National Sword speakers from left, Craig Robinson, purchasing director, Cycle Link UK; Lai En, president, Cycle Link International Holdings Ltd.; Billy Johnson, chief lobbyist, Institute of Scrap Recycling Industries; and Steve Wong, president of Fukutomi Co. Ltd. 

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

In his presentation “Insight of National Sword Impacts,” speaker Steve Wong described China’s strong 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 (BIR) Plastics Committee and Waste Electrical and Electronic Equipment Committee.

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

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.)

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 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 scrap materials. The current level is 1.5 percent.

Wong recognized that there will be less quantity available and therefore less materials 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 in recycled plastic materials within China is anticipated. 

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

A trend in the global recycling industry, Wong said he believes in recycling at the source. He predicted there will be more sorting done at the front end at material recovery facilities (MRFs). “More and more recyclers are setting up their plants for sorting,” 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.

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 . “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.

China boosting its investments in infrastructure is a “very good thing,” said speaker Billy Johnson, chief lobbyist, 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.”

Johnson pointed out that the U.S. has been the largest exporter of scrap for many decades. 130 million metric tons of recyclables are processed in the U.S. annually, with one-third exported. The value of U.S. materials exported is $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,” Johnson said.

He 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 plans to meet with China’s President Xi in November, Johnson said.

While U.S. recyclers are really feeling the effects of China’s moves most recently, 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 company is headquartered in Hong Kong.

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

En said, “In 2013, [President] Xi said we need to change. 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 due to a limited number of deal opportunities as a result of import licenses not being renewed.

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. “Quality is getting worse and worse.”

With questionable quality, En said, people will pay for quality.

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

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