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Transnational flows of e-waste

Two geographers residing in Beijing discuss the inflows, processing, and consumption of electronic waste-a topic largely neglected in the current literature on globalization. Based on extensive interviews with electronics producers and recyclers in China from 2002 to 2003, the paper explores the global flows of e-waste and concentration of related recycling in coastal China. The authors suggest that recycling activities (authorized as well as illegal) grew in tandem with the dramatic increase in electronics production during the last decade. They note that the country's recycling sector has played a significant role in rural industrialization and local economic development, albeit in conflict with the objectives of environmental protection. Journal of Economic Literature, Classification Numbers: F20, L63, O17, O19. 6 figures, 22 references.

Transnational Flows of E-Waste and Spatial Patterns of Recycling in China Xin Tong and Jici Wang1 Abstract: Two geographers residing in Beijing discuss the inflows, processing, and consumption of electronic waste—a topic largely neglected in the current literature on globalization. Based on extensive interviews with electronics producers and recyclers in China from 2002 to 2003, the paper explores the global flows of e-waste and concentration of related recycling in coastal China. The authors suggest that recycling activities (authorized as well as illegal) grew in tandem with the dramatic increase in electronics production during the last decade. They note that the country’s recycling sector has played a significant role in rural industrialization and local economic development, albeit in conflict with the objectives of environmental protection. Journal of Economic Literature, Classification Numbers: F20, L63, O17, O19. 6 figures, 22 references. Key words: electronic waste; global production network; local economic development; electronics industry, environmental protection; China. The rapid progress and pace of innovation in the global electronics industry accelerates the obsolescence of the industry’s consumer products, which leads to increasing amounts of electronic waste (e-waste).2 Regulations governing the disposal of such waste in the developed countries create incentives to export much of it to less developed countries. In March 2002, the Basel Action Network (BAN) and the Silicon Valley Toxic Coalition (SVTC) published a joint report entitled “The High-Tech Trash in Asia” (Puckett and Byster, 2002). Describing the transnational flows of e-waste from the developed to the developing countries of Asia, the report exposed the disastrous environmental pollution in some rural areas of southern China, which it traced to improper methods and techniques used in extracting secondary materials from the wastes. The exposé attracted much public attention to the management of e-waste in China, and it also created a highly negative view of the recycling industry based on imported waste. This paper attempts to link China’s problems relating to e-waste to the historical background of local industrial development, as well as to changing patterns of competition in the global electronics industry. It explores the connections between global transportation of e-waste and local reactions in China, on the basis of field research carried out by the authors 1Respectively, Assistant Professor and Professor, Department of Urban and Regional Planning, College of Environmental Sciences, Peking University, Beijing, China, 100871 [email: [email protected] and [email protected]]. The authors gratefully acknowledge financial support from the China Natural Science Foundation grant No. 40401014 and wish to thank Professors Laurence Ma, C. Cindy Fan, and Gerhard Werner as well as two anonymous reviewers for valuable assistance. Thanks are also due to all interviewees in China who shared their insights. 2The term e-waste chiefly refers to discarded (defective, obsolete, and/or no longer used) electronic consumer products such as television sets/computer monitors, computers, cellphones, home appliances, etc. 589 Eurasian Geography and Economics, 2004, 45, No. 8, pp. 589-602. Copyright © 2004 by V. H. Winston & Son, Inc. All rights reserved. 590 EURASIAN GEOGRAPHY AND ECONOMICS in 2002 and 2003. The first section briefly reviews transnational flows of e-waste and comments on related technical issues. The second outlines the investigation undertaken in this paper. The third covers the localization of recycling activities in China, stressing the role of the sector in the industrialization of coastal areas. The fourth section, last before our concluding observations, focuses on the changing patterns of competition and innovation in the electronics industry, which we believe could facilitate the transformation of local recycling activities in China. TRANSNATIONAL FLOWS OF E-WASTE Discarded electronic products are among the most rapidly expanding types of waste in the developed countries (e.g., see EU, 1998), and the management of e-waste has become an issue of global concern due to the environmental degradation traced to transnational flows. The transboundary movement of e-waste is driven by two forces. First, the disassembly of “end-of-life” equipment is labor-intensive with low value added, and second, compliance with environmental regulations can increase the cost of disposal. Most investigators tend to view recycling of electronics as an economically