One Country’s Trash WAS Another Country’s Treasure

Tilting Tides in the Global Recycle vs. Trash Trade Market

Do you ever wonder where your recycling goes when you toss your milk carton in the green bin? Since January 1st, 2018, it probably has not been making its way to China.

The US has historically sent plastics to China. China adds value to the “trash” by turning US plastic milk cartons and soda bottles into tomorrow’s toothbrushes. Similarly, they previously took the majority of US paper waste, returning it back to the US as toilet paper or reading their own newspapers on it.

The recycling business is directly beholden to the global market of trade. Free trade is crucial for the economics of turning a piece of trash into a treasure. The inverse, rather turns it into 100-million-year-old plastic heirloom at the bottom of a landfill.

Since China’s “National Sword” policy went into effect, China has been changing the flow of the rubbish tide, quite literally. Overnight, America’s steady flowing pipeline of recyclables, the sixth-largest export to China, has been cut off under China’s new rules which ban 24 kinds of solid waste imports to China. China renewed only 3% of 2017’s permitted exports of recycling for 2018.

Instead of ships steadily transporting American plastic recyclables to China, these same items are literally piling up on American soil. Many items are tipping the scale from profitable, to, you guessed it, garbage. In less than three quarters after China’s refusal to take US recycling went into effect, several smaller recycling businesses in major US cities such as San Diego and New York have now gone in the red. Waste Management, the largest US waste company, has found that their diversified company portfolio has kept them from going underwater, but they too are being forced to find new ways stay profitable without China as a key export market.

The US is not the only recycling market feeling the tsunami of trash piling up, now threatening to topple the industry. Britain is also feeling the pinch in this tough economic market. The UK is already sparking innovation to help overcome a new era with less exports of recyclables. They plan to enact a tax on previously profitable plastic and cardboard waste. China also previously received nearly all of hard-hit Canada’s recycling. Similarly, other Asian countries are tightening their import policies on foreign wastes. Vietnam, Thailand, and Malaysia have also set their own restrictions which further limit the options outside of China for waste exports.

The paper recycling global trade market has been plummeting for several years. China has a lack of softwood trees, and thus a historical need for imported recyclable paper.  The US and Canada are among several countries which have previously capitalized on this. However, around 2015, China instead increasingly purchased paper waste streams from the European market. This hit the US industry hard in 2015, cutting profits by over 50%. China is also increasing their capability to recycle their own waste for reuse without relying on the global market. Now, in 2018, this market was crushed yet again by China’s new rule that cardboard must be nearly contamination free (0.5%), which makes processing costs increase and paper recycling nearly unprofitable in the US.

The US and others will need to innovate the way they take in waste streams profitably, or fail under the weight of a sea of waste. This market will remain interesting to see where the trends turn – to trash, from treasure.

Liz Rayfield
PMBA Candidate
Tulane University, Global Business Projects