Required Report - public distribution

**Date:** 7/15/2005

**GAIN Report Number:** CH5052

CH5000

**China, Peoples Republic of**

**Solid Wood Products**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Maurice House

U.S. Embassy Beijing, Office of Agricultural Affairs

**Prepared by:**

James Butterworth & Zhang Lei

**Report Highlights:**

In 2006, China's logs, lumber and wood-based panels production is
forecast to increase five, ten and 15 percent respectively driven by
China's booming wood processing and construction sectors. China's supply
of domestic solid wood production is increasing, but not as rapidly as
demand due to China's booming economy. China's dependence on imported
wood is expected to grow into the foreseeable future.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Beijing \[CH1\]

\[CH\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Forest Situation & Outlook 3](#forest-situation-outlook)

[Solid Wood Products Situation & Outlook
6](#solid-wood-products-situation-outlook)

[Trade 8](#trade)

[Overview/Outlook 8](#overviewoutlook)

[Competition 9](#competition)

[Policy 10](#policy)

[Market Segment Analysis 10](#market-segment-analysis)

[Construction Sector 10](#construction-sector)

[Overview 10](#overview)

[Marketing 11](#marketing)

[Policy 11](#policy-1)

[Trade 11](#trade-1)

[Construction Sector Strategic Indicator Table
12](#construction-sector-strategic-indicator-table)

[Furniture & Interiors Sector 12](#furniture-interiors-sector)

[Production, Consumption & Marketing
12](#production-consumption-marketing)

[Trade 13](#trade-2)

[Material Handling Industry 13](#material-handling-industry)

[Overview 13](#overview-1)

[Policy 14](#policy-2)

[Statistics Tables 15](#statistics-tables)

[Appendix 1 Notice on Forbidding the "Double Rebate" Policy on Border
trade
19](#appendix-1-notice-on-forbidding-the-double-rebate-policy-on-border-trade)

[Appendix 2 Mark of Wood and Wood Products in Trade
20](#appendix-2-mark-of-wood-and-wood-products-in-trade)

[Appendix 3 Phytosanitary Treatment Measures for Entry WPM
26](#appendix-3-phytosanitary-treatment-measures-for-entry-wpm)

# Executive Summary

China's soaring demand for timber, driven primarily by its rapid
economic expansion and booming wood processing sectors, is forecast to
continue increasing in the next few years. China's domestic timber
production is forecast to increase slightly in the next few years
because of China's soon to be expanded logging quota and China's
Fast-Growing-High-Yielding (FGHY) forests. However, China's forest
management policies have changed to focus more on ecology protection and
less on timber production, which will limit timber production expansion.
More and more local timber is expected to come from plantations, instead
of natural forests. China's imported timber is forecast to continue
increasing driven by the strong demand. China is expected to import more
temperate-zone timber as substitute for tropical timber because of price
and concerns about future availability of tropical hardwoods. Russia is
expected to retain its dominant position in China's imported timber
products over the next few years because of its low price (lower
freight, and preferential tax policies), and similar species to China.
Indonesia's timber exports to China have decreased sharply because of
the Indonesian government's restrictive policies toward logging and the
December 2004 tsunami. U.S. hardwood exports are forecast to increase
moderately, primarily driven by demand from the furniture and interior
decorating sectors. U.S. softwood exports, especially Southern Pine,
also are expected to increase rapidly, driven by demand from the
construction industry, including real estate, infrastructure
construction and outdoor landscaping. There are several market niches
for U.S. softwood in addition to construction sector, such as pencils
and instruments.

# Production

## Forest Situation & Outlook

**Forest Resources:** In January 2005, China released its Sixth Forest
Inventory Report (covering 1999-2003). It estimated China's forested
area to be 175 million of hectares, with the forest stocking volume at
12,456 million cubic meters, and its forest coverage increased to 18.21
percent from 16.55 percent in 1998. For more information on China's
forest resources, including China's forest ownership, forest type, major
species, age class, and distribution, please refer to GAIN Report
CH5027, which is available at
<http://www.fas.usda.gov/gainfiles/200503/146119239.pdf>

China's forestry production policy is undergoing transformation. The
policy focus has shifted from maximizing harvesting natural timber
stands to one that focuses more on ecological preservation. During the
transformation, plantations will replace natural forests as the major
timber source in China. Ecological forests, including shelterbelt and
special-purpose forests, accounted for 75 percent of China's total area
planted during 2004.

In December 2004, China launched a Forest Ecological Benefit
Compensation Scheme (FEBCS). The Scheme began to fund forestry
ecological improvement. In 2004, 26.67 million hectares of key
ecological forests received RMB2 billion (US\$242 million) from the
Chinese Central Government as compensation for planting trees. The
Scheme stipulates that 90 percent of the fund must be used as
compensation for the costs of planting trees, and the remaining 10
percent must be set aside for controlling forest fires, diseases and
pests, or monitoring changes in the forest ecology.

**Forest Certification:** European consumers' demand for certified wood
products is the primary driving force behind China's pursuit of forest
certification. In response to that demand, China established the Forest
Certification Division under the State Forestry Administration (SFA) in
2001. Progress moved slowly during the first two years because of a lack
of market pressure. In 2004, however, the situation changed because more
and more European importers began requesting the use of certificated
wood. China began to actively consider different schemes, including
those advocated by the Program for the Endorsement of Forest
Certification (PEFC), the Forest Stewardship Council (FSC), and the
Sustainable Forestry Initiative (SFI).

China will release its Draft Regulations on Forest Certification by the
end of 2005. Mutual-recognition of other schemes seems to be the largest
difficulty. China is expected to incorporate FSC's principles and
standards into its own scheme. The Wild World Fund (WWF) has actively
promoted FSC in China, including with Chinese government forestry
officials. The WWF/World Bank Alliance initiated and funded China's
Forest Certification Working Group in 2001. FSC certified forest in
China totaled 431,606 hectares as of April 2005. Sixty-two wooden
product manufacturers have passed FSC Chain of Custody (CoC)
certification by the end of 2004.

Forest certification brings both benefits and challenges to U.S. wood
exporters because a lot of imported U.S. wood, especially hardwood, is
further processed and re-exported to the United States, Europe, Japan,
and other countries. The primary benefit is that forest certification
will help to decrease illegal wood from entering China and thereby
create more export opportunities for U.S. exporters. The main challenge
lies in universal acceptance of the various certification schemes
mentioned above. If, for example, the European market does not accept
uncertified, or SFI certified wood, Chinese manufacturers would not use
such wood for products destined to Europe, which means U.S. wood might
lose this market. However, Post expects it will be a long time before
certified wood becomes a major factor in the Chinese wood market, so the
U.S. wood industry has time to solve the problem.

**Logging Quota:** China continues to enforce a logging quota to protect
its forest resources. The annual allowable cut during the Tenth
Five-Year (2001-2005) is 223.1 million cubic meters. China has started
to work on a new logging quota plan for the 11^th^ Five-Year
(2006-2010). According to the latest forest resource inventory, China's
stocking volume annual growth is about 497 million cubic meters.
Industry sources expect China's State Council will approve increasing
the new quota to about 250 million cubic meters, when it releases its
decision at the end of 2005. This will be about half of the annual
growth.

*Special quota policies for commercial plantations:* In an effort to
encourage commercial plantations, the Government of China (GOC) allows
the following special exemptions to the logging quota as detailed
above: 1) managers of commercial plantations above a "certain size"[^1],
are allowed to develop their own annual logging quota[^2]; 2) plantation
managers can determine the harvesting age of plantation-grown timber for
industrial raw material use; and, 3) the GOC will separately list
commercial plantations' logging quotas and production plans.

Despite the GOC's efforts to enforce the logging quotas, excessive
logging is still one of the biggest forestry-related problems in China.
According to the latest inventory, annual logging has exceeded the quota
by 75.54 million cubic meters, or 34 percent.

