least some officials are thinking pragmatically. By agreeing to reclassify certain imports, such as brass and aluminum scrap, they’re creating a face-saving means of ensuring that foreign recycling can still play a role in China’s economy. Steel scrap will likely be reclassified too. And, for now, millions of tons of scrap paper and cardboard continue to flow into the country’s ports. That’s good for China's economy and even better for the environment, which will benefit if the post-Covid recovery uses as much recycling as possible.

But the most important news is that the world’s biggest recycler is finally coming around to the idea that the stuff in the blue bin is a valuable raw material. Hopefully, that consigns “foreign garbage” to the dustbin.