useful but environmentally hazardous activity (e.g., see Lin et al., 2002). They point out that e-wastes contain toxic substances, among which the following two broad categories are on the list of the Basel Convention:3 (1) heavy metals, such as the lead contained in glass in cathode ray tubes (CRT), or mercury used on printed circuit boards; and (2) brominated flame retardants (BFR), found in abundance in fireproof plastics. The impact of e-waste landfills and incinerators on the environment gives rise to spirited debates. Advocates favor recycling of electronic equipment because it yields useful components and quantities of precious metals.4 But without proper pollution control equipment and technology, serious environmental problems may occur in extraction of precious and nonferrous metals from circuit boards or plastic-coated cable in electronic scrap. For example, heavy metals in the residues can contaminate soils and ground water, and emissions of toxic substances by incineration of plastics containing BFR can seriously aggravate air pollution. Since recyclers of secondary materials recovered from scrap in developed countries must cope with rising costs of pollution control, many resort to exporting scrap instead of recycling it domestically (NSF, 1999). In fact, the so-called “pollution haven” hypothesis points out that the higher the costs of disposal caused by the increasingly strict environmental regulations in developed countries, the higher the incentive of recycling industries to move to the less developed world, where environmental restrictions are not severe. Thus, from a global perspective, pollution simply moves from one place to another, rather than being treated adequately in regions where the polluting products are made and used. Apart from disparities in environmental regulation, the gradual decline of transaction and transport costs also facilitates international trade in secondary materials. Thus, an international division of labor has evolved between developed and developing countries, whereby the former specialize in generating and recycling end-of-use products, whereas the latter concentrate on consumption and labor-intensive disassembly of secondary material (Beukering, 2001). A reasonable example is provided by a study of transnational flows of computers discarded in Australia, which were exported to the Philippines for disassembly, with some parts 3See the United Nations Basel Convention on the Control of Transboundary Movements of Hazardous Waste and Their Disposal (Basel Convention, 1989). 4A recent research report (Graedel et al., 2004) found high copper concentrations in electronics and electrical equipment, suggesting its favorable potential for copper recovery. TONG AND WANG 591 Fig. 1. Volume and global market share of electronics and electrical equipment exported by China, 1996–2003. Dollar values are in 1990 constant prices. subsequently re-exported to China for reuse. In turn, shredded circuit boards were imported back by the Australians for extraction of precious or nonferrous metals (see Kellow, 1999). The international debate on recycling and spatial dynamics of waste disposal has rarely addressed the relationships between the recycling of e-waste and electronics production. The close relationship between these two industries is noted in an EU proposal for the regulation of wastes of electrical and electronic equipment (EU, 2000).5 This document appears to confirm that recyclers of e-waste are mainly small- and medium- sized enterprises, found in most member countries, and that transnational transportation of such waste is concentrated in a smaller number of states. However, movements of e-waste from developed to developing countries were largely ignored until the results of an investigation undertaken by BAN and SVTC in 2002 appeared (Puckett and Byster, 2002). According to that report, over 90 percent of scrapped computers that the recyclers collect from users in the United States are exported to the developing regions of Asia, with about 80 percent destined for the coastal areas of China. It follows that China has become the largest receiver of e-waste dumped by the developed countries (ibid.). Flows of imported e-waste increased in coastal China at roughly the same time as expansion of the country’s electronic industry during the last decade. Figure 1, based on the UN Comtrade database (United Nations, n.d.), shows that exports of electronics and electrical equipment from China increase dramatically from 1996 to 2003. Export-oriented electronics manufacturing is also concentrated in the coastal areas, where most firms are focusing on labor-intensive assembly for international brand-name companies. The export-oriented economic development policies promoted by the government of China have restructured the domestic electronics industry to the point that production and consumption respond fairly quickly to advances in technology.6 5This topic was addressed for the first time in the United States in a baseline report on e-waste issued by the National Safety Council (1999). 6Although the government pursues different policies relating to electronics production and e-waste recycling, both have been growing quite rapidly. 