The Truth About China Turning Away US Businesses

When it comes to recycling, most people have heard stories about China turning away US businesses. But most people don’t know the truth.

For years, China has taken waste from US businesses. Now they are saying enough is enough.

“Simon Ellin, the chief executive of the Recycling Association in the United Kingdom, said the ban is prompting more investment into recycling technologies.”  - CNN News

After a series of measures and even a recent Vox article, there is a lot of concern over what is going to happen to the recycling industry. In fact, many believe that the speculative future of recycling will lead to more US cities cancelling their recycling programs. Simply put, if costs increase, firms may be less likely to focus on environmentally-sourced products and go for options that cost the firm less (read: opportunity cost).

“U.S. consumers also face increased costs as refuse companies up their rates, because they are paying more to ship refuse to alternative countries, like India, and because they are spending more to clean and process the waste better to make it eligible for acceptance in foreign markets.” -NBC News

While these concepts are nothing new, there are several factors that account for China’s change in behavior. Primarily, there is an angle no one is talking about in the recycling sector. That is, China’s desire to become a more powerful nation. This idea stems from articles you may see talking about the ‘great power clashes’ that can manifest themselves in the form of South China Sea aggression.

For those unfamiliar with the contentious military exercises conducted in the Pacific Ocean near Japan, China, and Thailand — the root of it is China believes they have a legitimate claim to extend sovereignty because of a maritime law that allows ownership 10 miles from the coast and pretty much every Western nation disagrees.

Second, if China is viewed as the ‘garbage can’ for the world, they displace political capital. To elaborate, mothers often tell their daughters “you get the love you command/deserve based on how you are expecting to be treated” is just as applicable to geopolitics, as ever.

“He said that knowing the country would no longer be able to ship poor-quality recycling materials to China, its biggest buyer, meant the UK recycling industry had to start changing. Others will follow.” - CNN News

Thirdly, China is still accepting waste. Yes, you read that correctly. Despite what most believe, China has actually just lowered the threshold of contaminated waste that they are willing to accept. US Businesses, under these new guidelines, are unwilling to decontaminate the waste to the level requested. Therefore, whether consumers see a shrink in recyclable offered products, the reason could be US businesses just don’t want to do deal with the hassle.

What does this mean? Well, likely, the United States will ship waste to another developing nation in the Global South and business will continue. However, the growing tranches of the population that demand sustainable products is growing and savvy businesses would do well to capture the economic trends.