GLOBAL INDUSTRY TRENDS does not support recycled papers. Almost anyone can make paper from recycled furnish – every country has RCF – and paper machines are not hard to buy and build. The margin from running RCF through a paper machine, therefore, generally is not high enough to support the additional costs of exporting. There are possible exceptions. For example, when new capacity comes online – and these days, new machines can be big enough to add materially to the capacity of a country – the machine’s owner can be forced to export until it builds enough domestic demand for its output. However, as the overall growth trend continues, it will be interesting to see how much China will import, especially during periods when the price of imported recycled papers rises. China’s growth has and will affect every industry participant in a wide range of ways. WORLD PULP&PAPER 10 CHINA’S PAPER INDUSTRY WILL NEVER BE A MAJOR GLOBAL EXPORT THREAT China’s mills are unlikely to threaten the global industry with cost-driven competition, largely because China does not have much virgin fibre. Chinese paper mills make most of their product from recovered paper. Figure 2 shows that the majority of Chinese furnish (for all grades) is recycled (“RCF”). It also shows that China imports the majority of the virgin component of its furnish. With that dependency on imported raw materials, there is little room for Chinese producers to create enough competitive advantage over foreign producers in order that they might then be able to export. Basically, the economics of exporting Figure 2. China relies heavily on recycled fiber for all grades produced. Figure 3. Chinese exports and percentage of GDP.