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Chinese recyclers respond to proposed regulations

By: Nina Ying Sun

September 26, 2012

BEIJING (Sept. 26, 1:20 p.m. ET) — Face-to-face with officials from the Chinese Ministry of Environmental Protection, the country’s plastics recyclers talked about current industry conditions and shared their take on the ministry’s initial draft of new and stricter regulations on the import of waste plastics.

The recently founded China Scrap Plastics Association Co. Ltd. organized the Beijing meeting where more than 40 recycling industry representatives congregated to voice their views.

Nearly 1,600 companies nationwide import and reprocess waste plastics, according to Zheng Yang, an official from the ministry’s Solid Waste Management Center.

CSPA pegs total imports of waste plastics at about 17.6 billion pounds annually.

The new “Imported Waste Plastics Environmental Protection Regulation” would set a market-entry barrier requiring reprocessing sites to be — at least — 4,000 square meters (43,000 square feet) with annual capacity for 5,000 metric tons (11 million pounds), Zheng said. The draft regulation also divides those 1,600 or so companies into four categories and raises certain requirements for each category.

CSPA Secretary General Jason Wang pointed out six major issues facing China’s plastics recycling industry: pollution and negative public perception, the reselling of import licenses, the trading of imported waste plastics, “industry turmoil and survival,” high compliance costs and low penalties for illegal activities, and the lack of a large-scale and high-technology model.

One industry representative brought up problems at the local level regarding regulations enforcement. Chen Zuhan, chairman of recycler Guangdong Haifeng Xinzhou Plastic Products Co. Ltd., said customs officials in the city of Shantou have not approved any imports of waste plastics this year.

“We already had the green light from the [ministry], but didn’t expect to encounter issues at the customs,” he said. He added that his company even had the local county government send an official letter to customs, requesting the processing of imported materials.

“But nothing worked,” said Chen, who is also a vice president of CSPA.

Wang Weiping, general manager of Shanghai Dongjin Plastic Fiber Product Co. Ltd., added that customs officials tend to give high duty appraisals to imported materials. “Companies have to take non-standard means to balance the duties with other taxes, which is not conducive for the company’s normal growth,” said Wang, a CSPA supervisor.

On the topic of moving recyclers into industrial parks for better management, Wang said it should be case by case. The model might work in Guangdong, he said, but not in Shanghai. There are a total of 25 companies in Shanghai involved in importing waste plastics, he noted: “It’s impossible to find a new campus and move these companies there.”

An official from the China Resource Recycling Association also sees major hurdles to the “campus management” model, which is encouraged in another new regulation. Vice Secretary General Tang Aijun cited the high operating costs of scrap-metal industrial recycling parks in Zhenhai and Zhaoqing, for example. Due to the scarcity and high cost of land, it makes little economic sense for localities to allocate land for such purposes, she said.

In Guangdong province, however, recycling parks are recommended to help small recyclers integrate into large operations.

Chen Jiangqiang, president of the Regenerative Resources Association in Guangdong, said the province reprocesses more than half of the waste plastics China imports. More than 70 percent of recycled granulate producers are located there.

“It’s easier to regulate companies of all sizes in the same campus, and the provincial government asks these parks to centralize logistics and warehousing. A micro-sized recycler could become a unit of a bigger operation that’s managed by the park,” Chen said. He is also chairman of Guangdong Tianbao Renewable Resources Development Co. Ltd.

China’s plastics recycling sector also needs technological upgrades to facilitate its growth, said Chen Qiang from the Shandong International Recycling Committee. He said regulations need to be updated constantly as technology advances. As an example, he mentioned bottle-to-bottle technology that is used in North America and Europe.

“This technology is the highest level of plastics recycling. This approach is not only legal, but should also enjoy a series of preferential policies of the government,” he said.