592 EURASIAN GEOGRAPHY AND ECONOMICS Until recently, only a few studies on e-waste exports to China have been undertaken and published. BAN and SVTC, cooperating with Greenpeace in Hong Kong, have investigated Guiyu, a small village in southern China, where the recycling of imported e-waste is prevalent; the authors focused on the environmental impact of recycling activities on local communities (Puckett and Byster, 2002). Lin et al. (2002) have extensively reviewed international legal regulations related to recycling and scrapping of discarded computers in China. Pointing out the threat of global regulation to the competitiveness of China’s electronics industry, they suggested an integrated policy for the domestic management of e-waste designed to benefit environmental protection as well as the electronics industry. Still, empirical research on e-waste exports to China is very scarce, even though the issues are of significance to the academic community and to policy makers as well. OUTLINE OF INVESTIGATION Regretfully, reliable statistical data on e-waste imports are virtually non-existent in China. We interviewed 8 key experts employed by the government, nongovernmental organizations (NGOs), and research institutes in Beijing, involved in the study and regulation of imported e-waste during the last few years. In order to obtain general background information, we designed a semi-structured interview schedule that we later employed in our investigation of 10 electronic producers and 10 recyclers in 2002 to 2003. The electronic producers included three computer manufacturers, one mobile phone producer, and one manufacturer of household appliances, all headquartered in Beijing; one producer of household electronic appliances in Qingdao, one mobile phone manufacturer in Ningbo, one computer producer in Suzhou, and one computer manufacturer and one automated office equipment producer in Shenzhen. All were drawn from a list of participants in a seminar on e-waste management sponsored by the Ministry of Information Industry (MII) in September 2002. We queried their attitudes toward e-waste management, their current knowledge about end-of-life requirements overseas, and their efforts to introduce environmentally friendly technological innovation and to increase the portion of secondary materials used in their products. Recyclers were selected through a snowball sampling procedure, which is suitable for studies involving difficult-to-find respondents (Bernard, 2002).7 Because China’s public media by 2002 had created such a distinctly negative image of e-waste imports and subsequently of the Chinese recycling sector that relies on imports of secondary materials, most recyclers, including those approved by the government, were reluctant to respond to our request for interviews. With the help of one of the leading specialists in Beijing, we were able to establish a reasonably good relationship with our interviewees in Ningbo and Taizhou. All interviews with recyclers were supplemented by a field study in these areas between May and June of 2002. Additionally, we visited the plants of the 10 recycling companies in our study and five local secondary material markets. These included a secondary plastics market in Cixi City, and four industrial material markets in the Luqiao Trade City (Luqiao Shangmao Cheng) in Taizhou City. The sample is yet relatively small, but most of our informants have been involved with a variety of relevant issues for many years, witnessing the industry’s development from different perspectives. 7All recycling enterprises were approved processors of imported 7th category recyclable goods in Ningbo and Taizhou. TONG AND WANG 593 Fig. 2. Volume of secondary materials Imported by China, 1996–2003. Fig. 3. Global market share of the secondary materials imported by China, 1996–2003. LOCALIZATION OF IMPORTED E-WASTE RECYCLING IN COASTAL CHINA The development of e-waste recycling has played a significant role in China’s local rural industrialization. Generally, imports of e-waste have been driven by the demand for low-cost raw materials to alleviate domestic shortages, and by the need to promote labor-intensive industries that generate employment opportunities for unskilled labor in rural areas (Lin et al., 2002). The demand for cheap industrial materials has grown in China since the beginning of economic reforms in the late 1970s. During the last decade, imports of secondary materials have increased rather steadily, as shown in Figures 2 and 3.8 Presently, China is one of the largest importers of secondary products in the world. 8Both n.d.). figures are based on statistical data from the United Nations COMTRADE database (United Nations, 594 EURASIAN GEOGRAPHY AND ECONOMICS Fig. 4. Spatial distribution of authorized importers and processors of category 7 waste in China, 2002. The recycling of imported e-waste is among the fastest-growing industrial sectors in several clusters in coastal China, including Taizhou City in the Yangtze River delta, and Nanhai City in the Pearl River delta. Most recyclers are township- or village-owned enterprises employing unskilled workers and using unsophisticated equipment. Concentrated mainly in rural locations near seaports, with convenient access to sources of supply and to market, they are difficult for government authorities to monitor and control. Uncontrolled development of imported e-waste recycling has created fairly serious environmental problems. A survey conducted by China’s State Environmental Protection Agency (SEPA) found that pollution in many localities in coastal China since the early 1990s was the result principally of e-waste recycling (Gao, 1995). The survey prompted the government to restrict (if not ban) not only China’s imports of e-waste but also imports of scrap as well