ChinaRecycleChina was once a destination for low grade scrap where cheap labor was used to extract the valuable fractions. This is increasingly no longer true.

Some time ago, China instituted its “Green Fence” policy. They started to inspect imported scrap loads with greater frequency and intensity, looking for loads that might be garbage disguised as scrap. They were looking for loads of mixed plastics and scrap metal with a lot of tramp material. Rejected loads were sent back to their origin at the shipper’s expense. A lot of US-based brokers who exported to China simply stopped buying.



Fast forward. China - in an effort to clean up it’s environment and be in good standing with the World Trade Organization (WTO) of which it is now a member - has instituted a new policy called “National Sword”. This new policy has raised standards for purity, allowing no more than one percent contamination for many commodities such as plastic, cardboard, and many grades of scrap metal. In a word, China no longer has an insatiable appetite for low grade scrap. While still in the market for higher grades, China is no longer the dominant destination for scrap that it once was.

Some of this material will be diverted to other developing countries and the rest will stay here. The good news is that increased domestic processing capacity will be put on line to take advantage of this new opportunity to extract the valuable parts of “dirty scrap”. In the short term, domestic scrap sellers will be left with weaker markets for their products. Taking a longer view, those that invest in new machinery and technology will have new value-added opportunities, and those that supply them will have better domestic markets.

In terms of producing war materiel, providing jobs, as well as putting added value back into our G.D.P., we should take a hard look at trying to do the same for our domestic manufacturing sector. Nothing illustrates this more than the current panic over the difficulties of exporting raw materials to buy them back for more money as finished goods, while trying to figure out how to create good jobs for Americans. We should have never been in a situation of being overly-dependent on exporting our resources due to a lack of a need for them at home.

The conclusion: We need to clean up our act, and responsibly recycle our own scrap. At the end of the day, China may have done us a favor.

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