At a recycling factory in the province of Hebei, shredded banknotes are being processed into pulp for making paper.
To remove the colors and inks, the banknotes are washed for over two hours, turning them into thin pieces of white paper.
After their fibers are extracted, the notes turn into white pulp, which is then used to make paper.
Zheng Ruibin is the head of the recycling factory.
"Nearly 6,000 tons of mutilated banknotes in different denominations are disposed of every year. They worth hundreds of billions of yuan."
The whole recycling process starts when banks single out damaged banknotes that cannot be used again.
The notes are returned to the central bank, where they are counted and shredded.
The shredded notes are then transported by armored vehicle to designated recycling factories approved by the central bank.
Since Renminbi banknotes are mostly made from cotton fibers, the pulp produced from the banknotes is mostly used in producing tissue.
"Tissue we produce here is all made from damaged-banknote-turned pulp. We produce about 20 to 30 truckloads, or 400 tons of them every day."
At the same time, the residue, or the so called sludge generated during the process, is collected and used to help raise earthworms.
The earthworms are then sold as fishing bait.
The sludge generated from the process is usually sold for 200 yuan per ton, giving the recycling centers an additional source of income.
Over 6 trillion yuan of Renminbi banknotes were circulating in China at the end of 2014.
But while the bank notes here in China are still being produced with bonded paper, a number of countries, including Vietnam, Australia and Canada, have begun producing notes through recycled plastics.
Those notes are said to be more durable, as well as more difficult to counterfeit.
It's unclear at this point whether the People's Bank of China is considering a move toward plastic bank notes.
For CRI, I'm Qi Zhi.