as other waste materials (Lin et al., 2002). In order to control recycling of imported e-waste, SEPA selected 460 enterprises from thousands throughout the country, and certified them as importers and processors.9 By 2002, the number of such enterprises increased from 460 (1995) to 509. Figure 4, based on data provided by the State Environmental Protection Agency in 2002, shows the spatial distribution of recycling enterprises licensed by the government to import recyclable goods of the 9Most were either state-owned secondary metal processors or joint-venture disassembly plants with overseas investment. TONG AND WANG 595 7th category, which included e-waste.10 Guangdong in the Pearl River delta and Zhejiang in the Yangtze River delta are the two regions with the highest concentration of recycling activity. It is noteworthy that the increasingly strict controls have failed to curb the growth of e-waste recycling in coastal China. Aside from authorized imports, in-flows of e-waste also came from smuggling, aimed at refurbishing electronic products rather than extracting secondary materials. Had such enterprises been added to the count, the Pearl River and Yangtze River deltas would have shown an even more concentrated pattern of e-waste recycling relative to other areas of China. On January 26, 2000, SEPA, together with three other government agencies, mandated a complete ban on imports of scrap computers, panel displays, television picture tubes, and similar electronic equipment. However, the ban is largely ineffective because local government agencies lack adequate resources to enforce the regulations; furthermore, and more broadly, the command and control approach is not likely to fundamentally alter the basic forces that generate environmental degradation. The number of small enterprises engaged in the recycling of imported e-waste is actually considerably larger than the number approved by the government. And it is difficult to obtain reliable data on the quantity of imports of e-waste, largely because such imports are frequently disguised as shipments of metal scrap or electronic products. The Beijing Zhongse Institute of Secondary Metals (2002) estimated the amount of e-waste imported in the Yangtze River delta at over 700,000 tons in 2001. And periodic exposés in the public media of unlawful processing tend to reflect the size and relative significance of activities in the underground economy.11 But notwithstanding the overwhelmingly negative public reaction and opposition to imports of e-waste, the recyclers interviewed told us a different story about the development of recycling in rural areas. Most believed it has played an irreplaceable role in local industrialization when China was still at an early stage of transition to a market economy. At the time, most raw materials (such as iron and steel, nonferrous metals, and plastics) were allocated only to state-owned enterprises, and it was difficult for township- or village-owned enterprises in rural areas to procure such materials through formal channels of distribution.12 Thus, secondary materials became an important alternative, shaping the spatial pattern of China’s recycling industry toward users of secondary materials Figure 5 depicts several industrial clusters investigated by the authors in the Yangtze River delta that are related to the recycling of imported e-waste. Ningbo, a city near Shanghai and the second largest seaport in the Yangtze River delta, is one of the major ports receiving 10China established a declaration and inspection system for all imports of waste in 1996. According to Regulations on Waste Imports for Environmental Protection and Management (Provisional) (SEPA, 2004), imports of the following materials had to be licensed: (1) animal bone; (2) metallurgical slag; (3) scrap wood and wood products; (4) scrap paper and paperboard; (5) scrap cotton and cloth; (6) iron and steel scrap, nonferrous metal scrap; (7) scrap motors, waste electrical line and cable, metal and electrical appliance scrap; (8) dismantled ships and floating platforms; (9) other scrap for specific need; and (10) plastic scrap. 11E.g., refurbishing of consumer electronics. An example is an enterprise in Luqiao based on the use of discarded computer monitors to produce television sets, which supplied 200 units per month to an appliance store (Chadu, 2002). There is also a market for refurbished electronic products in Nanhai City in Guangdong Province, with over 1000 disassembly and processing enterprises that have been in operation for 10 years (Bian, 2002). And inspection in Qingyuan City in Guangdong Province revealed that over 14,000 used hard disks were sold to a buyer in Guangzhou in one transaction (Ying, 2002). 12E.g., private sectors in the Yangtze River delta have played an important role in the area’s industrialization and urbanization in the 1980s and 1990s, with township- and village-owned recycling units supplying materials to many local industrial clusters. 