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Perc Pineda, PhD

Chief Economist

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In January 2018, China banned the import of recyclable plastics and other materials, which defined in the Harmonized Tariff Schedule (HTS) are broadly classified as waste, parings and scrap of plastics. In 2018, China's imports of recyclable plastics (HTS 391510, 391520, 391530, and 391590) decreased to 51,605 tons from 5.8 million tons in 2017. A year after the ban, China's imports decreased further to 924 tons—a 98.2% decline.

Over the five-year period prior to the ban, the US share of China’s imports of recyclable plastic materials in tonnage averaged 10.2%. China’s top sources of imports were Japan, US, Hong Kong, Germany, Malaysia and Thailand. In 2013, Japan was the largest exporter to China, thereafter most of China’s imports originated in Hong Kong, which from 2014-2017 averaged 18.6% of total Chinese imports. 

As expected, US exports of recyclable materials to China decreased dramatically. It fell from 557,876 tons in 2017 to 47,924 tons in 2018—a 91.4% decrease. It continued to decrease in 2019 to 16,904 tons or 64.7%. While it was once a robust export market for 33.0% of US recyclable plastics materials, China turned into a virtually nonexistent export destination. China's share of US exports was a mere 2.5%.

With the import ban in effect in China, one can speculate some form of trade diversion of US exports previously destined for China to other countries. Before the ban, China, Hong Kong and Canada were the top three export markets of US recyclable plastics materials. In 2017, 33.4% of US exports (in tonnage) went to China, and 22.4% and 8.1% to Hong Kong and Canada, respectively. In 2018 and 2019, exports to Canada increased to 12.5% and 22.7%, respectively. Globally, however, US exports decreased 38.1% suggesting that its previous exports to the Chinese market were not diverted to other countries.

While China imposed an import ban on recyclable plastic materials, its exports of these commodities increased. In 2018, it increased by 16.1%—from 35,688 tons in 2017 to 41,435 tons in 2018. The following year, it further increased to 53,491 or by 29.1%. Data shows that China's exports of recyclable plastic materials, in quantity, rose by 2500% in Nepal, 1407% in Myanmar and 823% in Kenya and France in 2019. China's exports to the US decreased 2.1% in 2019—significantly less than the 64.7% decrease in US exports to China. All told, China accumulated a trade surplus in recyclable plastic materials of 52,567 tons—exports and imports were 53,491 and 924 tons, respectively, in 2019—a year after it implemented the import ban. The latest trade data for 2020 (Jan - Nov) show that of the US exports of recyclable plastics materials of 629,910 tons, more than half were concentrated in five countries: Canada, Malaysia, Mexico, Vietnam and Hong Kong. US exports to China YTD Nov 2020 was 1.6% of its total exports.

The trade in recyclable plastics materials is global. Contrary to the idea that these are waste products, these commodities have commercial value, are part and parcel of the global plastics supply chain and are important in the industry’s goal of increasing global plastics recycling.

 

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