Report on the Analysis of Development of Forestry Industry and Wood Processing I

Since 1949, China has completed six national forest resources inventories. According to the result of the sixth forest resources inventory (1999-2003), there is 175 million hectares of forests, 13.618 billion of living trees accumulate, 12.456 billion cubic meters of forests accumulate, and 18.21% of forest coverage which is nearly 10% higher than 8.6% after the founding of new China. The forest area of China ranks the fifth in the world; the forests accumulate ranks the sixth in the world; the area of man-made forests is 53.2573 million hectares and ranks the first in the world.

On the whole, the status quo of forest resources in China is insufficient in total volume, low in quality and uneven in distributing. The forest coverage only amounts to 61.52% of the global average level 29.6%. The per capita forest area is 0.132 hectare, amounting to 22% of the global level 0.6 hectare. The per capita forests accumulate is 9.42 cubic meters, amounting to 14.58% of the global level 64.63 cubic meters. Among the existing forests, young-middle-aged forests take up a big percentage, the area and accumulate of which amount to 67.85% and 38.94% of the total area and accumulate respectively. In terms of geographic distribution, forests in the northeast and southwest region are more than other areas. The forest area and accumulate in six provinces (including Heilongjiang, Jilin, Inner Mongolia, Sichuan, Yunnan and Tibet) amount to 51.4% and 70% of national forest area and accumulate. However, forest resources in north China and the northwest region are relatively less, especially Xinjiang and Qinghai where the forest coverage is less than 5% (only 2.94% in Xinjiang).

With a view to consumption, China has become a big wood consuming country. With the economic development and improvement of living standard in China, the consumption of wood and wood products rapidly increases. The consumption of panel board, paper pulp and paper has ranked the second in the world. As to export, export volume of panel board, furniture and flooring also grow year after year, and China has become a global “wood processing base”. In general, commercial wood consumes approximately 190 million cubic meters of forest resources every year which amounts to 45% of total consumption of forest resources, but annual growth of wood available to cut is only over 100 million cubic meters and is short of demand.

In addition to the tight supply of wood, the snow disaster in the beginning of 2008 gave another big strike to the forestry industry in south China. 279 million mu of forests in 19 provinces, districts and cities (including Hunan, Guizhou, Jiangxi, Hubei, Anhui, Guangxi, Zhejiang, etc.) suffered the snow disaster; 1781 state-owned forest farms and 1200 nurseries were seriously hit; 30,000 nationally-protected wild animals were frozen to death or frostbitten. The forestry infrastructures were seriously damaged with a direct monetary loss of 57.3 billion yuan. Although the snow disaster had small impact on wood supply in 2008, most young-middle-aged forests were seriously destroyed which will definitely affect the wood supply in China in the next years and cause the forestry construction plan to be changed.

Furthermore, the sub-prime crisis in U.S. triggered a global financial crisis in 2008. Economic depression occurred in many countries with different extent, and economic development in major countries slowed down. Accordingly, the real estate industry entered a low tide period, and it was the same to the demand for various wood products such as panel board, flooring and furniture.

With a view to log export, Russia increased its export duty again and again in order to encourage wood deep-processing in Russia. Since April of 2008, Russia increased the log export duty to 25% and not less than 15 Euros per cubic meter and declared to increase it to 80% and not less than 50 Euros per cubic meter since January of 2009. Russia is the main wood exporting country to China, so the log import source of China is bound to change.

How will wood supply in China change confronted with so many events suddenly-occurred in 2008? And how will wood processing industry develop? What kind of change will happen to wood import source? We will make a comprehensive analysis and clear judgment to the future development of forestry industry and wood processing industry in China based on the analysis and review of forestry industry and wood processing industry in 2008 as well as the changes of policies. This will provide a reference for both foreign and domestic professionals who focus on forestry industry and wood processing industry in making their decisions.