596 EURASIAN GEOGRAPHY AND ECONOMICS Fig. 5. Industrial clusters related to recycling of e-waste in the Yangtze River delta. inflows of recyclable goods. Over two-thirds of the e-waste inflows passing through the port comprised imported recyclable goods. Taizhou, a city south of Ningbo, constitutes another cluster of recycling enterprises and secondary product markets. The development of recycling in that city, now known as an important center in the global secondary materials market,13 began in the late 1970s. There, peasants left their home villages to collect discarded goods in cities across the country in order to sell their finds to recyclers. Prior to the 1990s, most recyclable goods were collected domestically, so that the size of the industry was relatively quite small. However, since the early 1990s, imported waste has replaced domestic supplies as the major source of the industry’s raw material. Luqiao, a town whose location has been shown in Figure 5, is the center of trade and disassembly of discarded electrical and electronic equipment in Taizhou City. It is near seven specialized markets concentrated along the National Road 104 between Shiqu and Fengjiang in Luqiao (about 2.5 km) that buy and sell used machines, refurbished electric motors, gearboxes, nonferrous metals, e-waste scrap, iron and steel scrap, and secondary materials. Secondary goods come from other cities of China, as well as from Japan, the United States, Russia, and Western Europe. In Luqiao and three other nearby towns, thousands of small enterprises are engaged in e-waste scrapping, of which only 28 have been licensed by the government. State approval means passing pollution control inspections administered by the local environmental protection agency, and securing approval to import recyclable goods of the 7th category. There are still 30 other large disassembly enterprises without import licenses, and over 1500 family-based firms working as subcontractors for these large scrappers. A measure of the scale of the activity is the fact that as many as 13,000 local workers and migrant laborers are gainfully employed in this industry within an area of less than 13Interview at the Zhongse Institute of Secondary Metals in Beijing on 4/26/2002 TONG AND WANG 597 40 km2. And over 70 percent of local families are directly or indirectly active in this industry, employed for example in buying, disassembly, processing, and marketing of products.14 Cixi, a city north of Ningbo, is center for the production of plastic goods, and the center for plastics recycling in China. The plastics recovered from the waste of electric wires, the shell and structure of electronic products, etc. are collected and sent here for further classification into ABS, polypropylene, and PVC, and subsequent processing into flakes or pellets. Consequently the country’s largest secondary plastics market is located in that city. The recovered materials are sent to nearby industrial enterprises, such as those in Yongkang, one of the leading industrial and metalworking clusters in China, which mainly depends on supplies of secondary metals. Many rural enterprises have been active in refurbishing electronic products, regardless of restrictions on imports imposed by the government. For example, the low-tension electronics industry cluster in Liushi Town of Wenzhou City originated from disassembling and refurbishing of used electronic products exported to China. Although some of the enterprises have been upgraded to producing new products using primary materials, many still continue to refurbish and sell inexpensive products.15 The Beijing Zhongse Institute of Secondary Metals (2002) reported that local demand for secondary materials provided the main economic motive for the recycling of e-waste in the Yangtze River delta. One of our interviewees, a recycling entrepreneur from Taiwan, reported that recycling of e-waste in the 1980s had not been subject to controls in China. Among the first Taiwanese investors, he came to the Mainland in the late 1980s, mainly due to increasing labor costs and environmental restrictions in Taiwan. However, differences in the cost of labor and environmental controls did not fully explain the recent development and expansion of his company in the Mainland.16 The negative perception and attitudes toward the processing of imported e-waste has been one of the main concerns of the interviewed recylers. One recycler in Taizhou City, in business since the late 1970s, began his business from scrapping used electrical motors and wires collected from other cities. His enterprise grew rather dramatically after he started processing scraps imported from Japan. The company secured all necessary licenses from the government, made many efforts to comply with environmental regulations, and even hired consultants from academia to improve pollution abatement techniques in the plants. However, the prevailing public negativism associated with the recycling sector eventually dampened the entrepreneur’s enthusiasm as well as willingness to invest in more advanced equipment and technology. All told, under central planning, China had an established and fairly well designed system for recycling and recovery of resources, which has experienced difficulties during economic transition. The privatization of the recycling sector presents a dilemma, as the sector has become economically more significant while government controls and inspection have become increasingly more disruptive. In the absence of large investments by local 14Figures were derived from a report on secondary metal production and marketing in the Yangtze River delta by the Beijing Zhongse Institute of Secondary Metals (2002). 15This observation is based on a study of the low-tension electronics industry in Liushi City by Chunshun Liu (pers. comm., 2004) in another project undertaken in 2000. 