International Trading Supplement--The Trail Begins

Recyclers who read both industry-specific trade magazines and general news periodicals have had no shortage of reminders that China is an industrial powerhouse.

And as recyclers, most do not need media verification that China is booming. They need only look at the destinations of their own outbound shipments to see that the nation is consuming secondary raw materials in staggering amounts.

Throughout the scrap export boom of this decade, however, some have questioned to what extent and how soon the country will become self-sustaining. There is no one answer, and the variables are many.

KNOWN VALUE

A visitor to China who wonders whether that nation’s citizens are aware of the recycling value of scrap materials need only observe disposal activities in any major city to gain a few insights.

On the paper recycling side, old corrugated containers (OCC) enjoy a re-use market before they have the chance to enter the recycling stream. A common sight in Beijing, for instance, is a bicycle carrying not only its rider, but also a stack of flattened cardboard boxes in a storage area in the back.

Material that is not reusable may ultimately find its way to government-operated recycling centers or to a developing network of small recyclers who are establishing growing businesses in Chinese cities.

A visit to one such recycling plant in the Pudong district of Shanghai, operated by Sheng Wan Hao, reveals a bustling plant with processing operations centered around a Chinese-made horizontal baler producing bales of OCC.

The facility also takes in polyethylene (PET) plastic containers, washing and grinding them into flakes. The OCC comes into the plant from a variety of sources, as does the PET.

The increase in value of both aluminum and PET has clearly been conveyed to the Chinese public, as a growing cadre of citizens seems to be on the lookout for UBCs (used beverage containers) and PET bottles.

Commonly, tourists near sightseeing destinations will encounter offers to take possession of empty cans or plastic bottles. Or, should a can or PET bottle make its way into a trash receptacle, a scavenger can be seen retrieving the bottle not long afterward for its recycling value.

Hotel rooms are also providing a collection opportunity, according to Chinese recyclers. To supplement their incomes, hotel and office building cleaning crews have become very adept at gathering and re-selling UBCs and PET bottles.

Gathering recyclables has become a lucrative source of income for savvy scavengers in both the People’s Republic of China and in Hong Kong, according to Billy Leung, executive director of the Fook Woo Group, a paper making and recycling company with facilities in Hong Kong and southern China.

An experienced scavenger in Hong Kong can make about 400 HK dollars per day (about $51 U.S.), according to Leung. "They are the people who gain the most advantage when the prices go up," says Leung.

The increase in plastic pricing has helped these street-level recyclers add another form of income. "Whatever the price is [aluminum] UBCs get collected," notes Leung. "Three years ago no one collected PET bottles, but now they get collected here."

The municipal collection of such recyclables consists of some drop-off containers in busy pedestrian areas, but very little beyond that. "Recycling is done by the market; it’s always been that way," says Leung.

CIRCULAR ECONOMY

The market, as it is in other parts of the world, is effective in gathering, processing and shipping recyclables to consuming destinations.

However, as in Europe, North America and other parts of the world, the government appears to be taking an interest in getting more involved.

Some evidence of this was seen in a blueprint from China’s central government and subsequent programs backing what is being called the Circular Economy initiative.

As it is being touted, Circular Economy policies combine economic and environmental sustainability goals. Reportedly the ideas are being supported by the national legislature, the World Bank and even Chinese President Hu Jintao.

Should the push become widespread, it will mark a major turnaround from a country that just two decades ago heavily scrutinized the scrap recycling industry and had difficulty separating it from the solid waste industry.

The subsequent boom in basic materials production in China (paper, steel and other metals) has almost certainly revealed the critical role of scrap materials as a vital feedstock. Additionally, environmental missteps involving solid waste disposal (such as toxic electronics components being discarded and piled up near the Chinese village of Guiyu) has also demonstrated what can go wrong on the disposal side.

According to the Professional Association for China’s Environment (PACE), a network of Chinese environmental engineers and regulators, "The theme of the Circular Economy (CE) concept is the exchange of materials where one facility’s waste, including energy, water, materials—as well as information—is another facility’s input."

The group’s Web site notes that the concept was turned into a blueprint at the 16th National Congress of the Communist Party of China in late 2002. Since then, "In less three years, the concept of ecological industrial parks (EIP) and CE was introduced into China and started to flourish."

How recycling aspects of the CE initiative will be either encouraged or enforced is not especially clear. A paper posted to the Web by Indigo Development, a California-based consulting company, details a plan outlined for China’s Liaoning Province that involves building industrial parks with scrap-consuming facilities; the construction of a materials recovery facility for a number of items, including building materials; and a renewable energy infrastructure.

Recycling facilities at the proposed industrial park would include those following all steps along the chain, from sorting and processing of recyclables to the manufacturing and marketing of end products.

Such support for companies that process and consume recyclables may be most appreciated by private sector businesses in China, who have demonstrated their ability to consume secondary commodities.