**Fast Growing High Yielding (FGHY) Forest:** Developing FGHY forests is
China's major measure to protect its domestic natural forests and
thereby decrease its reliance on imports. China's goal is to plant 13
million hectares of FGHY forest by 2015. This would provide 133 million
cubic meters of timber. However, Post questions whether China will be
able to reach this ambitious target because of the following factors: 1)
China does not have anywhere near 13 million hectares available for
planting forests or any other commodity for that matter. As a point of
comparison, 13 million hectares would account for about 60 percent of
China's total corn planted area (22 million hectares). There are large
tracts of desert in Western China, but they are not suitable for FGHY
forests primarily because there is not enough water for irrigation, and
irrigating forests are not the optimal use of China's limited water
resources; 2) China needs to plant about one million hectares of FGHY
annually from 2002 to 2015 to meet its target. During the period from
2002 to 2004, actual plantings fell far short of that goal \-- less than
100,000 hectares were planted annually; and, 3) China's large-scale FGHY
plantations need to overcome considerable ecological concerns. China's
favorable investment environment has attracted large amounts of foreign
direct investment from multinationals for pulp and paper processing
facilities, which spurs pulp plantations in South China, especially in
Yunnan, Hainan, and Guangxi Province. In early 2005, China's state-run
media alleged that a major Indonesian paper manufacturer illegally
logged natural forests in order to plant eucalyptus forests. Several
non-governmental organizations (NGOs) highlighted the story as an
example of how, in their view, single-specie plantations damage
ecological diversity. These conflicting interests are forcing the GOC to
balance FGHY forest expansion with environmental protection.

Post forecasts that China's FGHY program will not decrease U.S. wood
imports because most timber from FGHY forests is for low-end use, such
as paper & pulp production, inside layers of plywood, and laminated
flooring. Most imported U.S. wood, on the other hand, is used for
high-end furniture, interior decoration, and outdoor landscaping. Wood
from FGHY forests is not a substitute for U.S. wood for those uses.

In addition to planting FGHY forests, China has planted small tracts of
rare species forests. In Hainan province, for example, they planted
teak. However, given the small quantity and slow growth rate of such
species, timber from these forests will not be a measurable factor
anytime in the near future.

**Illegal Logging:** Although most experts opine that China's domestic
illegal logging is not as serious as in Russia or Indonesia, as
mentioned above, it remains a considerable problem. Equally important,
however, is that China is considered to be one of the largest buyers and
millers of illegal logs. Post expects forest certification and the GOC's
concern about potentially harmful pests that enter China on the illegal
logs eventually will help reduce the flow of illegal logs into China. In
the meantime, however, the illegal logs continue to flow in.

  ----------------------------------- ------------ ------------ ------------
  FOREST AREA                                                   

  Country: China People's Republic of                           

  Report Year:                        2004         2005         2006

  Total Land Area (million hectares)  960          960          960

  Total Forest Area (million          177          180          183
  hectares)                                                     

  \--of which, Commercial ('000       106,200      108,000      109,800
  hectares)                                                     

  \-\-\--of commercial, tropical      5,310        5,400        5490
  hardwood (\'000 hectares)                                     

  \-\-\--of commercial, temperate     49,900       50,760       51,600
  hardwood (\'000 hectares)                                     

  \-\-\--of commercial, softwood      50,990       51,840       52,710
  (\'000 hectares)                                              

  Forest Type                                                   

  \--of which, plantation (\'000      56,640       57,600       58,560
  hectares)                                                     

  Total Volume of Standing Timber     13,773,600   14,007,050   14,240,500
  (thousand cubic meters)                                       

  \--of which, Commercial Timber      8,264,160    8,404,230    8,544,300
  (\'000 cum)                                                   

  Annual Timber Removal (\'000 cum)   385,000      392,700      400,550

  Annual Timber Growth Rate (\'000    512,000      522,200      532,640
  cum)                                                          

  Annual Allowable Cut (\'000 cum)    223,100      223,100      250,100
  ----------------------------------- ------------ ------------ ------------

## 

## Solid Wood Products Situation & Outlook 

**Production:** Logs production is forecast to increase about 5 percent
in 2006 because: 1) the new logging quota is forecast to increase
slightly; 2) logging policies on plantations are more relaxed; and, 3)
FGHY forests planted in 2000-2002 will be mature enough to harvest over
the next few years. The estimates of softwood and hardwood log
production in both 2005 and 2004 have been revised sharply because Post
used what it considers more reliable sources this year than in the
previous estimate.

China's lumber production from both imported and domestic logs has
increased very fast over the past several years and is forecast to
increase 20 percent in 2006 because logs' VAT is lower (13 percent) than
lumber (17 percent), domestically milled lumber using imported logs is
cheaper than imported lumber. And the transportation cost of lumber is
lower than logs.

Wood-based panels production is forecast to increase 15 percent in 2006
driven by the growth of fiberboard, particleboard, and the block board
sector. China's plywood production increase is forecast to slow down
because of resources limitation. Plywood production needs large diameter
timber, which has higher output than small diameter timber when peeled.
Whereas fiberboard and particleboard production can use small timber and
even wood scrap.

China's actual domestic industrial roundwood production is divided into
two parts \-- state-quota production, which accounts for about 50
million cubic meters, and production from illegal domestic logging,
i.e., over-quota production, which accounts for about 40 million cubic
meters [^3]. Post estimates China's total domestic industrial roundwood
(not including fuelwood) production at 90 million cubic meters. Official
statistics indicate that 60 percent of state-quota timber production
comes from plantations. In 2004, China's imported wood and wood products
(not including paper and pulp imports) totaled 39 million cubic meters
(Round Wood Equivalent -- REW). Thus, the total wood supply is estimated
at 129 million cubic meters.

####### China's major wood products production in 2004

  ----------------------- -------------------------- ---------------------
                          2004 Production (million   Yearly change (04/03)
                          m3)                        

  Timber                  51.97\*                    +9%

  \- Logs                 47.12                      +9%

  \- Softwood logs        19.68                      \--

  \- Fuel wood            4.85                       +11%

  Lumber                  15.33                      +36%

  \- Tropical lumber      1.05                       +45%

  Wood-based Panels       54.46                      +20%

  \- Of tropical timber   3.93                       +762&

  \- Plywood              20.99                      -0.18%

  \- Fiberboard           15.60                      +38%

  \- Particleboard        6.43                       +17%

  \- Block board          8.81                       +48%

  \- Others               2.68                       +48%
  ----------------------- -------------------------- ---------------------

Note: \* Refers to state-quota production

(Source: Forestry Statistics by State Forestry Administration)

**Price:** Prices of wood products are expected to increase
significantly in 2005 because of the strong demand, limited supply, and
high freight rates.

  ---------------------------- --------------- -------------- -------------
                               2003 Average    2004 Average   Yearly change
                               Price           Price          (04/03)

  Timber                       ￥449/m3        ￥479/m3       +6.6%

  Lumber                       ￥800/m3        ￥812/m3       +1.5%

  Chips                        ￥216/m3        ￥298/m3       +38.3%

  Wooden Flooring              ￥67/m2         ￥74/m2        +9.7%

  Plywood                      ￥1947/m3       ￥1655/m3      -15.3%

  Middle Density Fiberboard    ￥1103/m3       ￥1274/m3      +15.5%
  (MDF)                                                       

  Particleboard                ￥883/m3        ￥1043/m3      +18.1%
  ---------------------------- --------------- -------------- -------------

(Source: Forestry Statistics by State Forestry Administration)

The average plywood price decreased because more thick plywood, which is
cheaper than thin plywood, was produced. However, industry sources do
not believe the plywood price decreased 15 percent as shown above
because the plywood sector's overall profit margin is below 10 percent
in China, and production costs, especially to the cost of logs, is
higher than in 2003.