16 Interview with Recycler C in Shanghai on June 2, 2002. The interviewee’s first plant was built in Guangdong, where he imported most of the needed materials from overseas and eventually exported them after disassembly and subsequent processing. He built a new plant near Shanghai in the early 1990s, and became an active participant in the local business network, which facilitated sales of the company’s products to customers in Shanghai. 598 EURASIAN GEOGRAPHY AND ECONOMICS Fig. 6. The changing mode of competition in the global electronics industry. governments to re-establish a recycling system, some formerly state-owned recycling companies turned to importing goods, particularly those of the 7th category, which yielded comparatively higher profits. CHANGING PATTERNS OF COMPETITION AND INNOVATION IN THE ELECTRONICS INDUSTRY As noted above, most policies addressing the problem of imported e-waste had not been designed in cooperation with the electronics industry. However, the situation is changing in response to the new principles governing environmental regulations pertaining to the management of e-waste. Globalization prompts producers in the less developed countries to emulate their counterparts in the developed world, where the emphasis is on mass production, mass consumption, and the disposal on a massive scale, of products that have reached the end of their life cycle. Producers in the electronics industry have adapted to the rapid pace of technological advancement by incorporating such practices as planned obsolescence in product design, encouraging consumers to discard old equipment for upgraded models. To address such an unsustainable mode of development, environmental regulations in the developed countries are gradually shifting toward full life cycle responsibility. Regulatory approaches also have expanded to provide increasing incentives for producers and consumers to change their behavior at the earliest stages of material flows in the life cycle of products. Such a transformation will influence the pattern of innovation, production, consumption, and recycling in the global electronics industry (Fig. 6). With regard to the management of e-waste, a newly proposed principle of Extended Producer Responsibility (EPR) is being adopted by an increasing number of developed countries. According to the OECD (2001, p. 9), the key feature of the EPR policy is a “shifting of responsibility (physically and/or economically; fully or partially) upstream toward the producer and away from municipalities.” This regulatory approach creates incentives for producers to consider, even at the design stage, the subsequent disposal and recycling of used products, and to participate as key players in the entire system of end-of-life management. TONG AND WANG 599 By 2002, 16 countries had enacted “take-back” legislation on e-waste, manifesting a variety of forms of EPR. According to Raymond Communication (2002),17 similar legislation covering electronic products and materials is expected to become law in 28 additional countries in the period 2003–2007. In 2002, a joint commission involving China’s Ministry of Information Industry (MII), SEPA, and State Economic and Trade Committee (SETC) was organized to formulate regulations on e-waste management that are compatible with the concept of EPR in China.18 Producers are now required to utilize recyclable materials, adopt environment-friendly designs in production, and label contents of materials in products to facilitate recycling. The deadline to replace toxic substances was set for January 1, 2006, following the same timetable as directives on waste electrical and electronic equipment (WEEE) formulated by the EU.19 Take-back schemes, which will require producers and distributors to collect their end-of-life products that had been previously sold, also are in prospect. As debates on the merits of such legislation continue, experiments are being undertaken in selected localities to test the validity of EPR. On January 7, 2004, the State Development Planning Commission designated Zhejiang Province and Qingdao City as the two experimental sites for the design of a national take-back system for end-of-life household electronic appliances and electronic products. Zhejiang Province was selected because of its high per capita income and large supply of potentially obsolete e-products. The province also is one of the largest importers of e-wastes, with a comparatively good record of compliance with import inspection and pollution control. Qingdao City was selected because three large household electronic appliance producers (Haier, Hisense, and Aucma) are located within its confines. The government intends to test different models. In Zhejiang Province, the experiment is designed to establish a recycling system centered on a specialized recycling plant, and focused on taking advantage of the established network of junk buyers. In Qingdao, a recycling system operated by individual electronic firms will be tested, with an understanding that they will be encouraged to establish their own logistical system based on distribution and retail networks. The systems planned for both areas, however, may face difficulties in securing sufficient quantities of end-of-life procucts to keep the businesses running. While it is not difficult to import advanced technology and equipment for recycling and disposal, the challenge is to establish an efficient take-back system that is appropriate for China and that provides supplies adequate for use by qualified recyclers (Dianzi, 2004). Not all appreciating the initiative, producers have complained about the additional costs of assuming take-back responsibilities. Because such a responsibilities are not mandatory, producers who participate in the experiment, unlike those who do not, will face greater financial pressures. In recent years, profit margins have already been squeezed by cut-throat price wars over market share. Thus, most domestic producers find it hard to accept the idea of taking on additional financial responsibilities for the disposal of their end-of-life products. 