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.

China's Belt and Road Initiative

China Unveiled Its Belt and Road Initiative (BRI) Five Years Ago.

Since then, countries hailed it as a transformative tool for soft power. Many compared the BRI to the Marshall Plan and welcomed the new idea believing it would expand markets and stabilize the region. Despite the profound potential to promote connectivity and increase commerce, the associated risks are severe and the catastrophic implications -- as it relates to climate change -- threaten the ecosystem of our entire planet.

China’s Belt and Road Initiative is a project of enormous scale and reach. Considered a gargantuan development project, the purpose of the BRI is to improve China’s trade and transport links to the rest of the world through large-scale infrastructure projects. Chinese President Xi Jinping launched the $150 billion a year spending project in 2013 in an attempt to create a 21st-century version of the famed Silk Road. This also includes the estimated $900 billion of loans that China underwrote in 71 countries.

However, the Initiative relies heavily on coal. This emphasis is especially worrying. CoalSwarm, an environmental NGO, estimated Chinese firms are involved in the construction, ownership, or financing of at least 16 percent of all coal-fired power stations under development outside China. By the end of 2016, China was involved in 240 coal-fired power projects in 25 of the 65 countries collaborating with China on BRI projects.

“Chinese banks’ and companies’ investments in coal abroad are a cause of major concern because of their potential to lock in more climate warming emissions in our carbon-constrained world,” said Huang Wei, a climate and energy campaigner at Greenpeace East Asia. “It is a complicated web of involvement, but ultimately all investments in coal, the world’s dirtiest fossil fuel, are bad for everyone involved — recipient country, China and the planet as a whole,” Huang told CNBC.

Eco-friendly policies at home, however, do not necessarily translate to green policies abroad.

In 2012, the year the Chinese Communist Party elected Xi Jinping its leader, the party listed “ecological civilization” as one of the five goals in the country's overall development plan at the 18th National Congress of the Communist Party of China. In 2016, President Xi called for the Belt and Road to be “green, healthy, intelligent and peaceful.” In a 2018 speech, President Xi urged policymakers at the National Congress of the Communist Party to promote eco-friendly policies that ensure “harmony between human and nature.” Xi continued to promote policies that ensure “green, low-carbon and circular development,” “promote afforestation,” “strengthen wetland conservation and restoration,” and “stop and punish all activities that damage the environment” — in short, “to build an ecological civilization that will benefit generations to come.”

China’s coal consumption prevents achieving goals set in the Paris Agreement because of the Belt and Road Initiative.

In the Paris Agreement, 195 countries agreed to limit the increase in global temperatures by modifying the way firms conduct business. The standout phrase is moving temperatures from pre-industrial levels to below 3.6 degrees Fahrenheit. The energy think tank, Climate Tracker, confirmed statements made by the UN’s Intergovernmental Panel on Climate Change. Both estimated at least 59% of coal power worldwide must be retired by 2030 to limit a worldwide temperature rise to 1.5°C. By achieving a temperature rise of only 1.5°C instead of 2.0°C, some of the greatest consequences are curbed.

While it is well-known that fossil fuels are the biggest single contributor to the global rise of carbon emissions, it would be inspiring to witness global actors like China to elevate green practices to a higher level and decrease reliance on the coal industry. To China’s credit, they are taking steps to promote green energy. In 2014 alone, China added 20 gigawatts (GW) of wind power capacity, 11 GW of solar and 22 GW of hydro-power capacity. The next year, reforms to the electricity market removed coal’s guaranteed hours. Further, grid operators were encouraged to give priority to renewable energy over coal. These reforms were welcomed by climate advocates, but China’s promotion of coal in BRI projects threaten to undo the global community’s efforts to combat climate change.

China may be promoting “ecological civilization” at home, but it must address the urgent climate consequences of its expansionary agenda. Now.