The answer: slippers. The plastic and rubber that is used in Christmas lights wiring can also be re-purposed into slippers and other materials in China. Hence, the demand. Basically, China has figured out how to capitalize and find new life in our seasonal decorations. People who recycle the Christmas lights, separate the plastic wrap that insulates the copper wire and sells it independently from each other. On one end you have copper (which is plenty valuable) and on the other side you have the re-usable plastic. The process of getting there is not unlike panning for gold in the modern age.