The news is full of stories about products from China and concerns about safety. But what has not been addressed yet is the packaging that contains these products and China's role in producing that packaging.
Does the origin of packaging matter? What do we know about China's role in the global packaging industry? A look at the facts provides revealing answers and implications, and the United Nations trade data for 2005 is a good place to start.
What are the facts?
Fact 1 – A relatively small number of countries dominate the global packaging market. These include North American countries, European countries, and China.
Fact 2 – China is a dominant exporter of manufactured packaging, the third largest exporter of packaging following Germany and the U.S. In 2005, China exported $4.4 billion of manufactured packaging. This amount represents 7.4% of the world export market for manufactured packaging.
Fact 3 – China's exports of packaging are manufactured primarily out of plastic, as 64% percent of China's packaging exports are plastic packaging, only 17% of China's packaging exports are made from paper and paperboard, and only 6% are made from glass.
Fact 4 – China is not a dominant importer of manufactured packaging.
Fact 5 – China is a dominant importer of materials used to manufacture packaging. Indeed, China is the largest importer of primary form plastics, such as polymers of ethylene, styrene, and vinyl chloride. In 2005, China imported $26.2 billion of these primary form plastics, representing 15% of the world import market. China is also the largest importer of pulp, importing $6.2 billion worth (21% of the world import market).
Fact 6 – China is a dominant importer of waste and scrap materials used to manufacture packaging. For example, China is the largest importer of waste and scrap plastic and of waste and scrap paper and paperboard. In 2005, China imported $1.9 billion of waste and scrap plastic and $2.5 billion of waste and scrap paper and paperboard, each representing 44% of the world import market for these materials.
What are the answers?
What do these facts tell us? China imports the materials "inputs" and exports the manufactured "outputs." That is, China imports the raw materials used to manufacture packaging and exports the manufactured package. The raw materials are predominantly plastics and paper pulp, and waste and scrap materials of plastic and paper.
Indeed, a closer look at the data reveals a global cycle of trade flows. For example, consider the case of plastic packaging. Germany and the U.S. export plastics to China, where plastic containers are manufactured. China then exports plastic containers to the U.S. and Mexico, where the containers are used to package a product. The U.S. and Mexico then export the packaged product to the location where it is consumed (including the U.S.). The U.S. may then export the waste materials from the packaging back to China. If China uses the waste plastics to manufacture new plastic containers, then the trade cycle repeats. A similar global cycle also appears in the market for paper and paperboard packaging.
What are the implications?
One implication of the global cycle of trade is that China is a hub in the global packaging cycle. Thus, China influences the material resources used to manufacture packaging, and China influences the character of the manufactured package.
Given this influence, China needs to be included in policy dialog regarding changes in the packaging industry. This inclusion may occur in part through the market. For example, changes in resources used in packaging may occur through producer initiatives to increase the use of sustainable packaging along their supply chains.
However, the challenge associated with such initiatives is the enforcement of standards. After all, among the countries that dominate the global packaging market, China is the only so-called developing country. The infrastructure for enforcement of standards actually may be in the process of unwrapping.
Pamela J. Smith, Ph.D., is a faculty member in the Department of Applied Economics at the University of Minnesota. Her specializations include International Economics and Econometrics (Statistics), and can be contacted at www.apec.umn.edu/Pamela_Smith.html.