**Mills:** Private mills dominate China's wood processing sector.
Industry sources state that there are more than 200,000 mills in China,
of which more than 90 percent are private. Most are located in the
provinces of Hebei, Shandong, Jiangsu, Zhejiang, Guangdong and Fujian.
These provinces have ample skilled workers and raw materials, together
with good transportation infrastructure. However, most of the private
mills are small and low tech which explains why China's timber
conversion rate is only about 60 percent, which is below the 80 percent
rate in most developed countries.

Besides numerous private mills, China's state-owned forestry enterprises
also play an important role in managing state-owned forests. There are
four leading forestry groups in China: 1) Inner Mongolia Forestry
Industrial Co., Ltd.: <http://www.imfic.com.cn/>; 2) Longjiang Forestry
Industrial Co., Ltd.: <http://www.ljforest.com:9009/qybl/jtjj.htm>; 3)
Jilin Forestry Industrial Co., Ltd. (listed company):
[http://www.forestindustry.com.cn](http://www.forestindustry.com.cn/);
and, 4) Daxing'anling Forestry (Group) Co., Ltd. These four enterprises'
logs production account for 20 percent of China's total state-quota logs
production.

+---+--------------------+----------+----------+-----+-------+----------+
|   | Name               | Fo       | Stocking | 2   |       |          |
|   |                    | restland | Volume   | 003 |       |          |
|   |                    | Area     |          | P   |       |          |
|   |                    | (Million | (Million | rod |       |          |
|   |                    | ha)      | m3)      | uct |       |          |
|   |                    |          |          | ion |       |          |
|   |                    |          |          | (th |       |          |
|   |                    |          |          | ous |       |          |
|   |                    |          |          | and |       |          |
|   |                    |          |          | m3) |       |          |
+---+--------------------+----------+----------+-----+-------+----------+
|   |                    |          |          | L   | L     | Wo       |
|   |                    |          |          | ogs | umber | od-based |
|   |                    |          |          |     |       | panels   |
+---+--------------------+----------+----------+-----+-------+----------+
| 1 | Inner Mongolia     | 8.1      | 682      | 2,  | 28    | 232      |
|   | Forestry           |          |          | 479 |       |          |
|   | Industrial Co.,    |          |          |     |       |          |
|   | Ltd.               |          |          |     |       |          |
+---+--------------------+----------+----------+-----+-------+----------+
| 2 | Daxing'anling      | 6.5      | 520      | 2,  | 122   | 49       |
|   | Forestry (Group)   |          |          | 115 |       |          |
|   | Co., Ltd.          |          |          |     |       |          |
+---+--------------------+----------+----------+-----+-------+----------+
| 3 | Longjiang Forestry | 7.6      | 630      | 3,  | 103   | 334      |
|   | Industrial Co.,    |          |          | 999 |       |          |
|   | Ltd.               |          |          |     |       |          |
+---+--------------------+----------+----------+-----+-------+----------+
| 4 | Jilin Forestry     | 1.2      | 157      | 967 | 98    | 433      |
|   | Industrial Co.,    |          |          |     |       |          |
|   | Ltd. (listed       |          |          |     |       |          |
|   | company            |          |          |     |       |          |
+---+--------------------+----------+----------+-----+-------+----------+

(Source: China Forestry Yearbook 2004)

# Trade

## Overview/Outlook

China's log imports [^4] in 2006 are forecast to increase 5 percent to
28.9 million cubic meters, of which 65 percent are expected to come from
Russia. Lumber imports [^5] in 2006 are forecast to increase 10 percent
to 7.3 million cubic meters. Russia, Thailand, Indonesia, and the United
States are top lumber suppliers to China. The forecast assumes that
China's wood market will stabilize to a more sustainable growth rate
than it has experienced in over the past several years. Also, lumber
imports have been increasing faster than logs because more and more
exporting countries, such as Russia, have encouraged lumber exports
instead of log exports.

Post's 2005 estimate of temperate hardwood logs imports has been revised
downward while the 2005 estimate of tropical hardwood logs imports both
have been revised upward sharply because last year Post classified the
whole H.S. Code 44039900 (Others) as temperate hardwood logs, whereas
this year Post reclassified them according to the country of origin.
Imports from Indonesia, for example, are classified as tropical
hardwood, while imports from the United States are classified as
temperate hardwood. The same methodology was used for lumber imports and
explains the changes in the import numbers.

Russia's log and lumber exports to China are expected to continue
increasing because of their low prices, Russia's close proximity to
China, and Russia's vast unexploited wood supply. Although Russia is
expected to remain the number one wood exporter to China, U.S. wood
exports to China also are expected to increase because: 1) good credit;
2) strong Chinese demand which is driven by increasing exports of
manufactured wood products; and, 3) a 20-25 percent reduction of
Indonesia's lumber exports. This reduction is expected because the
Indonesian government has taken strict measures to reduce illegal
logging and the illegal wood trade. Also, the December 2004 tsunami
damaged Indonesia's transportation infrastructure, and, more
importantly, destroyed so many structures that need to be rebuilt that
strong domestic wood demand has left little for export. Tropical
hardwood lumber[^6] accounts for more than 70 percent of Indonesia's
total lumber exports to China. Most of Indonesia's tropical hardwood
lumber that is exported to China is used to produce flooring. The
shortfall of Indonesian lumber, together with strong demand, have driven
up the price of China's wood flooring by approximately 20 percent in the
first half of 2005 as compared to the same period in 2004.

Indonesia's loss could be U.S. exporters' gain, if U.S. exporters can
convince their Chinese buyers that U.S. temperate hardwoods[^7] are
suitable substitutes for Indonesian tropical hardwoods. In general,
Chinese buyers like U.S. hardwoods because of their good quality, and
reliable suppliers. Exporters of U.S. hardwoods will have to overcome
the high price of their product relative to other substitutes. Many
Chinese consumers cannot afford products made from U.S. hardwoods. This
is why many of those products are re-exported.

China's wood imports from other major suppliers, including Malaysia,
Thailand, and Myanmar (Burma), are forecast to remain stable in the near
term. In the long term, however, they are expected to decrease because
these countries' past unsustainable forest management practices will
limit the supply.

A new fumigation facility, which will help increase exports of large
diameter logs from Alaska, is expected to be completed and operational
very shortly. Exporting these Alaska logs to China has been difficult
because fumigation facilities do not exist in the remote areas of Alaska
where these logs are harvested, so they would have to be fumigated in
Japan, which is costly. The new facility is located the southern
province of Fujian in the port of Putian Xiuyu. The project was approved
by China's General Administration of Quality Supervision, Inspection and
Quarantine (AQSIQ) in September 2004. This is the first and only
combined quarantine and treatment facility for imported timber. The
municipal government reportedly is eager to benefit from the economic
activity that the new facility brings to the area. It has promised to
simplity procedures for timber transportation and quarantine
certifications.

**China Lumber Imports January-April 2005**

> Unit: Cubic Meters

  -------------------- ------------ ------------ ------------ -------------
                       Russia       Thailand     Indonesia    United States

  Lumber               342,885      284,235      242,612      241,010

  -Hardwood Lumber     52,003       284,235      241,879      229,713

  \- Tropical Hardwood 240          283,223      238,064      3,099

  \- Temperate         51,763       1,012        3,815        226,614
  Hardwood                                                    

  -Softwood Lumber     290,882      0            733          11,297
  -------------------- ------------ ------------ ------------ -------------

**China Lumber Imports 2004**

> Unit: Cubic Meters

  -------------------- ------------ ------------ ------------ -------------
                       Indonesia    Thailand     Russia       United States

  Lumber               961,959      834,656      799,126      782,409

  -Hardwood Lumber     940,684      834,608      150,423      718,273

  \- Tropical Hardwood 942,525      828,642      135          15,649

  \- Temperate         19,251       5,966        150,288      702,624
  Hardwood                                                    

  -Softwood Lumber     2,024        48           648,703      64,136
  -------------------- ------------ ------------ ------------ -------------

## Competition

As of January 2005, Russia replaced Indonesia to be the largest lumber
supplier (by volume) to China and the growth of these exports is
expected to continue into the foreseeable future. They compete with U.S.
hardwood exports in the furniture manufacturing and interior decoration
sectors. Russian hardwood is very competitive because of its low price,
which in turn is the result of low raw materials cost, low
transportation costs, and the preferential tax treatment enjoyed by
Russian wood exports to China. Although in June 2004 China's State
Administration of Taxation released a notice that eliminated the "double
rebate" [^8] (See Appendix 1 for an unofficial translation of the
notice), Post's sources have indicated that it has not been eliminated
and that border trade still is granted preferable tax policies - "half
duty and half Value Added Tax (VAT)". According to local Customs
statistics, about 90 percent of Russia's logs and 70 percent of its
lumber enter China through border trade. The other 30 percent of Russian
lumber is exported by ship directly to South China, primarily to the
Changjiang Delta and Pearl River Delta regions, which is the heart of
China's furniture manufacturing region.

