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                  China's new regulation shakes up plastic recycling industry
                  By Kevin Huang | PLASTICS NEWS CORRESPONDENT
                  Posted November 15, 2011

                  GUANGZHOU, CHINA (Nov. 15, 1:15 p.m. ET) -- Plastics scrap imports through China’s Guangzhou customs fell by more than 80 percent in the past two months, as the local customs tighten the enforcement of a newly implemented regulation on solid waste import.

                  The nation’s plastics recycling industry are fearful of a radical shakeup, once the government decides to order all customs across the country to strictly comply with the new regulation.

                  According to statistics from China’s General Administration of Customs, the first and second quarter this year each saw about 520,000 metric tons of scrap plastics enter China through the Guangzhou customs, but the volume dropped drastically to 240,000 tons during the third quarter, down by 35 percent year on year. Imports in October were only 22,000 tons, down by 82 percent year on year.

                  The Guangzhou Customs is a gateway that handles a large portion of China’s plastics scrap imports. During the first 10 months, it processed a total of 1,303,000 metrics tons of plastics scrap imports, taking up 20 percent of the nation’s total import volume and ranking first among all customs.

                  Since Aug. 1, Guangzhou Customs has been a designated pilot site to strictly implement China’s new policy on solid waste imports, causing the recent significant drop.

                  Beijing issued the new regulation earlier this year, aiming to better control waste imports. Along with solid waste of recycling value, a lot of non-recyclable waste also found its way into China, polluting the environment, said a spokesperson from China’s Ministry of Environmental Protection at the 2011 China Replas in Guangzhou.

                  Being a major importer of plastics scrap, China relies on imports for half of the plastics scrap it recycles. According to data from the customs, China’s annual imports of scrap plastics increased from 2,460,000 tons in 2002 to 7,400,000 tons in 2010, with an average annual growth rate of 26 percent.

                  According to officials who spoke at the Replas conference, the new regulation is showing major impact on plastics recycling because: a) it prohibits the borrowing, renting or selling of solid waste import licenses; b) it prohibits the reselling of imported waste materials, and the imported waste must be used as raw materials by the company that is listed on the imported license; c) an importer must conduct the clearance through its local customs, not any customs in the country.

                  Ding Lisheng, a director from the Guangzhou Customs, said in his speech at the Replas event that the borrowing, renting or selling of plastics scrap import licenses and the reselling of imported waste were “not unusual” in Guangzhou region, due to regulatory loopholes. He said the new regulation can effectively prevent “disordered flow” of solid waste and smuggling.

                  The new regulation is putting the plastics recycling industry under pressure, as it may significantly reduce imports once the strict enforcement practice is extended to all customs across the country.

                  Statistics show that China’s total import of plastics scrap felt 11 percent year on year in August, but rebounded by 1 percent in September and 11 percent in October. During the first 10 months, China imported a total of 7,390,000 tons of plastics scrap, up by 5 percent compared to the same period last year.

                  Toland Lam, president of the China Plastics Processing Industry Association’s recycling committee and owner of recycler T&T Hi-Tech Development Co. Ltd. in Shenzhen, said the new regulation has restricted his company’s operational flexibility in import clearance and increased the costs of imports. He stressed that the industry supports the government’s objective to better regulate the industry but many recyclers are not prepared well enough.

                  “The impact is strong and we are facing unprecedented difficulties,” Lam said, adding that 30 to 40 percent plastics recyclers in Guangdong province have shut down because of the new regulation as well as the gloomy global economy and increasing labor costs.

                  Chen Zhuhan, vice president of the CPPIA recycling committee and owner of Zhongheng International Trade Co. Ltd., warned that the strict enforcement of the new regulation will soon be extended to the entire country.

                  “Once the demonstration period in Guangzhou is completed, the practice will soon be rolled out to other customs in Guangdong and across China,” said Chen.

                  “I believe a big reshuffle of the industry is coming, therefore everybody should try to prepare for that,” he added. He urged recyclers to transform themselves, devise innovative business strategies, and invest in new technologies.

                  Paul Yan, chairman of Jiangsu-based Taicang Sicheng Plastics Co. Ltd., also is concerned about the industry’s future. “We talked about the coming thunderstorm at last year’s Replas meeting, and now I should say the typhoon has landed,” he said.



                   
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