Challenges for China’s recycling industry

1 Economic situation

Is China facing a “Japanization” and could China experience a phase of economic stagnation, similar to Japan following the property crisis in the 1990s? It doesn’t look that way at the moment. While it is true that China’s economy is currently battling with deflationary risks, high debt and weak demand, it did, however, maintain solid growth dynamic at the beginning of 2025, with the real GDP growing by 5.4 % on the previous year. According to the International Monetary Fund, growth is set to weaken from 5.0 % in 2024 to 4.5 % in 2025 and 4.0 % in 2026. Trade restrictions are putting a brake on export growth (Fig. 1) and an increased uncertainty in this respect is holding back investment in the manufacturing industries and the labour demand. Fiscal policy should be able to partly offset this in that it provides for higher infrastructural spending, an increase in consumer subsidies and targeted social benefits, while supporting investment and consumption.

The Chinese recycling industry is on the rise. With rising recycling rates and growing investment in the circular economy, the outlook is very encouraging. While China used to be a major importer of recycled materials, the country is now relying increasingly on a modernization of its domestic recycling industry and the reduction of waste. In recent years, China has recognized the development of a circular economy as an essential step to an ecological civilization and the precondition for high-quality economic growth. In the 14^th Five-Year Plan from 2021 to 2025, the long-term goals are defined up to the year 2035. In this, it is also about improving the key indicators for the development of circular economy, the depletion of resources, energy consumption per GDP unit and climate protection measures.

2 Description of the recycling situation
in China

The waste management system in China is now geared to a circular economy. The focus is on a reduction of landfill dependence and stepping up the recovery of resources. The key issues include increased investment in automated material recovery equipment and the transition from waste landfilling through waste incineration to recycling systems. For 2030, China is striving to achieve a resource recovery rate of 80 % for key waste materials. The country is turning away from traditional landfilling and relying on new methods such as composting and anaerobic processing to transform waste into valuable resources. In the meantime, incineration has gained importance on account of the limited landfill space and energy recovery from waste. In addition come directives to realize extended producer responsibility (EPR) and certification of green products.

Goal of the policy is to establish a circular economy in which waste is avoided, reused and recycled in order to conserve natural resources. The import of 24 types of waste, including plastic waste and unsorted paper waste was already regulated or banned years ago in order to strengthen the country’s own recycling capacities and mitigate the environmental impact in the country. In many cities, there are now waste separation systems with separate bins for recyclable and non-recyclable waste (Fig. 2). In the countryside, waste separation is less established. Huge investments are being made in the expansion of recycling centres and the development of new technologies for waste recycling. Despite the successes achieved, great challenges remain for the reduction of environmental pollution caused by improper waste disposal and for the improvement of recycling measures and mandatory participation of the population in separating waste

3 Various recycling projects

Primarily three waste groups have come to the fore. First, industrial waste, where it is about recycling large volumes of used metals, slags, ashes and other by-products from the steel and metal industry as well as the coal and power plant industry. A second group is household waste. Here, the main aim is to avoid waste while recycling paper and plastic waste, composting organic waste and incinerating non-recyclable waste. Organic waste and plastic waste are also the key topics in agriculture. For consumer products, it is primarily about the growing volume of waste electronics and electrical equipment, but also the recycling of batteries. For the various industries, very different figures are sometimes available for the country and key regions. It is difficult to verify these figures. That is why we are also using other sources for the figures from outside the country.

3.1 Processing of plastic waste

Global plastic production has increased by 8.7 % from a total of 380.6 mill. (Mta) in 2020 to 413.8 Mta in 2023. That corresponds to an average annual growth rate of 2.8 %. Biologically degradable production only makes up 3 Mta or 0.007 % of this. According to Plastics Europe, China reached a share of 33.3 % of global production in 2023 (Fig. 3), followed by the rest of Asia (without the Middle East and the CIS countries) with 19.7 % and North America with 17.1 % [1]. The EU plus Great Britain, Norway and Switzerland make up 12.3 %, Japan and the rest of the world (RoW) a total of 17.6 %. Up to now, only 36.5 Mta are mechanically and chemically recycled, that is just 8.8 % of global plastics production. China reaches 25.8 %, worldwide (Fig. 4). The rest of Asia, the EU and Japan lead the field, relative to their production, North America is falling far back.

According to SunSirs, a Chinese market research company, plastics production in the country has grown over the last five years by an average of 5.1 %. In 2025, with steady growth, a value of 131.5 Mta will be achieved. A large part of production goes abroad. Fig. 5 shows how consumption, and in particular per capita consumption, have changed [2]. For this year, a consumption level of 117.67 Mta and per capita consumption of 82 kg are forecast. Following a brief increase up to 2030, plastics consumption is set to decrease slightly to 111.5 Mta, with per capita consumption falling to around 80 kg. If you look at the demand for general plastics, it is noticeable that in the first six months of 2024, with around 24 %, plastic films accounted for a high percentage, followed by daily consumables, which reached a share of 7.7 %.