Russia has actively promoted its forest products in China, both through
government to private industry efforts. Sino-Russian cooperation in the
forest products market is mutually beneficial because China has skilled
workers, idle machinery [^9], and a large market and Russia has vast
forest resources. These natural synergies, together with improvements in
Russian lumber production capacity, are expected to keep Russia as a
formidable competitor to U.S. exporters into the foreseeable future.

## Policy

On January 1, 2005, China's Ministry of Commerce released a voluntary
industry standard -- "Commercial Wood & Products Mark." It entered into
force in August 2004. Although it currently is a voluntary standard,
some industry sources expect it will become a mandatory standard. The
standard requires the mark to include the name, species, grade,
moisture, and other factors (See Appendix 2 for unofficial translation
of the document). The standard was drafted by the China Wood
Preservation Center.

# 

See the Production section above for details on China's forestry
production policies.

# Market Segment Analysis

## Construction Sector

The construction sector is the largest wood consumer in China. Based on
industry sources, Post estimates this sector consumed 80 million cubic
meters (round wood equivalent) of wood in 2004, or 60 percent of China's
total wood supply (excluding imported paper and pulp). Within the
construction sector, the three sub-sectors that account for the most
U.S. wood consumption are interior decoration (including flooring),
which uses primarily hardwoods, wood frame building, and outdoor
landscaping materials. The latter two sub-sectors consume mostly
softwoods.

### Overview

China's marketable housing[^10] starts in 2005 are estimated to increase
about 5 percent to 630 million square meters from 604 million square
meters in 2004. The latter consisted of 479 million m2 residential
starts and 125 million m2 commercial starts. Post is forecasting this
modest growth rate because it expects the measures taken by the Chinese
government to cool the overheated real estate sector will have their
desired effect. These measures include increasing the interest rate for
home loans and collecting higher business taxes on the housing industry.
The government is concerned that speculation in the market is driving
housing prices up beyond the reach of too many consumers, which could
lead to social unrest and damage the economy as a whole. The housing
market in Shanghai has witnessed the highest growth rate of anywhere in
China. Please refer GAIN CH4826 for more information on Shanghai's
housing sector, which is available at:

<http://www.fas.usda.gov/gainfiles/200410/146117843.pdf>

The Olympic Games, World Expo, China's continued urbanization process,
development projects in China's Western region, and the revival of
China's northeast industrial base will continue to drive China's
construction sector.

These reasons for future construction growth notwithstanding, it should
be noted that China's long-term national construction debt in 2005
decreased to RMB80 billion from RMB110 billion in 2004.

### Marketing

*Hardwoods:* U.S. hardwoods are widely used for interior decoration
because of their beautiful color, texture, and desirable grain patterns.
In most cases, manufacturers use U.S. hardwoods only as a facing
material or veneer because solid wood is too expensive. U.S. walnut, for
example, is very popular in China. However, very little solid walnut is
used for flooring. Most of what is sold in walnut-faced wood flooring.
Cities with higher incomes, such as Shanghai, Beijing, Guangzhou,
Shenzhen, Hangzhou, Nanjing, and Suzhou, present the best market
opportunities for U.S. hardwood exporters.

U.S. exporters are encouraged to contact the American Hardwood Export
Council in Hong Kong or Shanghai for assistance in exporting U.S.
hardwoods to China.

*Softwoods:* With more and more affluent people in China, demand for
villas, town houses, and other high-end housing is increasing. This
presents market opportunities for U.S. softwoods in the form of wood
framing and outdoor landscape timber. The hot sales of Beijing's first
wood frame villas indicates that the potential market demand for wood
frame housing may be more than many experts expected.

Several niche markets for U.S. softwoods have developed over the past
several years. China's first wood frame bridge indicates a new market
opportunity for U.S. softwood products. The 33 meter glued laminated
timber (glulam) bridge was built by the Engineered Wood Association
(APA) in Sheshan, Shanghai. The American Forest & Paper Association
(AF&PA), which is the largest U.S. forestry association, also supported
the project. It has also actively promoted the use of U.S. wood for
walkways in several of China's public parks. U.S. exporters are
encouraged to contact AF&PA's Beijing office for detailed marketing
information at telephone: +(86 10) 8526-3150; fax: +(86 10) 8526-3151

For general information about export opportunities for both hardwoods
and softwoods, U.S. exporters can also contact USDA/FAS's Agricultural
Trade Offices in Beijing (<atobeijing@usda.gov>), Shanghai
(<atoshanghai@usda.gov>), and Guangzhou (<atoguangzhou@usda.gov>).

### Policy 

China is actively developing new architectural technologies and
establishing standards for energy-saving buildings. Industry sources
indicate that these technologies and standards will use more wood
products to improve energy efficiencies in buildings. Given China's
limited forest resources and limited knowledge of wood architectural
technologies, these changes may present opportunities for the U.S. wood
building industry to expand in China.

### Trade

Canada is one of the biggest and most effective competitors to U.S.
softwoods in the Chinese market, especially in the wood frame
construction sector. It has actively promoted its wood frame housing
technology in China. The British Columbia provincial government funded a
demonstration project named Dream Home Canada (DHC) in Shanghai. The 888
square meter-building features advanced wood technology, architecture
and wide application of solid wood. DHC also offers training to Shanghai
builders, architects, engineers, and traders. Canada also built a
demonstration home cooperating with Chinese Academy of Forestry in
Beijing. In addition to Canada, New Zealand also actively promotes its
wood structural products in China. After Canada's success with its DHC
project, New Zealand will also build a demonstration wood-frame house in
Shanghai.

### Construction Sector Strategic Indicator Table

  ------------------------------------------- --------- --------- --------
  **Construction Market**                                         

  **Country: China, People's Republic of**                        

  **Report Year:**                            2004      2005      2006

  Total Housing Starts (thousand units)       15,600    16,380    18,020

  \-- of which, wood frame (thousand units)   10        10        11

  \-- of which, steel, masonry, other         15,590    16,370    18,009
  materials (thousand units)                                      

  \-- of total starts, residential (thousand  14,118    14,825    16,305
  units)                                                          

  \-\-\-- of residential, single family       10,010    10,510    11,560
  (thousand units)\*                                              

  \-\-\-- of residential, multi-family        4,108     4,315     4,745
  (thousand units)                                                

  \-- of total starts, commercial (thousand   1,482     1,555     1,715
  units)                                                          
  ------------------------------------------- --------- --------- --------

\* All housing starts in China's rural area are classified as single
family.

## Furniture & Interiors Sector

### Production, Consumption & Marketing

China's furniture production is forecast to increase 20-30 percent in
2005 because of strong domestic demand and rapidly increasing exports.
Increasing consumers' income and more young families that are buying
their first home are driving the domestic demand growth.