17An international consulting company that specializes in the recycling market. drafts of Regulatory Approaches to Pollution Control in Electronic and Information Products (MII), focusing on elimination of toxic substances in electronic products), and of Regulatory Approaches to the End-of-Life Household Electronic Equipment (SETC) were distributed for public comment in September 2003. 19Still another technical policy relating to the wastes of electrical and electronic equipment is now under consideration by the SEPA. 18Preliminary 600 EURASIAN GEOGRAPHY AND ECONOMICS In contrast to the reluctance of domestic producers, multinational corporations (MNCs) such as Motorola, Nokia, Hewlett-Packard, and Epson have voluntarily promoted their own take-back schemes since 2000. The behavior of the large MNCs has influenced local recycling enterprises. For example, MNCs in Beijing, such as Motorola, Nokia, Hewlett-Packard, and IBM, have to dispose of their e-waste in a proper way in accordance with standards of environmental management stipulated by the International Organization for Standardization (more specifically, ISO 1400-series standards; see ISO, 2004). Seeking qualified facilities to do the job, they managed to find one in suburban Beijing for the disposal of hazardous industrial waste, which however could only handle disassembly. Thus, PCB scraps had to be sent to Korea or Singapore for additional processing; other recyclable materials, such as glass, plastics, and metals in electronic wires, went to recycling enterprises in Hebei and Zhejiang provinces. “If the new regulations . . . are enforced, business prospects are likely to improve, and we would then consider investment on technological upgrading,” indicated one of the interviewees. “However, at present, . . . the domestic users have not taken this issue seriously.”20 Domestic producers, who wish to enter and/or expand their access to markets outside of China, have tended to welcome the development of EPR systems overseas since the late 1990s.21 CONCLUDING OBSERVATIONS The report by Pucket and Byster (2002), which traced transborder movements of e-waste to an environmental disaster in a small Chinese village, raised public awareness of the hazards and reinforced the negative perception and attitudes toward China’s recycling sector and the inflows of recyclable materials from developed countries. Our investigation leads us to conclude that the electronics industry in China needs a solid recycling system that incorporates environmental controls. We should note here, however, that the difficulties faced by the recycling sector were almost completely ignored in public discussions prompted by the problem. New resolutions, based on the principle of Extended Producer Responsibility, could become an effective way of linking production and recycling within a closed loop to reduce the environmental impacts. It is believed that a more flexible legal framework and improved institutional infrastructures could help China build an environmentally and economically sound e-waste recycling system. However, such “top-down” transfer of regulatory approaches promoted by the central government still requires a broadly based consideration of the costs and benefits faced by producers, consumers, as well as recyclers at the local, national, and global levels. Due to the virtual lack of reliable statistical data, we did not attempt to address a variety of issues and factors relating to the size and significance in the national economy of activities involving the processing of imported e-waste. Nor are we ready to answer questions about who is investing in domestic recycling of such waste. Perhaps an equally significant reason for the void is the fact that an appreciable number of establishments in the sector operate in the shadows of the underground economy. In that realm, most of our interviewees were, at best, sharing pertinent information off the record. 20Interview of an official of a disposal facility for hazardous industrial waste in Beijing, on May 14, 2002. a well-known producer of household electronic appliances, proceeded to investigate relevant e-waste policies in targeted foreign markets. The company is now actively participating in the development of a national legal system that addresses the industry’s problems. 21Haier, 601 EURASIAN GEOGRAPHY AND ECONOMICS Nonetheless, some general observations can be made regarding broader economic trends affecting the sector’s future development. The growth of China’s domestic electronics industry and its exports (e.g., Fig. 1) has been spectacular. As recently as December 2004 that industry’s global reach was evidenced by IBM’s sale of its PC unit to China’s Lenovo—a leader in the domestic PC market that has surpassed Japan to become the world’s second largest (Lohr, 2004). Eventually, increasing quantitites of locally used PCS (and any stocks of unsold ones in the Chinese market) will become obsolete, augmenting supplies of imported e-waste and even displacing them in some local markets. 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