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China begins drive to crack down on import malpractices

China begins drive to crack down on import malpractices

CUSTOMS TODAY REPORT

 SHANGHAI: Stricter supervision by Chinese customs has hit small-scale scrap importers in China, according to delegates at the Bureau of International Recycling (BIR) conference in Shanghai.

In a drive to improve environmental standards—an effort dubbed Operation Green Fence—the Chinese government is enforcing previous regulations more strictly across the scrap industry and is closely monitoring the quality and use of imported goods (amm.com, May 16). While no new regulations have been implemented, the crackdown has exposed areas where regulations had not previously been stringently enforced, sources said.

Prior to officially launching Operation Green Fence this February, Chinese officials began a drive in the last quarter of 2012 to crack down on specific import malpractices, delegates said. Some said the impact on small-scale traders in particular has been dramatic.

Last fall, the Chinese government began enforcing existing laws to ensure that smaller-scale importers were actually shipping the scrap they imported to the end consumer on their documents, sources said. End-users of imported scrap are given import quotas, which can be used to buy scrap from abroad, often through Chinese traders.

The Chinese government aims to ensure that scrap that is imported is utilized, not traded internally. Customs officials have been monitoring factory use of scrap even after it arrives at its destination.

“Importers must sell for processing. In the past, imports were often resold. This is now not possible. This is not a new policy. It is just being strictly applied,” said Hongchang Ma, vice secretary general researcher at the China Nonferrous Metals Industry Association Recycling Metal Branch (CMRA).

At a later date, there will often be spot checks to ensure that scrap has been processed and not resold, Ma told AMM sister publication Metal Bulletin.

Small-scale importers often import scrap with higher levels of impurities, Ma said, meaning that these products are less likely to pass customs checks. “Smaller mills often import mixed scrap,” he added, which he said could in the past make shipping easier and lower costs. “In the past, small mills imported engines and scrap in one container. This won’t be accepted now,” he said.

Some delegates at the conference confirmed that smaller players have been hit particularly hard by the regulation enforcement, which comes at a time of low domestic scrap prices and comparatively high international prices. “The government wants to protect the environment by enforcing policies. For small trading companies, this can be difficult,” one Chinese importer said.

“For us it’s not a problem. We are mid-sized Ningbo buyers. But some smaller players are suffering. Some have left the industry,” the importer added. A Chinese scrap end-user noted that several smaller scrap traders have shut shop over the past year, partly due to strict regulation enforcement but also as a result of high costs.

“Some of the smaller traders I used to use are not responding to calls. I think the high costs and small margins have played a part,” the Ningbo-based buyer said.