How China Turns Trash Into Wealth

Chinese recyclers are the world’s greatest buyers and processors of what others don’t want.

Plastic bottles turning into diamonds through recycling.
Lisa Larson-Walker

In early November 2009 I was seated in the front row of a stuffy, nearly empty conference room at the Dongfang Hotel in Guangzhou, China. The occasion was an annual Chinese government–organized convention to promote the importation of scrap metal into China. High- and low-level officials from and around China were in attendance, along with several hundred scrap metal traders from China and the world. By late afternoon, almost none of them were in the conference room, which was understandable. The speeches were dry affairs, primarily recitations of prepared facts, figures, and policy changes. The action was out in the lobby, where business cards and millions of tons of developed country scrap metal, worth hundreds of millions of dollars, was traded.

I would’ve liked to have been in the lobby. But I was reporting that day for Scrap, an American trade magazine, and I was obligated to cover the speeches. It was a grueling job, especially at the end of the day when the government organizers dumped the speakers that they felt obligated to include because they were important sponsors or political allies. So I wasn’t expecting much when, just after 4 p.m., Guo Guanghui, vice chairman of a scrap metal recycling trade association in Qingyuan, a thriving industrial town roughly two hours north of us, took the podium. Guo wanted to talk about a government policy that roughly translates as “going out,” designed to help Chinese businesses set up operations abroad. He thought it a good idea for the government to help recycling companies “go out” to foreign countries where they could buy up recyclables and ship them back to China. “We need to get rid of the ability of the other countries to control the resources,” he declared from the podium, “and seize them for ourselves.”

I had a copy of Guo’s prepared remarks, and I circled that passage for future reference, eventually inserting it into the story I wrote about the conference. Then I forgot all about it until I read about the fictional “waste zone” in Juan Villoro’s story, “Paciente Cero.” In Villoro’s telling, the “waste zone” was established following China’s decision to stop importing waste from the United States. It’s a premise that echoes stiff restrictions on the import of recyclables that China announced in 2017.

In real life, those restrictions upended the global recycling trade, with the consequences still being felt globally. In Villoro’s story, they precipitate a “trash crisis” that China resolves by moving its garbage processing facilities to Mexico. So far, that hasn’t happened and is unlikely to anytime soon. But Chinese recyclers haven’t exactly stayed in place, either. They’ve been “going out” for years, quietly maintaining their role as the world’s greatest buyers and processors of what others don’t want. In a world in which trash is growing by the day, China knows better than anyone how to turn it into wealth.

It’s an inherited role. In the 19th century, the United States imported scrap metal from England for use in building railroads. Prior to World War II, Japan imported vast amounts of American scrap metal for use in its war machine. After the war, Japan resumed importing American recyclables for use in the rebuilding effort. In the 1960s, Taiwan took Japan’s place as Asia’s biggest importer of scrap, using it for the manufacture of everything from golf clubs to auto parts. The trade thrived until the early 1980s, when rising wages and environmental consciousness rendered it too costly.

But good fortune loomed. Mainland China, with whom the Taiwanese shared language, cultural, and family ties, was opening up for business. Taiwan’s industrial-scale recyclers relocated and soon were providing recycled raw materials to Taiwanese and PRC manufacturers. By the mid-1990s, China was the biggest importer of scrap metal, paper, cardboard, plastics, and used electronics that the world had ever seen.

That industry played a crucial role in China’s development into a manufacturing colossus. As recently as the mid-2010s, the four Chinese provinces with the highest GDPs—Guangdong, Jiangsu, Zhejiang, and Shandong—were the leading importers of foreign “waste,” as the Chinese government and environmental organizations referred to it. By 2009, more than half of the paper, 70 percent of the aluminum, and 60 percent of the copper used by Chinese manufacturers came from recycled resources. Plastics are more difficult to track, but during my 12 years reporting on China’s recycling trade I saw imported “waste” plastics processed for use by some of the world’s largest manufacturers.

