By Clay Chandler and Eamon Barrett
March 23, 2019

China is sick and tired of taking rubbish from America.

That sentence may or may not be true in a metaphorical sense, but it is absolutely true in a literal sense. According to a flurry of recent reports in the U.S. media, a decision last year by China’s government to ban waste imports has triggered an American trash catastrophe in which thousands of cities and towns have been forced to cancel recycling programs, dump mountains of additional trash into hazardous landfills and, in the worst cases, incinerate more waste—all with devastating consequences for the quality of U.S. air and water.

The New York Times, in a recent report, quotes California treasurer Fiona Ma as warning that “we are in a crisis moment in the recycling movement right now.” Boston’s WBUR reports that, in Massachusetts, where cities and towns are required to offer recycling services, municipal officials are “scrambling to figure out how to pay for something that used to turn a profit.” An investigation by WIRED finds that, while the “conscientious citizens of Philadelphia continue to put their pizza boxes, plastic bottles, yogurt containers, and other items into recycling bins…half of these recyclables have been loaded onto trucks, taken to a hulking incineration facility, and burned.” The Wall Street Journal, observes that “from Australia to Japan, New York City to Hong Kong, garbage collectors are being forced to make a mockery of those curbside recycling bins we’ve all been trained to fill.”

All these analyses attribute the chaos in recycling to “National Sword,” a January 2018 decision by China to ban the import of nearly all plastic and papers. Prior to that policy shift, “some 70% of the world’s plastic waste went to China – about 7 million tons a year,” according to NPR.

The recycling trade, in which Chinese companies paid top dollar for the world’s plastic and paper trash, minted some of China’s largest fortunes—including Nine Dragons founder Zhang Yin, China’s first female billionaire. Shipping containers that brought Chinese-made products to the U.S. and would otherwise return empty were stuffed with refuse from American cities, which companies like Nine Dragons then combed for recyclable materials using low-cost Chinese labor.

The more I learn about the bizarre dynamics of the recycling industry, the more it reminds me of the 19th century opium trade, in which Britain offset its own addiction to Chinese tea by stoking Chinese addiction to a drug grown in its Indian colony.

But, over the past five years, the economics of the recycling trade have broken down. One problem, as NPR notes, is that much of the plastic imported to China was contaminated with elements that made it difficult and expensive to recycle—paper, food waste and plastic wrap. Often plastic that couldn’t be recycled was dumped illegally in China, adding to the nation’s already considerable pollution challenges. Chinese labor costs increased, making waste more expensive to sort. And, as the Journal notes, an unexpected culprit was fracking: a sharp decline in the cost of natural gas starting in 2014 meant that suddenly it was cheaper for manufacturers to produce new plastic than use recycled materials.

China’s 2018 crackdown reduced trash imports last year to 1% of imports in 2016. Vox reports the ban has forced some of the world’s biggest companies—including Procter & Gamble, Unilever, Nestlé, and PepsiCo—to adopt reusable packaging, while grocery chains like Trader Joe’s are scrambling to eliminate plastic altogether.

All of this supports an argument we’ve often pressed at Fortune: the world’s most urgent challenges, especially those involving protection of the environment, can only be solved in collaboration with China. We’ll tackle recycling and a host of other environmental issues at the Fortune Global Sustainability Forum in Yunnan province in September. Details about the conference here.

Meanwhile, I’d urge you to read this insightful analysis of China’s electric vehicle industry by Stanford Law School lecturer Jeffrey Ball, who will join me as co-chair of the Yunnan forum. The forum is by invitation only but Jeff and I would welcome your nominations for speakers and participants.

More China news below.

Clay Chandler


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