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China’s new waste import restrictions – a wider strategy

China’s new waste import restrictions – a wider strategy, Packaging, Asia, China, Japan
New waste import regulations introduced by the Chinese government have once again thrown the scrap into the fan, sending exporting nations into a tailspin, severely slashing shipments and depressing scrap plastics prices by up to 40%.

The ‘new’ regulations - originally announced in April 2011 and effective from last August - tighten solid waste import regulations: the ‘Regulation on Managing Import of Solid Waste’, ban the dumping of solid waste for treatment in China from overseas, and outlaw the transport and transhipment of hazardous solid waste through China.

The regulations, which were originally introduced in 2008 as an amendment to Customs and Quarantine Procedures, also prohibit the import of solid waste that “cannot be used as raw materials, and those that pose a serious risk to the environment”.

In July 2011, the amendment was given teeth by a supplementary regulation to tighten rules covering ships carrying waste into China.

Under these rules, the shipping of solid waste refers to the import of waste into mainland China including shipments from Macao, Hong Kong and Taiwan – routes commonly used by exporters as a back-door to circumvent the 2008 customs regulations.

According to the regulations, ‘solid waste’ is divided into three categories: Import-forbidden solid waste; import-restricted solid waste – for which specific licences are required; and automatic-licensing import solid waste pre-approved materials.

The lists of these materials were published in July, and the government inspection agencies have been given implementation and testing procedures.

The transhipment of waste between Chinese ports is forbidden. Additionally, vessels carrying imported solid waste are required to be supplied with four certificates from the shipper prior to loading: a valid import license for solid waste; the Chinese consignee’s registration certificate for import of solid waste (stating the waste is for use as raw material); overseas shipper’s (carriers) registration certificate for import of solid waste (stating the waste is for use as raw material); and a pre-shipment inspection certificate (CCIC PSI) of imported solid waste that may be used for raw materials.

Should customs inspectors find solid waste without complete documentation, the importer or the carrier will be ordered to return the cargo to the port of origin. All costs, including those incurred by customs procedures, shall be borne by the importers or carriers.

Massive volumes
According to a notice recently posted on the MEPs’ website, in 2010 China imported more than 40 million tonnes of solid waste which could be used as raw materials, including waste paper, plastics, ferrous and non-ferrous metals.

The US was the largest contributor with 24% of the world’s recovered plastics shipments to China, followed by Japan with 19%, Germany with 15%, the UK with 9% and Belgium with 4%China’s new waste import restrictions – a wider strategy, Packaging, Asia, China, Japan.

As a direct result of the regime, plastics scrap imports through China’s Guangzhou customs fell by more than 80% in September and October, as local customs officials tightened the enforcement.

For the first two quarters of 2010, imports of scrap plastics through Guangzhou, China’s gateway for raw materials, had remained stable, averaging 520,000 tonnes for each three-month period. But after the new regulations, this dropped to 240,000 tonnes during the third quarter, a fall of 35% year-on-year.

Worse, by the end October only 22,000 tonnes were recorded as having been imported – an even bigger fall of 82% year-on-year.

Due to the high volumes of plastics recyclate passing through Guangzhou port – 1.3 billion tonnes of plastics scrap imports, or about 20% of China’s total imports – on 1 August 2010, the Guangzhou Customs department was designated as a pilot site for the strict implementation of China’s new waste import policies.

As a result, plastics recycling in Guangzhou and the heavily-polluted surrounding Guangdong Province has suffered a slump, with an estimated 30-40% of provincial plastics recycling operators being shut down.

Chen Zhuhan, vice president of the China Plastics Processing Industry Association recycling committee, warned that the strict enforcement of the new regulation will soon be extended across the entire country.

The rationale
While it may appear that China has been flip-flopping over its scrap material imports, the reality is that the policy has been fairly constant since late 2007, when the State Council (China’s Cabinet) issued the Method for Administration of Packaging Recycling Materials, a ‘Master-plan’ for a national packaging materials, waste recovery and recycling policy circulated within government agencies.

The Master-plan sets a road map, with targets, for all government agencies to achieve, to reduce the national dependence on virgin raw material imports, following Premier Wen Jiabao’s 2006 announcement in the 5-Year Plan that: “We must transform the national economy from being resource consuming into a resource conserving economy.”

This is not about warm environmental motherhood statements – it is about conserving and reusing resources inside the country, reducing dependence on foreign material imports and creating an industrial recycling infrastructure purely in the interests of the national economy. Nor is it about the management of waste: the 2007 Master-plan envisages a Zero Waste system. The introductory paragraph makes it clear: “All packaging must be recoverable, recyclable or compostable, no other type shall be permitted.”
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Scattered through the Master-plan are provisions for; packaging reduction (which in 2010 became the Excessive Packaging Law), selective separation of household garbage into convenient-to-recycle streams (work in progress in major cities but yet to take root nationwide), restrictions on transportation of recyclable plastics and bioplastics in the same vehicle (to avoid contamination of the recyclate stream), and restrictions and bans on specific materials.

By far the largest component of the Master-plan is the establishment of an industrial-scale, market-oriented recycling system; from household to municipality, highly specific pre-qualification criteria for recycling companies (minimum capital, qualifications and experience of management staff), and the creation of massive Special Eco Zones into which all recycling activities will relocate: so far some 27 of these zones have been given operational licences.

However – and this is where the recent plastics import restrictions come in – very little progress has been made in creating a domestic waste collection system to feed these zones.

The problem, it seems, is that it has been cheaper for companies to buy quality recyclable plastics from overseas than to set up their own collection systems, or to depend on fragmented municipal collections – therefore by choking off around 80% of the supply of cheap imports the Chinese government created an acute shortage of recyclate materials – and most importantly, created the demand for domestically sourced product.

In November 2011, the government launched the second phase of this strategy: the announcement of an ‘official guideline’ (amounting to a Cabinet Directive) that a “complete and advanced” system would be introduced to recycle 70% of major waste products by 2015.

The system, as directed by the 2007 Master Plan, is to feature complete waste collection network, advanced technologies, well-functioning sorting and standard management, under a Market Oriented Economic System. “Major waste products” include metal, paper, plastics, glass, tires, cars and electronic devices.

To speed up the creation of the system, it encourages a broad array of investments: The semi-privatisation of collection to encourage small and medium-sized enterprises, as well as individual sanitation workers, to be employed to carry out the street-level collection work, said the guideline, adding that favorable policies in terms of financing would also be available.

In the current 12th Five-year-plan (2011-2015), China committed to building a Circular Economy based on a sustainable development pattern, promised to promote energy/resources conservation and emissions reduction.

Meanwhile, in November 2011, the State Council also announced that it will “actively promote reforms in environment-related taxes” and “conduct research regarding the collection of an environmental tax.”

It’s a move which suggests that after more than five years in discussion the debut of a “green tax” is now officially on the agenda in China.

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