Image: M. Huniewicz, CC
Susan Cornish Associate, Moore & Associates
Susan Cornish, Associate, Moore & Associates

These ongoing changes to policy in China have been monitored closely around the globe, in RCP sectors as well as other recycled materials. Yet, there is limited understanding of Chinese government policy motivations and expectations for the future vary considerably, contributing to volatility in RCP pricing, trade, and investment flows for all involved. In the medium – term, the following trends are evident:

• The Chinese government has more work to do to define the nature of ‘waste paper’ that should not be imported vs. what is recyclable ‘green’ fibre and can be imported;

• Chinese investment overseas is likely to expand in search of additional sources of fibre;

• As Mixed Paper is phased out, it is expected that use of virgin fibre will increase in China.

Given the new landscape, what are productive strategies for RCP companies outside of China? It is still possible that the Chinese government may redefine RCP standards at a later point in time so that some of what is now considered ‘waste paper’ could come to be considered a recyclable resource and acceptable for importation. However, until then:

Understanding the perspective of Chinese policymakers, both at the top levels and at the implementation level, will be critical to being prepared for future changes and planning for future impacts.

• While previous RCP markets have changed, new opportunities are opening up.As the domestic recycling system is being upgraded in China, there is great opportunity for exporters to provide recycling equipment, software, and other related business functions to China.

• Alternative types of fibre imports are beginning to emerge such as recycled pulp, whether RCP or virgin fibre.
As Bill Moore, president of Moore & Associates said: “Many companies in North America and Europe believe that China’s RCP import restrictions are the ‘end game’ and have written off China as a market in general. The implications of RCF pulp exports – along with ongoing growth in the containerboard sector — remain an open question.”

• Growing foreign investment from Chinese paper mills is beginning to change global RCP trade flows.

• While RCP exports to China may be down, growth in China’s imports of non-RCP paper and board has been significant.

Finally, China will need additional fibre beyond what it can supply domestically. NPC Partners’ new report provides multiple quantitative scenarios for OCC, ONP, Mixed Paper, containerboard, and recycled pulp. These will give exporters extensive data and insights from which to assess RCP demand and align with changing fibre market needs in China.