Furniture made of natural materials, such as wood, bamboo, and rattan,
has become more popular in recent years because more people believe
natural products are healthier than man-made materials. Furniture made
from panel products is a more affordable alternative for many consumers
who like wood furniture, but cannot afford the relatively high price of
solid wood furniture.

Multi-functional furniture is welcomed in China's furniture market
because it is more flexible, functional, and space efficient. These
factors are important because the average Chinese apartment is small,
about 75 m2 by Western standards, so space is at a premium. For example,
a raised bed with storage space underneath maximizes floor space.
Furniture of simple design and neutral colors is expected to be the main
trend in furniture styles.\
\
Furniture is one of the largest consumers of imported U.S. hardwood in
China. However, a lot of furniture made of U.S. wood is exported to the
United States, not locally consumed. This is because U.S. wood furniture
is relatively expensive for most Chinese consumers.

Regarding the interiors sector, China's measures to limit speculation in
the housing sector could have the unintended effect of increasing demand
for U.S. hardwoods because buyers of homes as their primary residence
tend to spend more on interior decoration, including quality trim, than
buyers of homes for speculation or rental purposes.

### Trade

*Exports:* China's furniture exports are forecast to increase 20 percent
to US\$15 billion in 2006 compared to 2005. This increase is driven by
Chinese furniture producers' low production costs, especially labor. The
main destinations for Chinese furniture are the United States, Japan,
and Europe (mostly the United Kingdom and Germany.) Most of China's
exported furniture is produced according to foreign brands' custom
specifications. There are very few nationally recognized Chinese
furniture brands.

Looking several years into the future, Post expects the rate of growth
in China furniture exports will slow to a more sustainable rate than has
occurred in recent years. The political fallout of China's flood of
furniture exports may prompt Chinese officials to impose some form of
voluntary restraint, such as export tariffs, like they did for textiles,
rather than face the prospect of more anti-dumping cases.

China's tariffs on most furniture products (H.S. Code 9401, 9402, 9403,
not including 94012010, 94012090, and 94019011) were reduced to zero
since January 1, 2005.

*Imports:* Although China's total furniture imports, which include wood
and upholstered furniture, decreased about 20 percent in first four
months of 2005, imports of wooden furniture increased about 30 percent
during the same period. Europe is one of the main sources of China's
furniture imports. This increase occurred even though the Euro's
appreciation has increased the cost European furniture in China. This
increase is also surprising because some Chinese manufacturers cannot
export furniture to the United States at competitive prices because of
the U.S. antidumping duties and some of these producers are selling
their furniture in China and displacing European imports in China's
high-end furniture market.

Most of the decrease in total furniture imports can be attributed to the
decreased imports of motor vehicles seats (H.S. Code 940120), which are
considered furniture. The quantity fell from 94 million to 24 million.
The tariff on this category is 10 percent, not zero like many other
categories.

## Material Handling Industry

### 

### Overview

The material handling industry annually consumes about six million cubic
meters of wood in China, of which two million cubic meters go to wood
pallets. Wood packing is the major packing material for exporting large
and medium sized machinery and electrical products.

China's material handling industry is forecast to continue expanding in
the next few years due to China's booming trade and growing logistics
and express delivery industry. According to China's Ministry of
Communications, China\'s ports are expected to handle 100 million
standard containers by 2010 and that volume could even double by 2020.

This forecast growth does not mean the wood packing materials industry
will grow at the same rate. Although wood currently is one of the major
packing materials in China, its application is forecast to shrink as a
percentage of the total in the future because of the following
factors: 1) the Chinese government is encouraging the use of wood
substitutes to save its forest resources; 2) quarantine requirements for
wood packing material in international trade are becoming more
stringent; and, 3) wood substitutes, such as honeycomb boards, plastics,
and metal, are increasingly popular because they do not have the
quarantine requirements of wood packing material and still offer the
same functionality.

Given the high price of U.S. wood, and the low added value of wood
packing material, very little imported U.S. wood are used for wood
packing material.

### Policy

China released its new quarantine requirements on entry wood packing
material (WPM) in January 2005. It is scheduled to enter into force on
January 1, 2006. Please refer to GAIN Report CH5014 for detail
information of quarantine requirements on entry WPM, which is available
at <http://www.fas.usda.gov/gainfiles/200502/146118706.pdf>. Also see
Appendix 3 herein for details on proposed phytosanitary treatment
measures.

# Statistics Tables

Table 1. Softwood Logs PS&D Table

+---------------+--------+--------+--------+--------+--------+--------+
| ####          | **     |        |        |        |        |        |
| ##### Country | China, |        |        |        |        |        |
|  {#country-1} | P      |        |        |        |        |        |
|               | eoples |        |        |        |        |        |
|               | Re     |        |        |        |        |        |
|               | public |        |        |        |        |        |
|               | of**   |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Commodity** | **So   |        |        |        | 1000   |        |
|               | ftwood |        |        |        | CUBIC  |        |
|               | Logs** |        |        |        | METERS |        |
+---------------+--------+--------+--------+--------+--------+--------+
|               | 2004   | R      | 2005   | Es     | 2006   | Fo     |
|               |        | evised |        | timate |        | recast |
+---------------+--------+--------+--------+--------+--------+--------+
|               | USDA   | Post   | USDA   | Post   | USDA   | Post   |
|               | Of     | Es     | Of     | Es     | Of     | Es     |
|               | ficial | timate | ficial | timate | ficial | timate |
|               | \      | \      | \      | \      | \      | \      |
|               | [Old\] | [New\] | [Old\] | [New\] | [Old\] | [New\] |
+---------------+--------+--------+--------+--------+--------+--------+
| **Market Year |        | 0      |        | 0      |        | 0      |
| Begin**       |        | 1/2004 |        | 1/2005 |        | 1/2006 |
+---------------+--------+--------+--------+--------+--------+--------+
| Production    | 29760  | 19681  | 32736  | 20665  | 0      | 21700  |
+---------------+--------+--------+--------+--------+--------+--------+
| Imports       | 11920  | 15961  | 13112  | 16760  | 0      | 17600  |
+---------------+--------+--------+--------+--------+--------+--------+
| TOTAL SUPPLY  | 41680  | 35642  | 45848  | 37425  | 0      | 39300  |
+---------------+--------+--------+--------+--------+--------+--------+
| Exports       | 1      | 0      | 1      | 0      | 0      | 0      |
+---------------+--------+--------+--------+--------+--------+--------+
| Domestic      | 41679  | 35642  | 45847  | 37425  | 0      | 39300  |
| Consumption   |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| TOTAL         | 41680  | 35642  | 45848  | 37425  | 0      | 39300  |
| DISTRIBUTION  |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+

Table 2. Temperate Hardwood Logs PS&D Table

  ---------------- ------------- ---------- ---------- ---------- ---------- ----------
  **Country**      **China,                                                  
                   Peoples                                                   
                   Republic of**                                             

  **Commodity**    **Temperate                                    1000 CUBIC 
                   Hardwood                                       METERS     
                   Logs**                                                    

                   2004          Revised    2005       Estimate   2006       Forecast

                   USDA Official Post       USDA       Post       USDA       Post
                   \[Old\]       Estimate   Official   Estimate   Official   Estimate
                                 \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                  01/2004               01/2005               01/2006
  Begin**                                                                    

  Production       13740         24700      14840      25935      0          27230

  Imports          7120          3298       7832       3465       0          3640

  TOTAL SUPPLY     20860         27998      22672      29400      0          30870

  Exports          8             6          8          5          0          5

  Domestic         20852         27992      22664      29395      0          30865
  Consumption                                                                

  TOTAL            20860         27998      22672      29400      0          30870
  DISTRIBUTION                                                               
  ---------------- ------------- ---------- ---------- ---------- ---------- ----------

Table 3. Tropical Hardwood Logs PS&D Table

  ---------------- ------------ ---------- ---------- ---------- ---------- ----------
  **Country**      **China,                                                 
                   Peoples                                                  
                   Republic                                                 
                   of**                                                     