What does that mean for the recycling of plastics in China? Unfortunately, current figures don’t present any uniform picture. According to a report [3] from 2022 by the International Pollutions Elimination Network (IPEN), back in 2019 already 30 % of plastic waste was recycled (Fig. 6). The largest part with 32 % went to landfill, 31 % went to incineration for energy generation while 7 % (4.41 Mta) were disposed of in an uncontrolled process. The Chinese government is now paying close attention to increasing recycling capacity. China’s plastics industry (CPPIA) comprises more than 5000 companies. Over 300 member companies are organized. In the plastics recycling association CRRA. At the last count, their members had recycled 5 Mta plastics. The most important areas include the recycling of PET as well as polyolefin and flexible packaging, chemical recycling, bottle-to-bottle technologies and mitigation of marine plastics.

3.2 Battery recycling system

China is now regarded not only as a leading nation in the production of batteries, but also in battery recycling. Chinese manufacturers prioritized lithium ferro phosphate (LFP), a lower-cost battery chemical. Initially, LFP batteries were regarded as unsuitable for electric cars on account of their lower energy density. Many years of research and development by Chinese manufacturers have advanced the development of LFP batteries. These now cover almost half of the worldwide electric vehicle market after they more than tripled their share over the last five years. China’s electric vehicle industry has grown from 13 000 manufactured units in the year 2012 to 1.2 mill. in 2024 and has accordingly captured 76 % of the global market. The Chinese battery ecosystem comprises all steps in the supply chain – from mineral extraction to the recycling of spent batteries [4]. The Chinese battery market on which already 100 manufacturers are represented is characterized by fierce competition on the domestic market.

Fig. 7 shows which large new battery capacities are in the pipeline for the increase of electromobility, according to a current study by Wood Mackenzie [5]. In China alone, these total around 3500 GWh, that corresponds to over 60 % of the new capacities planned worldwide. On account of the stop to Northvolt Drei factory in Schleswig-Holstein/Germany, China‘s share is likely to increase further. In 2021, China had a capacity of just around 600 GWh. Without a rapid increase in recycling capacities, severe shortages will result for the necessary raw materials already in the next few years (Fig. 8). According to Wood Mackenzie, shortages of nickel are expected already in 2026, for lithium in 2028. Lithium is also the metal with the largest expected deficit of 63 % in 2040. It is therefore patently clear that electromobility and therefore humanity’s desire for decarbonization are not possible without huge efforts in recycling.

The probably leading car manufacturer BYD (Build Your Dreams) manufactured a total of 4 274 145 electric cars in 2024. The recycling economy is a priority for the company. The reuse rate for popular models is given as 97.5 % to 98 %. BYD has developed the world’s first 12-V lithium ferro phosphate battery, which replaces conventional lead-acid batteries and reaches a lifetime of up to 15 years. The company has actively further developed the recycling of batteries. Within the own company, an interconnected end-to-end production chain has been built up, from battery production up to battery recycling (Fig. 9). Battery lifecycles have been effectively lengthened, which has contributed to an improved circular economy. In 2024, two new battery recycling factories started operation, in which 10 000 t key materials were recycled.

3.3 Waste incineration and composting

Household waste in China’s towns and cities contains high shares of organic waste in excess of 50 %, with huge problematic consequences for thermal utilization of the waste at low calorific values. There are various reasons for the large quantities of biowaste in the waste. Many sources assume that more than 35 mill. t foodstuffs are lost or thrown away per year, that corresponds to around 6 % of food production in the country. Based on the example of Shanghai, Fig. 10 shows how the waste volumes in the city changed from the end of 2018 up to the middle of 2020 prior to the Corona era [6]. The total volumes have fallen slightly; following a sharp increase, food waste is now constant and the share of recyclable waste has increased considerably. After the Corona era, an increase in non-returnable packaging but also a decrease in “buy-and-go” habits were registered.

China is taking an active approach to waste separation in its towns and cities and has set itself the goal of complete coverage in communities from prefecture level in a few years. Besides incineration, China relies on recycling of recoverables from waste and is aspiring to reuse 60 % of municipal household waste in a few years. Only with the help of a large number of sorting systems can the waste be separated into the required size fractions. For the waste materials after the sorting plant, now landfilling is only to be permitted in exceptional cases. Instead, these materials are to be incinerated for energy recovery (Fig. 11). China has invested a great deal in incineration plants. In October 2023, there were 1010 waste incineration plants with a total capacity of around 1.11 mill. t/d. Only up to 60 % plant capacity is utilized. Reasons are the lower population and growth in waste volume, but also competition from furnaces in the cement industry and to a lesser extent blast furnaces in the steel industry.

