Very murky waters

You find all sorts in this river...

Not worth the parchment that it’s written on? That is one response to the paper industry’s promise to stop polluting its surroundings, if the experience of Liaoning province is any guide. Mills alongside the Liao River have turned it into a stinking, toxic mess. The river has even earned the unwanted title of China’s second most polluted waterway (some achievement, given the long list of contenders).

Nearly 2,000 years after paper was invented by Han Dynasty official Cai Lun, modern day manufacturing methods continue to encroach on China’s natural environment. Most of the country’s older growth forests have been clearcut. And where they have been replaced at all it has often been with single-species ‘green deserts’ (see WiC57). Recycling would take some of the pressure off China’s thinning forest stock, but it has yet to be adopted on any significant scale.

But plans are still afoot to clean up the worst offenders in the industry. A Ministry of Industry directive this year ordered the shutting down of the oldest factory capacity, putting particular emphasis on antique pulp and paper mills.

Liaoning’s political bosses – who have been struggling to clean up their local river for at least a decade – have already shut some mills. “Paper mills are the first priority for pollution control,” admitted Chen Zhenggao, the provincial governor.

Local environmental officials talk a tough game, and say the numbers back them up. “Of the 417 paper mills in the province, 285 have been completely shut down and 132 are in the process of making changes,” the local director Zhu told the Economic Observer in a recent interview. Zhu also asked for Liaoning to be judged against other provinces. “Now papermaking in our province is down to only four or five hundred thousand tonnes, about the same as the annual output of one mill in the south.”

But those policies will have to continue if the Liao is to have any chance of recovering.

“Paper mills have become the worst polluters of the Liao River, and have to be shut down for regulation,” explained Zhu. The province has been manufacturing paper for more than four decades, and he thinks that is a big part of the problem. The technology that many of the mills use is hopelessly out of date.

Industry executives have often been resistant to change, and managers have exploited their close relationships with local officials to delay expensive factory upgrades. Zhou Ping, a longtime worker at the now defunct Tieling Kaiyuan Pulp and Paper Company told the Economic Observer that despite being threatened with closure several times by environmental authorities, his mill’s management refused to change its operations. He said the mill was closed only after a long struggle, when provincial bosses overruled county officials.

The county government had been reluctant to act because Tieling Kaiyuan employed 3,000 workers and paid Rmb20 million ($2.94 million) annually in local taxes, making it the largest single taxpayer in the county.

Pulp and paper mills take tens of thousands of gallons of clean water, an increasingly scarce resource in China, to process just one tonne of pulp. Many then discharge an unpleasant mix of chemicals into the local water table. Some of those compounds can get into the food chain. Organic matter leftover from the pulping process is also dumped into rivers, deoxygenating the water and killing off marine life.

Efforts to change industry practices are hampered by the public’s lack of awareness of environmental practices like recyling.

Tetra Pak, the Swedish packaging giant, has been trying to turn that around by partnering with a Chinese firm to promote recycling – but progess has been slow. In the partnership, Orient Champion Group, a leading Shanghai maker of paper products, has started selling toilet paper made from recycled Tetra Pak milk cartons.

That has helped win some headlines, as well as a sponsorship berth at the ongoing Shanghai Expo. Visitors will get to use the environmentally-friendly paper on site, if nature happens to call. The ‘Free Forest’ brand can also be found in the washrooms of a few foreign companies in the city.

But wider commercial success remains elusive.

Many consumers are simply put off by the product’s appearance. Since recycled toilet paper isn’t bleached, ‘Free Forest’ paper has a slightly yellow hue. And if the colour is looked on poorly, the price is also making shoppers wince. The recycled version is more expensive than Orient’s regular brand, and is likely to remain so until China develops incentives for wider recycling campaigns (see WiC44 for Tetra Pak’s efforts in this area).

Currently, there is no nationwide waste sorting law, so Orient has to pay an army of scavengers to find, clean and cut paper waste into the cartons used for recycling. That means that the recycled material costs about 10% more than virgin wood pulp, according to the company. This is then reflected in the final price, with few willing to pay extra for a greener product.

Orient thinks those attitudes will change with time and plans to spend Rmb15 million marketing its recycled toilet paper this year alone. But if that doesn’t help change consumer habits, the rising cost of timber could do the trick instead, upping the price of regular loo roll.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.