On November 23, Li Guojun, vice president of the China Plastics Processing Industry Association, shared insights with reporters regarding recent shifts in the plastics sector’s trade dynamics. He highlighted that for the first time since July, domestic plastic exports have experienced a sharp decline, driven by changes in processing trade policies and rising international trade barriers. Meanwhile, import volumes have risen, signaling a shift in the industry's foreign trade structure.
These trends align with recent customs data showing that from January to October this year, China’s primary plastics imports rose by 6.1%. In contrast, the growth rate of plastic product exports dropped from 8.9% in the same period last year to 5.2%, marking a significant 3.7 percentage point decrease.
Li Guojun explained that for years, processing trade has played a major role in China’s foreign trade, often leaving companies in a position where they simply "dress for others" — producing goods for foreign brands without reaping substantial profits. This model has also made the industry vulnerable to anti-dumping accusations. Plastic products are no exception.
Starting from September 15, 2006, the state began reducing export tax rebates for plastic products, lowering them from 13% to 11%. Then, on July 1 this year, the rate was further cut to 5%. On July 23, the Ministry of Commerce and the General Administration of Customs added plastic products to the list of restricted items under processing trade, increasing the number of restricted 10-digit commodity codes by 1,853, including specific tariffs for plastic raw materials and finished goods. As a result, many companies have scaled back their exports due to the steep reduction in tax rebates, leading to a sudden drop in exports and a corresponding rise in imports.
Experts note that plastic products have long been a key export category for China. Since 2001, the sector has seen an average annual growth of over 13% in exports, with an increase of more than 25% in volume each year. However, this growth has largely relied on low-cost labor and resources, resulting in minimal value addition. The industry remains heavily dependent on low-end, low-tech production, which limits its long-term competitiveness.
Currently, China is home to around 90,000 plastic processing companies, but only about 9,000 are classified as large-scale enterprises. This highlights the need for structural reform and innovation within the sector.
Li Guojun emphasized that the recent policy adjustments are pushing domestic plastic companies to rethink their strategies and focus on upgrading their products and improving efficiency. This shift, while challenging, could ultimately lead to a more sustainable and competitive industry.
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