4 Presentation of recycling companies

In the China National Resources Recycling Association (CRRA), over 1200 member companies are listed. The association was founded in 1993. Affiliated in this organization is the China Plastics Recycling Association CPRA as one of the total of 16 sub-organizations. The ENF database currently comprises 65 plants belonging to plastics recycling companies in China. Several companies are presented in this article.

4.1 BoReTech

Zhejiang BoReTech Environmental Engineering Co. was founded in Zhejiang in 2005 and specializes in plastics recycling technology and engineering services. The group of companies actually comes from Taiwan and has in the meantime realized a string of plants in China. Mainly, recycling plants for PET bottles and bottle-to-bottle plants are built. For Gezhouba Huanjia, a young enterprise for renewable raw materials, BoReTech delivered a PET bottle washing plant for processing PET bottles in Hubei (Fig. 12). The plant has an annual input capacity of 42 000 t. Besides a PET bottle recycling plant with a capacity of 7 t/h, an auxiliary plant was set up for recycling PE and PP materials. Here, both rPET flakes as well as other PP and PE raw materials are produced. The entire plant features a high degree of automation, which effectively lowers labour costs and enables a breakthrough in the recycling of PET bottles.

4.2 Incom Resources Recovery

Incom Resources Recovery (Tian Jin) Co. was founded in 2003. It is a national pilot plant for the circular economy. In 2005, the company set up a new PET recycling plant on a 4.82-ha site (Fig. 13) in the Shunyi district of Beijing. At this plant, 50 000 t PET drinks bottle waste is processed annually and around 30 000 t clean and 20 000 t ultrapure polyester chips are produced. The starting material consists of hot-washed and dried PET flakes from collected bottle material that does not contain more than 5 % PET from non-food applications. The flakes are extruded to pellets that are dried and crystallized in a reactor and then preheated and further treated in a solid state polymerization reactor (SSP). Up to 100 % recycled pellets are to be used for the production of materials and objects for contact with foodstuffs of all types, including drinking water.

4.3 Tetra Pak China

China’s first automated sorting centre for lightweight packaging was opened in Xiamen. The plant uses innovative technologies such as AI and near-infrared sensors and, with these, it achieves unparalleled efficiency in the region, The sorting centre is operated by Luhai ProEnvironment. Tetra Pak supplied technical and financial support for the project, which takes used drinks cartons based on an innovative collection model and almost completely recycles the recoverables in the plant (Fig. 14). Equipped with intelligent sorting technologies and with the help of artificial intelligence and near-infrared sensors (NIR), the sorting centre boasts a capacity up to 5 t/h – four times more efficient that conventional manual sorting. It is estimated that 60 mill. used drinks cartons from the solid waste stream are collected annually by Xiamen.

4.4 Tomra China

Since the founding of the first subsidiary in China in 2010, Tomra has actively increased its investments and business activities in this dynamic market. The company is active in three areas of business in China. In 2012, Incom Tomra Recycling was founded as a JV. In 2017, Tomra invested in the expansion of its production site in Kunshan, to strengthen the supply chain and increase support for the local market. In addition, the technology centre in Xiamen was extended to support product and application development. For example, Tomra has supplied several sorting systems to Douyuan Food Co. (Fig. 15), which amongst other things improve food supply and curb food waste. Douyuan is a successful vegetable processing company and a key player in the agriculture sector in the Chinese Province of Shandong. The company founded in 2000 switched the sorting of processed vegetables from manual to machine sorting for the first time in 2014.

4.5 Veolia China

The Veolia plastics recycling plant in Huafei, which is owned by Veolia Huafei Polymer Technology in Zhejiang (Fig. 16), recycles 170 000 t plastic waste every year. The recycled PCR-PET-, PCR-HDPE- and PCR-PP products have a high quality and are used widely in the manufacturing industry, in branches like the automotive industry, the packaging industry and home textiles to enable ecological change for customers and partners. Since December 2019, together with its partner Zhejiang Lanjing Technology and with the support and direction of the Ministry of Ecology and Environment, Veolia has been developing a new model for recycling plastic waste in the sear, the “Blue Circle” in the province of Zhejiang. The company has so far processed around 6 mill. plastic bottles collected from bodies of water (Fig. 17). In total, around 10 800 t marine waste has been collected, included 2200 t plastic waste. These are impressive figures, which require more supporters to make our waters and seas cleaner.

5 Outlook

To realize the goal of a circular economy, China and rest of the world face huge challenges. In China, however, the paths towards this goal appear to be shorter. There are good chances for what has been compiled by the state planning commission and formulated in laws to be realized in practice. In China, sometimes only a few years are needed to implement environmental measures, while in other countries or regions this still seems to take ages. For that reason, the prospects are good that waste recycling will be a success in China.