The Six-Fold Labyrinth of Waste Plastic - Recycling Economy Shaken by the Chinese Market (Late 1990s-early 2000s)

The Six-Fold Labyrinth of Waste Plastic - Recycling Economy Shaken by the Chinese Market (Late 1990s-early 2000s)

Behind the dependence on the Chinese market for waste plastic exports were major changes in the international economy from the end of the 1990s to the early 2000s. After the bursting of the bubble economy, Japan suffered from a recession and began full-fledged efforts to sort and recycle waste with the enactment of the Containers and Packaging Recycling Law. However, domestic recycling processes were not profitable due to high labor costs and capital investment, and the cost of poor-quality waste plastic was prohibitive.

On the other hand, China, which was growing rapidly at the time, was expanding its manufacturing industry, and demand for inexpensive recycled resources was exploding. Plastic, in particular, could be widely used for home appliances, toys, and building materials, and high-quality flakes and pellets were traded at several times the domestic price. This international price differential was a major source of profit for the traders, creating a dual economy in which the legitimate consignment route to the Containers and Packaging Recycling Association and the export and illicit processing routes coexisted.

The problem here was the six-fold price structure. The coexistence of multiple prices, including sorting costs borne by municipalities and businesses, consignment fees to associations, prices received by recycling companies, export prices, domestic recycling market prices, and final disposal costs, made it possible to manipulate profits by taking advantage of the difference. Although the recycling rate may have ostensibly improved, in reality, the difference between the two prices was fraudulently taken out of the market and fraudulent exports were rampant, resulting in a reversal of the situation in which the more diligent operators who obeyed the law lost out.

This situation is inextricably linked to the fluctuations in the international resource market, and it is also a result of Japan's poor domestic institutional design. As Japan became increasingly dependent on the Chinese market before a stable domestic cycle could be established, the system often oscillated between environmental protection and economic rationality. The waste plastic problem is not just a waste disposal issue; it is a mirror of the contradiction between the global economy and the domestic system.