SW CHINA: CHENGDU RECYCLES THANKS TO MIGRANT ENTREPRENEURS

UNCLAS SECTION 01 OF 03 CHENGDU 000132

SENSITIVE
SIPDIS

DEPT FOR EAP/CM

E.O. 12958: N/A
TAGS: SENV ECON SOCI CH
SUBJECT: SW CHINA: CHENGDU RECYCLES THANKS TO MIGRANT ENTREPRENEURS

CHENGDU 00000132 001.2 OF 003



1. (U) This cable contains sensitive but unclassified
information - not for distribution on the Internet.




2. (SBU) Summary: Migrant worker entrepreneurs help Chengdu
recycle by providing multiple filters for the city's waste,
keeping recyclable material of all kinds out of landfills.
Laborers, entrepreneurs, and businesses have put together a vast
recycling network without government involvement or direction.
Although prices for some recyclable goods have fallen by 50
percent over the past year, the competitive labor market and the
one million-strong migrant work force in Chengdu means there is
no shortage of workers willing to do the dirty jobs needed for
Chengdu to recycle part of its waste stream. End Summary.



Entrepreneurial Drive: The Backbone of Urban Recycling Efforts

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3. (SBU) Across Chengdu's broad metropolitan area,
entrepreneurial activity drives a remarkably effective recycling
program. Merchants recognize the monetary value of recyclable
material and serve as the primary collectors of material. A
medium-sized Chengdu restaurant might receive 100 RMB (15 USD)
or more by recycling the glass, newspaper, and cardboard
accumulated over a few days. The restaurateurs need only to set
aside the recyclable goods and wait for one of the collectors to
arrive. Recycling collectors, who serve as intermediaries, pay
cash on-the-spot for collected materials.




4. (SBU) Many hundreds, if not thousands, of men and women
across the metropolitan area make a living as intermediary
collectors. This small army of individual businessmen typically
traverses the city on three-wheeled bicycle carts designed to
haul heavy loads. After buying a full load of recyclable
material from one or more merchants, the collectors then haul
the goods to recycling points located primarily on the perimeter
of downtown Chengdu along the third ring road. These, small
recycling centers buy the materials at market prices, and resell
them to factories that will convert the paper, plastic, glass or
other material into new products.



Declining Prices and Thin Margins

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5. (SBU) The network of individual entrepreneurs, who are the
backbone of the recycling industry, tell us that prices for all
materials have declined over the past year. One collector
attributed the decline in prices to the global economic crisis,
while others have cited competition or the May 2008 earthquake
as reasons for the decline in prices. The manager of a
recycling center north of the city-center said that before the
earthquake he could sell cardboard for 10 cents per jin (1 jin =
1.1 pounds). As of mid-July, he can sell the same weight for
only 3 cents. A collector in downtown Chengdu mentioned the
same trend. He said that cardboard prices had fallen from 7-9
cents per jin to about 3 cents. Scrap iron and steel prices
have fallen 40 percent while plastic and glass has fallen by
about 50 percent, according to the same recycling center manager.




6. (SBU) A second manager attributed the drop in prices to
competition among recycling centers and price consciousness by
sellers. She said that a few years ago, people did not think
scrap iron had much value. Now, however, sellers coming to her
recycling center know the market price and try to haggle for a
better one. Despite the seemingly tough economics of the
recycling industry, the manager, from a town 60 miles outside of
Chengdu, started her business one year ago. Most of the people
who collect materials or run recycling centers are migrant
workers.



Opportunity and Poverty Spurring Recycling

CHENGDU 00000132 002.2 OF 003



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7. (SBU) One million migrant workers live in Chengdu. This
abundant supply of laborers eking out a living has increased the
amount of recycled material. Some migrant laborers pick through
the city's landfill, hoping to earn money by collecting any
discarded recyclable material. Other migrant laborers, such as
the second manager mentioned above, start their own small
recycling businesses. A Consulate staff member commented that
recycling is seen by many as a dirty, undesirable job. This
creates opportunities for migrant laborers to enter the
business. The first recycling center manager said that he
earned 1,000 RMB per month (146 USD) and received free rent for
his work, although he does not own the business. (Note: This
is a competitive wage in Chengdu. A young or relatively
inexperienced maid or nanny in Chengdu might receive the same
base salary, but receive no lodging.)




8. (SBU) The more impoverished migrants and other city residents
also contribute to the recycling effort out of necessity. At
the lowest end of the economic spectrum, it is common to see men
and women around Chengdu sifting though garbage containers for
anything that is either usable or recyclable. Potentially
recyclable items are also plucked from the general waste
collection, which is often stored in small cement rooms attached
to buildings or housing complexes.



Government Advocates Recycling, Aids Effort

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9. (SBU) Chengdu's government is broadly supportive of recycling
efforts in the city, and even announced late last year that it
plans to establish community-based recycling centers. The city
government set a goal of building 200 recycling centers by 2013.
Each of the recycling centers under the plan would be 160-430
square feet, according to a Deputy Secretary of Chengdu's
Commerce Bureau. These small centers-which would be located in
communities with one center per 1500-2000 households-would be
about the size of the current, private recycling centers now
located outside the third ring road. The city also has placed
recycling bins, painted green, across large sections of
downtown. These largely replace rather than supplement trash
cans, but appear to do little on their own to encourage
recycling.




10. (SBU) The city concentrates its effort on waste collection
and removal rather than recycling, but low wages drive city
garbage workers supplement their income through recycling.
Workers fan out across the city at all hours of the day and
night, sweeping up trash from sidewalks and gutters, cleaning
roads, and emptying trash bins. These workers also transport
garbage from cement-block garbage collection rooms to waste
collection points outside the city center. Despite long hours,
they earn only about 700 RMB (102 USD) per month, according to a
recent local press report. Congenoff commonly sees city
sanitation workers sifting through the garbage for recyclable
items they can sell to supplement their income. The city is
seeking to discourage workers at waste transfer stations from
sorting through garbage, however, since this practice leads to
foul smells that cause local residents to complain to the city
government.



Profile of Recycling Entrepreneurs

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11. (SBU) The recycling business in Chengdu is operated by men
and women alike. The workers Congenoff has met appear to range
in age from about 35-55, although some more elderly residents
and city workers also search through the garbage for
recyclables. The first recycling center owner mentioned in this
cable appeared to be in his 50s. He said that he was originally

CHENGDU 00000132 003.2 OF 003


from a town north of Chengdu, near Luo Dai. He had worked at
the recycling center for six years, and was unconcerned that the
house he lived in at the recycling center had large cracks
running through the walls, saying it held up just fine during
the earthquake. The second recycling center manager also lived
at her workplace, a cement-block room of roughly 500 square
feet. She said she was from Jianyang, a town southwest of
Chengdu. She was able to enroll her fifth grade daughter in a
private school in Chengdu, which she said cost about the same
amount as the "free" public schools that nonetheless charge
parents a number of miscellaneous fees. She would not say how
much money she makes.
COWHIG