  **Commodity**    **Tropical                                    1000 CUBIC 
                   Hardwood                                      METERS     
                   Logs**                                                   

                   2004         Revised    2005       Estimate   2006       Forecast

                   USDA         Post       USDA       Post       USDA       Post
                   Official     Estimate   Official   Estimate   Official   Estimate
                   \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                 01/2004               01/2005               01/2006
  Begin**                                                                   

  Production       2290         2740       2520       2880       0          3025

  Imports          2990         6984       3440       7335       0          7700

  TOTAL SUPPLY     5280         9724       5960       10215      0          10725

  Exports          0            0          0          0          0          0

  Domestic         5280         9724       5960       10215      0          10725
  Consumption                                                               

  TOTAL            5280         9724       5960       10215      0          10725
  DISTRIBUTION                                                              
  ---------------- ------------ ---------- ---------- ---------- ---------- ----------

Table 4. Softwood Lumber PS&D Table

  ---------------- ------------ ---------- ---------- ---------- ---------- ----------
  **Country**      **China,                                                 
                   Peoples                                                  
                   Republic                                                 
                   of**                                                     

  **Commodity**    **Softwood                                    1000 CUBIC 
                   Lumber**                                      METERS     

                   2004         Revised    2005       Estimate   2006       Forecast

                   USDA         Post       USDA       Post       USDA       Post
                   Official     Estimate   Official   Estimate   Official   Estimate
                   \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                 01/2004               01/2005               01/2006
  Begin**                                                                   

  Production       8450         6425       10980      7710       0          9250

  Imports          1190         1700       1370       1870       0          2060

  TOTAL SUPPLY     9640         8125       12350      9580       0          11310

  Exports          0            187        0          180        0          180

  Domestic         9640         7938       12350      9400       0          11130
  Consumption                                                               

  TOTAL            9640         8125       12350      9580       0          11310
  DISTRIBUTION                                                              
  ---------------- ------------ ---------- ---------- ---------- ---------- ----------

Table 5. Temperate Hardwood Lumber PS&D Table

  ---------------- ------------- ---------- ---------- ---------- ---------- ----------
  **Country**      **China,                                                  
                   Peoples                                                   
                   Republic of**                                             

  **Commodity**    **Temperate                                    1000 CUBIC 
                   Hardwood                                       METERS     
                   Lumber**                                                  

                   2004          Revised    2005       Estimate   2006       Forecast

                   USDA Official Post       USDA       Post       USDA       Post
                   \[Old\]       Estimate   Official   Estimate   Official   Estimate
                                 \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                  01/2004               01/2005               01/2006
  Begin**                                                                    

  Production       4930          7850       6400       9420       0          11300

  Imports          3055          1395       3300       1535       0          1690

  TOTAL SUPPLY     7985          9245       9700       10955      0          12990

  Exports          350           274        380        300        0          320

  Domestic         7635          8971       9320       10655      0          12670
  Consumption                                                                

  TOTAL            7985          9245       9700       10955      0          12990
  DISTRIBUTION                                                               
  ---------------- ------------- ---------- ---------- ---------- ---------- ----------

Table 6. Tropical Hardwood Lumber PS&D Table

  ---------------- ------------ ---------- ---------- ---------- ---------- ----------
  **Country**      **China,                                                 
                   Peoples                                                  
                   Republic                                                 
                   of**                                                     

  **Commodity**    **Tropical                                    1000 CUBIC 
                   Hardwood                                      METERS     
                   Lumber**                                                 

                   2004         Revised    2005       Estimate   2006       Forecast

                   USDA         Post       USDA       Post       USDA       Post
                   Official     Estimate   Official   Estimate   Official   Estimate
                   \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                 01/2004               01/2005               01/2006
  Begin**                                                                   

  Production       705          1050       910        1260       0          1510

  Imports          1380         2909       1650       3200       0          3520

  TOTAL SUPPLY     2085         3959       2560       4460       0          5030

  Exports          10           11         10         10         0          10

  Domestic         2075         3948       2550       4450       0          5020
  Consumption                                                               

  TOTAL            2085         3959       2560       4460       0          5030
  DISTRIBUTION                                                              
  ---------------- ------------ ---------- ---------- ---------- ---------- ----------

Table 7. Softwood Plywood PS&D Table

  ---------------- ------------ ---------- ---------- ---------- ---------- ----------
  **Country**      **China,                                                 
                   Peoples                                                  
                   Republic                                                 
                   of**                                                     

  **Commodity**    **Softwood                                    1000 CUBIC 
                   Plywood**                                     METERS     

                   2004         Revised    2005       Estimate   2006       Forecast

                   USDA         Post       USDA       Post       USDA       Post
                   Official     Estimate   Official   Estimate   Official   Estimate
                   \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                 01/2004               01/2005               01/2006
  Begin**                                                                   

  Production       3780         3148       4725       3620       0          4165

  Imports          230          279        280        295        0          310

  TOTAL SUPPLY     4010         3427       5005       3915       0          4475

  Exports          1100         2368       1200       2600       0          2860

  Domestic         2910         1059       3805       1315       0          1615
  Consumption                                                               

  TOTAL            4010         3427       5005       3915       0          4475
  DISTRIBUTION                                                              
  ---------------- ------------ ---------- ---------- ---------- ---------- ----------

# Appendix 1 Notice on Forbidding the "Double Rebate" Policy on Border trade

**Public Notice on Strictly Complying by the Taxation Laws, Forbidding
the**

**"Double Rebate" Policy on Border Trade**

No. 830 \[2004\] of the notice of State Administration of Taxation

June 21, 2004

Heilongjiang, Jilin, Liaoning, Inner Mongolia, Ganxu, Xinjiang, Guangxi,
Yunnan Taxation Bureau:

To encourage the development of border trade, Central Government applied
preferential policy of Half VAT Collection to the goods imported under
border trade. However, in some regions, the VAT rebate was not according
to the actual amount indicated by the Customs documents, but "Double
Rebate". The "Double Rebate" disobeyed the current VAT collection
policy, injured the integrity and severity of the Taxation System, and
brought hidden trouble to the tax collection. The "Double Rebate" was
also very easily to induce the crime of tax dodging and evasion,
therefore, it must be totally forbidden and corrected. It is hereby
restated as below:

1.  In accordance with the regulations of Article three and Article 13
    of the Law of People's Republic of China on Tax Collection
    Management, taxation departments at different levels should strictly
    comply with the current tax collecting laws and regulations,
    constituting taxation policies without authorization is not allowed.
    The taxation departments should not implement the decisions made by
    other departments, organizations or individuals, which are conflict
    with the current tax collection laws and administrative laws. And
    the taxation departments should report to the superior departments.
    Those organizations or individuals who disobey the regulation and
    implement incorrectly without authorization should be found out
    their responsibilities according to related regulations.

2.  The taxation departments at different levels and region should
    overall inspect the operation of import VAT rebate, and cease the
    "Double Rebate" policy immediately. The reduced and remitted VAT
    during importing could not be rebated in next stage.

3.  The State Administration of Taxation will inspect the VAT rebate
    operation in the border trade region irregularly. The "Double
    Rebate" and other irregular management would be seriously punished.

It is hereby announced.

# Appendix 2 Mark of Wood and Wood Products in Trade

######## SB

Domestic Trade Industry Standard of the People\'s Republic of China

**SB/T** 10383-2004

**Mark of wood and wood products in trading**

Issued on 2004-08-04　　 Executed on 2005-01-01

Issued by Ministry of Commerce, the People\'s Republic of China

**SB/T** 10383-2004

##### 

Foreword

This standard mainly stipulates the contents and use method of mark of
wood and wood products in trading. To avoid repetition in the standard,
contents for general mark are included in general stipulations and those
for special mark are listed separately. Considering the great variety of
wood products, this standard can be referenced for the wood products
uncovered hereby.

