RISI China Conference: Internal struggles

RISI China Conference: Internal struggles

The opportunity to recover more fibre in China exists, but experiments to find the right policies continue.

December 13, 2016

China’s economy has grown and changed as fast as any national economy on Earth. Combined with the size of the nation’s population and land area, it can make the statistical tracking of something like the paper recycling rate a difficult endeavor.


Nonetheless, several presenters at the RISI Fifth Annual China International Recycled Fiber Conference, held in Zhuhai, China, in early December, referred to efforts from government agencies and the private sector in China to increase the amount of scrap paper harvested in the nation.


Kevin Jiang, a project analyst with the Shanghai-based subsidiary of United States-based RISI, said scrap paper collection volumes have risen in China, reaching as high as 47 million tonnes in 2015. He added, however, that China is “still far from self-sufficient in recovered paper.”


Jiang said the growth in domestic collection is “very good news” for Chinese papermakers, in part because mills in other nations are competing more vigorously for exported scrap paper, and also because nations that traditionally export recovered fibre are hitting ceilings on their export volume levels. In particular, he said, Japan with its 80% scrap paper collection rate is unlikely to grow as an exporter.


The tight market may have been a factor in soaring old corrugated container (OCC) prices in China in the fourth quarter of 2016. Between September and late November 2016, OCC prices in China spiked from RMB 1,300 ($188) to RMB 1,600 ($232) per ton. Jiang mentioned the Hanjin shipping bankruptcy as one factor, with mill shipments either tied up in ports or mill buyers concerned that shipping rates would soon spike upward.


At least two delegates to the conference, speaking off the record, blamed the price spike on the kind of speculation that has often affected metals pricing in the previous several years. These delegates said some Chinese “hot money” (money in the hands of investment advisors who have promised a high return) had been used recently to corner the market on OCC in China’s largest cities as a way to cause a price spike.


Presenter Tang Yanju, the secretary general of the Recovered Paper Branch of the China Resource Recycling Association (CRRA), said the paper recycling infrastructure in China is “still in its primary stage” in many parts of the country.


Tang commented that government policies and recommendations are in place to encourage more paper recycling, but “there is still a long way to carry it out.” She said before policies can gain momentum, stakeholders will have to be convinced they are fair. Regarding the value-added tax (VAT) tax policy, for instance, Tang commented, “It needs to be fair and not partial, say, to the mills.”


In China’s largest cities, Tang said policymakers have taken a good first step in acknowledging that land and operating plant space is rare and expensive. “We need to anticipate this in the initial policy,” she remarked. One potential response to this is support for the idea of collecting materials in cities like Beijing and Shanghai but trucking them to counties well beyond those cities’ borders for processing and resale.


Other potential policy influences include extended producer responsibility (EPR) for packaging and the notion of collecting commingled recyclables to improve the landfill or incinerator diversion rate. She expressed support for the idea of direct stakeholders finding as many of its own solutions as possible. “If it can be solved by the industry, it should be solved by the industry.” Then, she said, national policies need only “provide support.”


The RISI Fifth Annual China International Recycled Fiber Conference was 8-9 December in Zhuhai, China.