At a factory in Zhejiang province on China’s eastern coast, two mounds of discarded cotton clothing and bed linens, loosely separated into dark and light colors, pile up on a workroom floor. Jacket sleeves, collars and brand labels protrude from the stacks as workers feed the garments into shredding machines. It’s the first stage of a new life for the textiles, part of a recycling effort at the Wenzhou Tiancheng Textile Company, one of the largest cotton recycling plants in China. Textile...