Dynamic Spillover between the Chinese and International Wastepaper Markets: Analysis of the Impact from China's Newly Implemented Wastepaper Policies

摘要

As China is the largest importer of wastepaper in the world and is highly dependent on the international market, the relationship between the Chinese and international wastepaper markets affects the stability of both markets. The purpose of this study was to investigate the impact of China's newly implemented wastepaper polices on the degree of integration between the Chinese and international wastepaper markets and analyze the dynamics of the relationship between the two markets over time. We developed both the static and dynamic total spillover indices to analyze the degree of integration in average and in time-varying perspectives and performed E-Divisive with Medians (EDM) on the dynamic total spillover index to evaluate the impacts of the new policies. The results revealed that the Chinese and international wastepaper markets were integrated. The calculated dynamic total spillover index varied widely during the studied period and presented an overall declining trend, indicating that these policies have disrupted the integration relationship between the two markets. The results of EDM detected structural breaks in the dynamic spillover index due to the new policies, further confirming and describing the negative impacts of the new policies on the integration relationship between the two markets. Since mutual dependence exists between the Chinese and international wastepaper markets, the interventions on the integration relationship have led to dramatic fluctuations and expanding price differences between the two markets, imposing risks and uncertainties on the stable development of China's paper industry and the global recycling industry.