In 2009, the United States exported a little over 23 million metric tons of recyclables to China—an all-time record—and then the volumes started to decline. Following the pattern seen in the U.S., Japan, and Taiwan, rising wages and better environmental enforcement in China contributed to the downslope, giving many Chinese manufacturers—and the recyclers who supplied them—reasons to move to Southeast Asia and other less regulated and cheaper manufacturing regions. But the most important factor was the most predictable: China was wealthy enough to be generating sufficient volumes of its own waste that could be recycled. (It is currently the world’s largest generator of waste.) By 2017, the year that China announced it was going to begin restricting imports of recyclables, U.S. recycling exports to China were down to 15 million metric tons.

From 2002–14, I covered the Chinese recycling trade from Shanghai. Then, in need of a change of scenery, I moved with my family to Malaysia. In the weeks before leaving, I said in-person goodbyes to many of the Chinese scrap metal recycling importers whom I’d befriended over the years and invited them to come visit me in Kuala Lumpur. For three years, nobody took me up on the offer.

Then, in late 2017, weeks before China’s restrictions on imported recyclables went into force, I received my first phone call from one of those recyclers. He said he was in Port Klang, a hub of Malaysian recycling, looking for somewhere to move his Chinese scrap metal processing operations now that it was no longer possible to import most grades of scrap metal into China. Was I free for dinner? Over the next few months, I received five more Chinese scrap processors, all looking to do the same thing. Around this time, I was told by an authoritative Malaysian source that more than 400 Chinese-invested recycling operations set up shop during an 18-month period starting in late 2017.

Some, like the one in northern Malaysia, operated cleanly. But others were wildcatting operations that processed and burned waste left over from recycling without regard to human health or the environment. By late 2018, the Malaysian government, media organizations, and environmental NGOs began to notice. Curiously, blame wasn’t assigned to the Chinese importers; instead, fingers were pointed at the countries that allegedly “dumped” the waste on Malaysia. For sure, companies and governments in the United States, Japan, and Australia were among those who exported waste to Malaysia. But so were companies in Bangladesh, Sri Lanka, and China. Was developing Bangladesh “dumping” on developing Malaysia? Or was it possible that somebody in Malaysia saw an opportunity in what Bangladeshis classify as trash, and can’t—or won’t—upgrade on their own?

Mexico is no stranger to importing recyclables for manufacturing. Years ago, I had a cousin in Pharr, Texas, who bought recyclables from local factories and households and shipped them to recyclers and manufacturers in Monterrey. Fong, the manager of the waste zone in Villoro’s story, reminds me of him. “I work with the greatest wealth on the planet,” Fong says near the end of the story. “Trash, human waste.” A sentence later, Villoro reveals a dark double meaning to that last clause. But the obvious meaning is the one that resonates with today’s world of globalized recycling. The Industrial Revolution inaugurated a period of unprecedented human consumption and—inevitably—human waste. And for two centuries, various economies around the world have taken advantage of that waste.

Villoro is projecting that story forward into the future. China, once almost solely an importer of waste and recycling, now derives powerful economic and intelligence benefits by brokering it to Mexico. But the future of recycling and waste in the United States and China isn’t just Mexico or any other country to whom the phrase “world’s dumping ground” is affixed. Instead, waste disposal will resemble globalized manufacturing, driven by manufacturers in search of low-cost and—increasingly—sustainable raw materials. Rather than occur in one country—China—that demand will emerge in dozens of countries, especially in Africa, keen to emulate China’s economic transformation over the past 40 years.

Mostly, the trade won’t be driven by local recycling centers, national waste policies, or the good intentions of zero waste groups. Rather, as it has been for two centuries, small private sector traders—the waste and recycling equivalents of mining barons—will guide modernity’s scraps to the places that can use them most profitably. In many cases, Chinese traders, with the support of an ambitious, outward-looking Chinese government, will own and operate the factories in emerging markets (like Malaysia) that transform that waste and recycling into commodities for shipment home and around the world. Of course, not all of that transforming will be good for people or the environment. Some of it may, in fact, resemble Juan Villoro’s future Mexico, polluted and gray, oppressed by its “Founding Hero.” But in a world that increasingly craves sustainable stuff, such compromises are the occasional price of managing what we waste.

Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.