China's overcapacity is not without environmental costs


 China's overcapacity is not without environmental costs. In order to maintain the utilization rate of factories, even in the case of shrinking profits, factories often choose to continue production, which not only aggravates the volatility of the market, but also puts pressure on the ecological environment. China's huge demand for imports of wood fibers, chemicals and energy has raised concerns about the industry's sustainability and resource efficiency.   picture Against this backdrop, a new regulation announced by the general administration of customs of China (GACC) on October 9, 2025 has dropped a bombshell on the global renewable fiber trade chain. The new rules require importers to declare whether the production process of recycled paper pulp is dry or wet.   The measure, designed to control pollution, stems from concerns by Chinese authorities that "dry grinding" could be used to camouflage imported solid waste as pulp. Since China's comprehensive ban on the import of solid waste (including goods mixed with paper and plastic) in 2021, suspected solid waste has been found posing as "recycled paper pulp" in customs inspection in many places in China, resulting in the return of the goods.   The ban follows the direct export of about 60 per cent of recycled paper to China. After the ban, southeast Asian countries, especially Malaysia and Thailand, quickly became important intermediate producers of recycled paper in the UK. Processing plants in these countries have initially treated imported waste paper, processed into recycled paper pulp and then supplied to Chinese buyers. Malaysia and Thailand exported more than 2.6 million tons of recycled paper pulp to China in the first eight months of 2024, according to the international recycling bureau.   The new rules will have a major impact on this new trade process. The purification degree of recycled wet pulp is relatively high through decomposition, cleaning, pulp and mechanical dehydration. Dry grinding pulp is only to crush and compress waste paper into bundles, which lacks the same purification, disinfection and sterilization processes, so it is more likely to cause pollution concerns. It is widely believed that imports of recycled paper pulp from southeast Asia, especially those identified by the customs as "dry" law, may face serious delays and even direct rejection, which will directly reduce China's demand for British origin fibers.   In addition, the timing of the new rules has exacerbated the confusion. The change coincided with a decline in production capacity at factories, ports and customs after China's golden week holiday. The occasion further exacerbated traffic congestion and administrative overhang. Traders warned that additional #paperwork requirements would not only delay delivery, but would significantly increase the burden and cost of inspection.   As a result, UK exporters of renewable fibers are actively preparing for a decline in orders from pulp producers in southeast Asia. Although paper market prices were relatively stable after falling in August in September, the continued downturn in pulp prices and increased competition from North America and northern Europe continue to put pressure on the industry as a whole. Compared with last year, pulp prices have fallen by almost half, and this low price will continue to have a profound and widespread impact on the global chain of pulp and #recycled fiber industries. 

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