Removing Natural Forest From Timber Production: A New Challenge for the Development of Forest Industries in China
Authors: Heimo Claude René 
Published: June 2007

In spite of its impressive reforestation record which ranks China first in the world, China's forestry development program is still far from meeting the country's national economic and social development needs. With a total forest area of about 134 million hectares and a standing volume of 11.8 billion cubic meters, total forest resources are insufficient, and the natural forest resources available for harvesting are almost exhausted. Furthermore, forest management is too extensive and forest infrastructure development inadequate to meet the needs of modern forestry development. The heavy tax burden and complexity of the tax system remain major impediments to the full participation of farmers in sustainable forestry development and forest conservation activities. Property rights issues continue to be problematic as farmers are still uncomfortable with the often inconsistent and volatile policy changes. Furthermore, the structure, scale and pattern of forest industries are somewhat irrational, and enterprises still depend upon state support and are requested to take on heavy social burdens. The secondary and tertiary forest industries are seriously stagnant with low levels of processing efficiency.

All these factors have seriously damaged the structure and ecological functions of natural forests. Over the last 50 years,China's ecological environment has deteriorated at high speed and ecological disasters have occurred more frequently as all over China, the ability of forests to prevent erosion and conserve water has greatly decreased. Prompted by the floods in the reaches of the Yangtze River in August 1998, the Chinese goverment now clearly recognizes the importance of protecting natural forests. The reduction of natural forest resources and the deterioration of the ecological environment in the major watersheds are now both restricting the country's social and economic development. Consequently, conserving natural forests, banning the harvesting of natural forests in the upper and middle reaches of the main rivers, afforesting mountains and returning converted forestland to forestry are now listed as priorities for the government which launched the Natural Forest Conservation Program (NFCP), and as urgent tasks for the forest sector.

However, in a country with a population of 1.3 billion,improving the eco-environment and resolving the disparity between conservation and development will not be an easy task. Due to the implementation of the NFCP, China's timber supply deficit is expected to increase from 5 million m3 in 1997 to about 25 million m3 in 2003, thus further affecting domestic wood-processing enterprises as well as the availability of fuelwood and non-timber forest products in areas already prone to poverty. As a result, many State-owned forest enterprises may not survive in a competitive environment, which will be further boosted by trade liberalization induced by China's admission to the WTO.

The current shortage of timber alongside further trade liberalization measures should, however, provide a competitive opportunity for those enterprises investing in technologies which make use of the wood waste and engineered wood products that reduce the dependency on timber from natural forests. As a result, more research is needed to reshape China's forest product industry. It is essential to assess the conditions under which sustainable forestry, in tandem with adequate management and good business practices, can contribute to both the competitiveness of state forest enterprises and environmental conservation through lower production costs, product enhancement, environmental accountability (ethical standards),business redefinition and the ability to ensure longterm reliable, high quality sources of wood.