Shanghai’s Informal Waste Sector is Formalizing. FAST!

With the rapid growth of China, citizens become more affluent and waste has been generated at an unprecedented rate, many of China’s first and second-tier cities have been forced to rethink waste management. Particularly, the informal waste management systems that have, to date, efficiently closed the loop on a lot of waste streams.

In Shanghai, with two of its largest landfills in the process of being closed, the government is trying to expand its capacity by opening up more incineration sites. Which, if all goes according to plan, will process more than half of the city’s waste.

However, a much larger story is already taking place. One that involves the formalization of the informal recycling industry (see our report here), which for years Shanghai is perhaps one of the most efficient areas of Shanghai’s waste management challenge. It is a system supported by a pure market for materials, every day thousands of migrants shuttle within or outside the city to gather recyclable trash and form a profitable supply chain of recycled material.

With sites, large and small, scattered around the city, in the last few years, the city government started looking into centralizing the recycling industry.  A processed that over the course of the last few months, has picked up steam, and is just another example of what can be accomplished when policymakers put their minds to it.

As a bit of context, last year we when we began our research project, many of the site managers (owners) were already speaking about the challenges that they were facing to clean up, and the need to constantly be on the move.  However, they were always able to find a space, be it an active construction site, or a quiet lane.  For many of the recyclers, the average ride to these sites would be anywhere from 15 minutes, to a small/ local collection site, to 30-45 minutes.

However, in the last 2-3 months, things have changed.

At the beginning of this year, we visited a big-scale consolidation center at Huangpu District that took a space of nearly one block. At the time, he told us that this site will be shut down within several months and ‘our sites might float constantly, but we are always in the business.’  Now, just a few short months since we spoke with him, we went back to the same site, but all the recycling business were shut down and the whole area was already under construction.

Similar things happened to a big waste collection site at Guilin Road at the beginning of July. It used to be one of the largest collection centers in Xuhui District, and supported more than one hundred full-time employees. When we recently visited the site again, we saw it under demolition, and the owner told us the government was shutting down all the sites within inner ring and building big scale consolidation centers under government control outside of the center area.

A transition that we, as mentioned in our recently released informal waste report, knew was going to happen, but even we have been surprised by the speed by which the government has moved.

For a regular citizen who unconsciously consumes all kinds of material on the daily basis, without noticing where the trash ends up, the city always seems clean and there is always space in trash bins. When we see people traveling on streets carrying things we throw, we know they are not only contributing to the city and making it a better place to live, but they are also a vital component of a value chain that diverts large amounts of waste from landfills and gets them back into the economy.

Turning waste into resources.

Looking into the formalization of the informal waste system, and seeing fewer and fewer individual recyclers shuttling on street selling their trash, we are wondering where they are moving when the collection sites are out of their reach, and what will happen to people like Mr. Lu and Mr. Wang who believe recycling is not just a way to make money, but a career to seek.

Moreover, what opportunity will come to the business and the city when recycling is more than just a sanitation issue to address.

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