This standard was proposed by Ministry of Commerce, the People\'s
Republic of China.

This standard was drawn up by Wood Saving and Development Center.

This standard mainly drafted by Yu Xiqiu, Tao Yiming, Ma Shouhua, Hao
Lihua, Chen Zhimin, Wang Hongli, Zhang Xizhong.

This standard was entrusted to Wood Saving and Development Center for
interpretation.

**SB/T** 10383-2004

###### Mark of Wood and Wood Products in Trading

1 Scope

This standard stipulates the contents and use method of mark of wood and
wood products in trading.

The wood and wood products in trading referred to in this standard
include such wood materials as raw log, saw timber, artificial board as
well as semi-finished products and finished products made from mountain
wood materials.

This standard shall be applicable to the production, distribution,
storage and transportation, quality inspection and use of wood and wood
products in trading.

2 Normative Reference Documents

The following standards contain provisions which, through reference in
this text, constitute provisions of this standard. For dated reference,
subsequent amendments (not including text corrections) or revisions of,
any of these publications are not applicable to this standards. However,
all parties of agreement based on this standard are encouraged to
discuss if the latest version of those documents are applicable. All the
latest editions of the referenced documents without date indication are
applicable to this standard.

> GB/T 4822-1999 Saw timber inspection
>
> GB/T 4897.1---2003 Chipboard, common requirements for all types
>
> GB/T 5849 ―1999 Lumbercore plywood
>
> GB/T 9846.7-1988 Plywood, mark, package, transport and storage of
> ordinary plywood
>
> GB/T 11917-1989 Terminology of wood making process
>
> GB/T 12626.2-1990 Hardboard technical requirements
>
> GB/T 14019-1992 Terminology of wood preservation
>
> GB/T 14732-1993 Urea formaldehyde, phenolic aldehyde and melamine
> formaldehyde resin used in adhesives for wood industry
>
> GB/T 15035-1994 Terminology of wood drying
>
> GB/T 15787-1995 Terminology of raw log inspection
>
> GB/T 16734-1997 Names of wood in China
>
> GB/T 18107-2000 Redwood
>
> GB/T 18513-2001 Names of wood imported to China
>
> GB 18580 Interior decoration materials, Limit of formaldehyde emission
> from artificial board and its products
>
> GB 18584 Interior decoration materials, Limit of harmful substances in
> wood furniture
>
> LY/T 1280-1998 Terminoloty of adhensives in wood industry
>
> LY/T 1511-2002 Raw log Mark Label
>
> LY/T 1580-2000 Directional chipboard

**3. Terminology and Definitions**

The terminology and definitions in GB/T 11917-1989, GB/T 14019-1992,GB/T
15035-1994, GB/T 15787-1995,LY/T 1280-1998 shall be applicable to this
standard.

**4. Mark Contents**

**4.1 General provisions**

**4.1.1 Tree species**

Wood and wood products in trading shall be identified with tree species
in both Chinese and Latin languages.

The names of domestic tree species shall conform to GB/T 16734-1997,
that of imported tree species to GB/T 18513-2001, and that of redwood to
GB/T 18107-2000. The names of tree species not stipulated herein shall
be in Latin language.

Wood products made from materials of several tree species shall be
marked with the name of main materials.

**SB/T** 10383-2004

**4.1.2 Product name and trade marks**

Wood and wood products in trading shall be indicated with normalized
product names (title) and trademarks in Chinese. Using commodity names
shall not be allowed.

**4.1.3 Grade symbols**

Grade symbols for wood and wood products in trading shall conform to the
corresponding product quality grades (See Table 1):

**Table 1 Grade S**ymbols

  -------- --------- --------- ----------- -------- -------- -------- --------
  Grade    Super     High      Qualified   Grade 1  Grade 2  Grade 3  Off
           quality   quality                                          grade

  Symbol   Super     High      Qualified                              
  -------- --------- --------- ----------- -------- -------- -------- --------

**4.1.4 Measuring unit**

For wood and wood products in trading, legal measuring units shall be
used.

**4.1.5 Producers （factory or plant）**

Wood and wood products in trading shall be stated with the full name of
producer (factory or plant), or the ID code or bar code of producer.

**4.1.6 Production date**

Wood and wood products in trading shall be marked with production date
in Arabic numbers.

**4.1.7 Moisture content**

Wood and wood products in trading through drying processing shall be
indicated with moisture content ex-work.

**4.1.8 Processing method**

Wood and wood products in trading processed with chemicals shall be
indicated with the name of chemicals used in Chinese or English.

**4.1.9 Mark of quality inspection authority**

Wood and wood products in trading passed through quality inspection
shall be marked with the full name of the quality inspection authority
in Chinese, or with the ID code or bar code of the trademark of the
authority.

**4.1.10 Certification mark**

Wood and wood products in trading passed through certification shall,
within the validity period, be marked with the corresponding mark of
certification.

**4.1.11 Points for attention**

Wood and wood products in trading subject to decay, inflammation,
damage, molding or dangerous to environment and human health shall be
indicated with points for attention in transportation and storage,
processing, use and disposal after use. For wood and wood products that
are complicated in performance, structure and usage, or uneasy in
installation and use, detailed instructions of installation, maintenance
and use shall be provided as stipulated by national standards, industry
standards and provincial standards.

**4.2 Mark for raw log**

The diameter, length, grade, species and code of raw log shall conform
to the stipulations of LY/T 1511-2002.

**4.3 Saw timber**

**4.3.1 Specifications**

Saw timber shall be marked with the length, width and thickness in
Arabic numbers and conform to the stipulations of GB/T 4822-1999.

**4.3.2 Grade**

Saw timber shall be marked with the grade in Chinese or grade symbol and
conform to the stipulations of GB/T 4822-1999.

**4.4 Mark of artificial board**

**4.4.1 Applicable varieties**

Mark of artificial board is applicable to such decorative boards as
plywood, hardboard, chipboard (including OSB) and Lumbercore plywood.

**SB/T** 10383-2004

**4.4.2 Specifications**

The length, width and thickness of artificial board shall be indicated
in Arabic number in mm.

**4.4.3 Grade**

The grade of artificial board shall be marked in Chinese or grade symbol
as stipulated in the standard and conform to the stipulations of GB/T
9846.7-1988, GB/T 12626.2-1990, GB/T 4897.1-2003, LY/T 1580-2000, GB/T
5849-1999.

**4.4.4 Adhesives**

Artificial board shall be indicated with name of adhesives used in
production in Chinese and English and conform to the stipulations of
GB/T 14732-1993 and LY/T 1280-1998.

**4.4.5 Limit of formaldehyde emission and executive standard**

Artificial board shall be indicated with the limit of formaldehyde
emission and executive standard and conform to the stipulations of GB
18580.

**4.5 Mark of wood products**

**4.5.1 Applicable varieties**

Mark of wood products is applicable to finger jointed lumber, laminated
lumber, solid wood flooring, solid wood compound flooring, varnished
wood pressboard flooring, wood structure, wood molding, sleeper, mine
timber, wood electric pole, furniture, doors and windows, fishing boats,
stationery, toys, chopsticks, toothpicks, etc.

**4.5.2 Specifications**

Wood products shall be marked with specifications for the respect type
in general dimensions.

**4.5.3 Grade**

Wood products shall be marked with the quality grade and conform to the
inspection by quality inspection authorities in Chinese or in unified
symbols.

**4.5.4 Limit of harmful substances**

Wood products shall be indicated with content of harmful substances and
conform to the stipulations in GB 18584.

**4.5.5 Producer's address and contact method**

For wood products for direct use such as furniture, doors and windows,
floors, fishing boats, stationery, toys, chopsticks, toothpicks, etc.,
producer's detailed address, postcode and telephone number shall be
marked.

**5. Mark Indicate Method**

**5.1** Mark of wood and wood products in trading shall be indicated in
the way based on the type of the product mark with precondition that the
product quality and use are not affected.

