Chinese Timber Dynamics

I had a couple of conversations with friends from China recently. One of the key outcomes is that China is facing a structural wood fibre deficit and is growing, given the rapid expansion of China’s urban population, which will translate into ongoing strong demand for housing and wood products. What is more, the Chinese government plans on moving 300 million rural people into the cities. China relies on imports for roughly 20% of its industrial round-wood requirements while imported lumber and plywood account for more than 40% of China’s total consumption. In essence, China is roughly accounts for about one-third of the global log trade.

Reacting to the devastating Yangtze River floods of 1998, the Chinese government summarily banned timber harvesting in large areas of the country. While the ban has improved forestry management in China, the government now goes elsewhere for the wood it needs, accelerating timber poaching in other nations and becoming the main hub of a global network of trade of timber. Imports of industrial wood -- used in construction, furniture-making and pulp mills -- have more than tripled since 1993. According to the World Wildlife Fund (WWF), China's demand for imported industrial wood -- timber, paper and pulp -- will grow by at least 33 percent within the next five years, from the current 94 million cubic meters to 125 million cubic meters.

China now trails only the US in wood consumption and with the country's projected growth rates, China is sure to soon surpass the States and Japan to frontrunner status for consumption. According to The Economist, The small town of Nanxum near the port city of Zhangjiagang used to produce only small amounts of wooden floorboards up until about five years ago. Today, there are 500 floorboard factories and about 200 sawmills, which the EIA says together process one merbau log -- a type of sturdy tropical hardwood -- every minute of every work day.

The value of trade in commodity tropical timber products (logs, sawnwood, plywood and veneer) has dropped by almost a third since the early 1990s, that of higher-value (or "downstream") products such as doors, windows, furniture and joinery, has grown almost five-fold.

China's increasing imports more than offset steady declines in Japan, traditionally a major player in the tropical timber market. Japan's imports had fallen for several years due to its sluggish economy, competition from China for available log supplies, and its increasing reliance on softwood logs for plywood manufacture.