A Chinese government ban on plastic bags is earning a warm response from the international community but it also poses another challenge for the country's plastics industry.
The industry still is digesting the impact of two government policy changes during the past six months that reduce profit margins for Chinese plastic product exporters.
But this time, the regulation is targeting domestic suppliers, rather than exporters. Whether the effect will turn out to be positive or negative, the industry is waiting to see.
China's State Council will ban the production, sale and use of ultrathin plastic bags, defined as less than 0.025 millimeter thick. In the meantime, retailers - including supermarkets, department stores and bazaars - are prohibited from providing free plastic shopping bags, apparently of any thickness.
The order will take effect June 1, two months before Beijing opens the nation's first Summer Olympic Games.
``Passenger trains, vessels, buses, planes, stations, airports and scenic spots must not provide ultrathin plastic bags,'' China's State Council said in a Dec. 31 statement that was posted Jan. 8 on the central government's Web site.
The directive said China is targeting plastic bags because ``the excessive use and inadequate recycling of plastic bags have caused severe pollution and waste of energy and resources.''
``Ultrathin shopping bags, in particular, tear easily and are mostly littered, becoming the main source of White Pollution,'' pollution from discarded plastic bags and Styrofoam containers, the directive states.
While some retailers, especially supermarkets and larger chain stores, welcome the ban, consumers are expressing more concern than support.
A Web poll conducted by China's largest daily newspaper, People's Daily, showed nearly 60 percent of the 34,244 respondents voted against the ban on free shopping bags, citing inconvenience.
The future of plastic bag manufacturers is at stake as well.
``There are more than 100 plastic shopping bag makers,'' said Ma Zhanfeng, secretary in general of the China Plastics Processing Industry Association. ``We are doing a survey to see how they take the new rules.''
Li Guojun, vice president of CPPIA, noted that there are numerous tiny workshops that manufacture ultrathin plastic bags out of recycled resin.
``Many of them just buy a machine with a few thousand yuan [roughly a few hundred U.S. dollars] and start running,'' he said. ``They don't even register with the authorities. So it's difficult to quantify the scale of this sector.''
``These ultrathin-bag makers will have to switch their business under the new law,'' said Allen Tsai, general manager at film and bag equipment maker Lung Meng Machinery Co. Ltd. of Tainan, Taiwan.
Shifting to exports may not be a good alternative at this point.
``Although Chinese exporters of plastic bags are exempt from the impact of this new directive, their business is not easy with all the anti-dumping charges as well as rising material cost,'' Tsai said.
Thicker and more durable plastic bags still could have a bright future, even with uncertainties surrounding the question of whether consumers will reduce their use of shopping bags.
At least some analysts hold this positive view.
``I don't think the new policy will curb the consumption of plastic bags or resin - mostly polyolefins - in China, not to a significant extent,'' said Deepak Parikh, a consultant at Houston-based Chemical Market Resources Inc., in a telephone interview. A former official with DuPont Dow Elastomers Inc., Parikh has extensive experience with the Chinese and Indian markets.
``From the consumers' point of view, the convenience and utility of having plastic bags should outweigh the costs of having to pay for plastic bags unless the costs become too prohibitive,'' said Andrew Ho with Houston-based Chemical Market Associates Inc.
``Demand should be relatively inelastic to costs changes, if the costs of plastic bags changes from zero to say 0.10 yuan or 0.20 yuan per plastic bag,'' said Ho, who is CMAI's polyolefins director for Asia, based in Singapore.
Chinese state-owned media reported the government will introduce standards for shopping bags in a month. It is not clear whether the new standards will cover production and pricing.
Ho also pointed out that Chinese consumers already are reusing plastic shopping bags for waste disposal.
``If plastic bags are not available, consumers will need to buy more plastic garbage bags, which are practically similar in content and origin as plastic shopping bags,'' Ho said.
Taiwan, with a comparable retail industry structure, has had success with a similar ban, noted Lung Meng's Tsai.
``In the beginning, people tend to be paranoid, but the impact tapers off fairly quickly,'' Tsai said in a telephone interview.
Taiwan started banning free plastic shopping bags in early 2003, and workers at plastic bag factories organized protests.
``But the consumers in Taiwan soon got used to paying for shopping bags, and the industry has stayed upbeat,'' Tsai said.
``Compared to ultrathin bags, it's easier to make thicker ones from a tech point of view. And you need less time having the bags cut out. Plus you use more resin per bag and sell to higher-end customers. The margin could actually go up,'' he said.
China uses 50 billion plastic shopping bags in retail outlets every year, according to Beijing-based trade group China Chain Store & Franchise Association.
``Fifty billion bags, when converted into weight basis, are significant compared to the total plastics demand in China. However, the impact on total demand or use of plastics resin should not be significant unless costs of plastic shopping bags become too expensive relative to convenience, and this is a subjective matter,'' Ho said.
The Chinese cabinet also encourages recycling in the new law, ordering waste collectors to separate plastic scrap for reprocessing.
``China should, in fact, already be the world leader, in terms of scale and size of plastics recycling,'' Ho said.
He believes the new law will give another boost to the recycling industry.
Meantime, Hong Kong-based bag makers, many of which produce plastic bags in their mainland factories but sell them in Hong Kong, wonder about the applicability of the new rules.
Ricky Wong, executive vice president of the Hong Kong Plastic Bag Manufacturers Association, said most of the bags exported from the mainland to Hong Kong supermarkets, for example, are 18 microns thick.
The new law would ban production of bags less than 25 microns thick, but Wong said the industry is waiting for clarification on whether that applies to bags exported to Hong Kong.
A similar rule in the southern Chinese city of Shenzhen may not have been strictly enforced against exporters, but the situation is not very clear, according to Wong.
Shenzhen has been testing a law to ban free shopping bags since November. The draft is being revised based on feedback in the past few months, city officials told the press.
Wong said the industry will be watching to see how such a ban might be enforced. He compared a ban on bags to a far-reaching ban the city of Guangzhou enacted against motorcycles on city streets.
''If they are determined, like banning motorcycles, they can do it,'' he said. ''It depends on how determined they are.''
Plastics News staff reporter Steve Toloken in Guangzhou, China, contributed to this report.