**5.2** Mark of wood and wood products in trading can be indicated in
such forms as nameplate, label and stamp. Their shape and size shall
conform to the relevant standards. Those with no stipulated standards
may be determined according to their size of products.

**5.3** Mark of wood and wood products in trading shall use standardized
Chinese characters. Bar codes shall conform to the national standard of
bar code for commodities. The height of characters, numbers and letters
shall be not less than 1.8 mm.

**6 Use of Mark**

**6.1** Mark of wood and wood products in trading shall be shown in a
visible place without affecting the product quality and use.

**6.2** Mark on raw log shall be made on the sectional side or on the
log body near one end.

**6.3** Mark on saw lumber shall be made on the sectional side or on the
log body near one end.

**6.4** Mark on artificial board shall be made on the end surface or on
the back side.

**6.5** Wood and wood products for market retailing shall have the mark
shown in a visible part of the product, provided the appearance and use
of the product are not affected. With consent by the buyer, wood and
wood products for whole sale and direct use in production and processing
can use the mark on the sample of the same kind of products, or indicate
the mark content as stipulated in this standard in contract or product
instructions.

**6.6** Wood and wood products with external package shall indicate the
mark on a visible position in the external package. For those having no
package, being small in size or unsuitable for bearing the mark, mark
shall be shown in instructions or on a sign at the stack.

------------------

# Appendix 3 Phytosanitary Treatment Measures for Entry WPM

NO. 32 Notice

**By the General Administration of Quality Supervision, Inspection and
Quarantine (AQSIQ)**

**(February 22, 2005)**

In order to prevent the introduction of harmful forest organisms into
the People's Republic of China that are associated with the entry of
wood packing material and to protect domestic forests, the ecological
environment, and tourism resources, in accordance with the Law of the
People's Republic of China on Entry and Exit Animal and Plant Quarantine
and with reference to the International Standards for Phytosanitary
Measures Publication No. 15 of the International Plant Protection
Convention (IPPC) "Guidelines for Regulating Wood Packing Material in
International Trade," AQSIQ,

the Customs General Administration, the Ministry of Commerce and the
State Forestry Administration released the No. 11 Joint Announcement
2005. The Announcement claims that the entry cargo wood packing should
be subject to phytosanitary treatment in exporting countries or
territories and be issued special mark. Hereby release the requirements
for wood packing phytosanitary treatment measures and marks as
following:

I. Quarantine Phytosanitary Treatment Measures

1.  Heat Treatment (HT)

    1.  The wood packing material must achieve a minimum wood core
        temperature of 56°C for a minimum of 30 minutes.

    2.  Kiln drying (KD), chemical pressure impregnation (CPI) or other
        treatments may be considered to the extent that these can meet
        the HT specifications. For example, CPI may meet the HT
        specification through use of steam, hot water, or dry heat.

2.  Methyl Bromide (MB) Fumigating Treatment

    1.  The wood packing material shall be treated as per the below
        criteria at normal atmospheric pressure:

+-----------+-----------+-----------+-----------+-----------+-----------+
| Te        | Dosage    | Minimum   |           |           |           |
| mperature | rate      | conc      |           |           |           |
|           |           | entration |           |           |           |
|           | (g/m3)    | (g/m3) at |           |           |           |
+-----------+-----------+-----------+-----------+-----------+-----------+
|           |           | 0.5 hour  | 2 hours   | 4 hours   | 16 hours  |
+-----------+-----------+-----------+-----------+-----------+-----------+
| ≥21°C     | 48        | 36        | 24        | 17        | 14        |
+-----------+-----------+-----------+-----------+-----------+-----------+
| ≥16°C     | 56        | 42        | 28        | 20        | 17        |
+-----------+-----------+-----------+-----------+-----------+-----------+
| ≥11°C     | 64        | 48        | 32        | 22        | 19        |
+-----------+-----------+-----------+-----------+-----------+-----------+

2.  The minimum temperature should be no lower than 10°C, and the
    minimum fumigating time should be no less than 16 hours.

3.  Coniferous wood packing from Pine Wood Nematode (PWN) infected
    countries/ territories should be subject to MB fumigating treatment
    according to the following requirements temporally.

+---------------------+---------------------+-------------------------+
| Temperature         | MB Dosage           | Minimum concentration   |
|                     |                     | (g/m3) in 24 hours      |
|                     | (g/m3)              |                         |
+---------------------+---------------------+-------------------------+
| ≥21°C               | 48                  | 24                      |
+---------------------+---------------------+-------------------------+
| ≥16°C               | 56                  | 28                      |
+---------------------+---------------------+-------------------------+
| ≥11°C               | 64                  | 32                      |
+---------------------+---------------------+-------------------------+
| Note: The minimum   |                     |                         |
| temperature should  |                     |                         |
| be no lower than    |                     |                         |
| 10°C, and the       |                     |                         |
| minimum fumigating  |                     |                         |
| time should be no   |                     |                         |
| less than 24 hours. |                     |                         |
| The PWN infected    |                     |                         |
| areas include:      |                     |                         |
| Japan, the United   |                     |                         |
| States, Canada,     |                     |                         |
| Mexico, South       |                     |                         |
| Korea, Portugal,    |                     |                         |
| China Taiwan and    |                     |                         |
| Hong Kong.          |                     |                         |
+---------------------+---------------------+-------------------------+

> After IPPC amends its MB fumigation standard, China will implement the
> new standard.

3.  Other phytosanitary treatments recognized by International Standards
    for Phytosanitary Measures or accepted by AQSIQ.

4.  Based on the Pest Risk Analysis, AQSIA may request export countries
    or territories to take other pest-removal measures when the above
    phytosanitary treatment measures cannot effectively kill the harmful
    organisms cared by China.

II\. Requirements for mark

1\. Sample of marking

![](media/image2.png){width="5.000694444444444in"
height="1.7694444444444444in"}

Where:

> IPPC ------ Abbreviation of "International Plant Protection
> Convention";
>
> XX ------International Standardization Organization (ISO) two letter
> country code;
>
> 000 ------Wood packing producing enterprise code approved by official
> plant quarantine authorizations in export counties or territories;
>
> YY ------ The phytosanitary treatment measures, Methyl Bromide
> Fumigating -- MB, Heat Treatment -- HT;

2.  Official plant quarantine authorizations in export
    counties/territories or wood packing producing enterprise may
    provide other information on request, for example, DB means
    debarking.

3.  The mark should be placed in a visible location of wood packing,
    preferably on at least two opposite sides. The mark should be
    legible, permanent and not transferable.

> 4\. The use of red or orange should be avoided.

[^1]: The provincial level forestry department determines what qualifies
    as a certain size.

[^2]: According to the Forest Law of the People's Republic of China, a
    county is the legal unit when developing a private forest logging
    quota. The new policy qualifies the forest manager (above a certain
    size) to be an independent unit to develop the quota. State Forestry
    Administration collects quotas from all units, adjusts according to
    local forest resources, and submits to the State Council.

[^3]: ^1^ It comes from 75 (million cubic meters of over-quota logging)
    \*0.8 (20 percent for fuelwood) \* 0.65 (yield percentage).

[^4]: ^1^ H.S. Code 4403

[^5]: ^2^ H.S. Code 4407

[^6]: H.S. Code 440724, 440725, 440726, 440729, and part of 44079990

[^7]: Oak, maple and cherry are the major flooring species from the
    United States used in China

[^8]: ^1^ "Double rebate", for example, Russia logs importers only need
    to pay 6.5 percent of imports value as VAT according to border trade
    policies. However, they can get 13 percent VAT rebate after selling
    logs.

[^9]: ^2^ Especially in Northeast China because of the significant
    reduction of China's domestic timber production after China's
    implemented it Natural Forest Protection Program.

[^10]: ^1^ Not including farmers' self-constructed homes. Very few of
    these houses will use U.S. wood.