227 International Forestry Review Vol. 6(3-4), 2004 Meeting China’s demand for forest products: an overview of import trends, ports of entry, and supplying countries, with emphasis on the Asia-Pacific region XIUFANG SUNz, E. KATSIGRIS and A. WHITE z Market Analyst, Forest Trends, 1050 Potomac Street NW, Washington, DC 20007, US Senior Director, Policy and Market Analysis, Forest Trends Email: [email protected], [email protected], and [email protected] SUMMARY This study analyzes trends in China’s forest product imports between 1997 and 2003 by both product segment and ports of entry. The same information is provided for each of the main Asia-Pacific countries supplying China. A high growth was experienced in China’s forest product imports between 1997 and 2003 in both timber products and pulp and paper. Logs, lumber, and pulp are the most rapidly growing import segments as China moves towards handling more of the processing of forest products itself. Forest-rich countries in the Asia-Pacific region are playing an increasingly important role in sup- plying China’s expanding demand. Ocean ports in the Shanghai-Jiangsu and South China regions have maintained their leading role in the forest product trade. These have been joined more recently, and in some cases surpassed, by inland ports in Northeast China, which have been catapulted to leading roles by the booming border trade with Russia. Keywords: China, forest product imports, Asia-Pacific, timber products, pulp and paper INTRODUCTION trade, in particular, is a recognized problem that has been addressed in a number of recent studies. These China’s flourishing economy, coupled with policy have used evidence from both discrepancies in trade constraints limiting domestic forest production, has statistics and on-the-ground investigations2. Expecta- resulted in a massive increase in forest product im- tions for China’s continued strong economic growth ports over the last several years. In a decade, China has suggest that the trends will continue, if not accelerate, moved from a ranking of seventh to second among all in coming years. Full diagnosis of the impacts, as well nations in total value of forest product imports and is as projections of import trends and identification of also now the leading importing country worldwide of opportunities for low-income producers to possibly 1 industrial round wood. benefit from this trade, require a much clearer pictu- This growing import demand is having major im- re of the flows of forest product imports into China pacts on forests and forest peoples in producer coun- than has been available to date. tries and is stimulating increases in illegal logging and This paper provides a brief overview of forest pro- deforestation. The link between illegal logging and duct import trends, by both product segment and port of entry, in addition to providing the same informa- 1 In 1990, China was ranked seventh among nations in forest tion for each of the main Asia-Pacific producer coun- product import value. By 2000, it was ranked second, with on- ly the US importing a greater total value of forest products. tries supplying China. Trends are identified primari- 3 Source of data: ,FAOSTAT Agricultural Data‘, Food and Agri- ly through use of official Chinese customs data . The culture Organization of the United Nations (FAO), 2004: Ac- paper is based on a more detailed analysis published cessed via http://faostat.fao.org/ on March 12, 2004. by Forest Trends and CIFOR and builds on recent 2 The ITTO has recently commissioned a number of trade dis- work by WWF and others4. The paper first describes crepancy studies, which provide details on the gap between the overall import trends and then describes trends import statistics of destination countries (e. g. China) and ex- by product segment. It next addresses trends in ports port statistics of supplier countries (e. g. Indonesia). Gaps are thought to be a result of product that is illegally harves- of entry and identifies major supplier countries. The ted in and/or smuggled out of the producer country. An im- roles of eight leading Asia-Pacific producer countries portant study that covers illegal logging more generally is currently involved in the China trade; Cambodia, In- FAO’s ,Law Compliance in the Forestry Sector: An Overview‘ donesia, Laos, Malaysia, Myanmar, Papua New Guinea, by Arnoldo Contreras-Hermosilla (2001). Other good sour- Russia, and Thailand, are then examined. These coun- ces include reports and briefings produced by the Environ- tries are home to some several million indigenous and mental Investigation Agency’s Forests for the World Pro- gramme (http://salvonet.com/eia/campaigns2_reports.shtml) other forest people as well as high concentrations of and www.globaltimber.org.uk. globally significant biodiversity (13 of 25 global biodi- Xiufang Sun et al. 228 versity hotspots are located in the region (World Bank The main drivers of these general trends in forest 2000, Operations Evaluation Department 2000)). product imports are China’s strong economic growth, her low per capita endowment of wood, and policy TRENDS IN OVERALL GROWTH constraints to domestic production from natural and AND ITS COMPOSITION plantation forests. To a lesser extent, recent reduc- tions in forest product tariffs may play a role in in- China’s forest product imports more than doubled in creased imports including, possibly, a shift from ille- round wood equivalent (RWE) volume between 1997 gal to legal product as smuggling becomes less attrac- and 2003, rising from 40.2 million to 106.7 m3 (Figure tive. 1)5. Overall imports in the sector increased by 102 % during the same period, rising from US$ 6.4 billion to TRENDS BY SEGMENT US$ 12.9 billion. Timber products FIGURE 1 China’s forest product imports 1997-2003 Timber product imports were analyzed according to the following segments; logs (unprocessed), lumber (sawn wood), wood chips, fiberboard, plywood, par- ticleboard, veneer, and a general ,other‘ designation for more minor products (Figure 2). FIGURE 2 China’s timber product imports by product type 1997-2003 Timber product imports more than tripled in volu- me and more than doubled in value between 1997 and 2003, reflecting China’s marked expansion of its timber processing industry. This industrial expansion has been driven not only by growing domestic de- mand for end products, but also by international de- mand for exports of China’s low-cost finished wood products such as furniture. Pulp and paper are responsible for an even larger Logs, and to a lesser extent lumber, account for the volume of forest product import growth over the pe- largest portion of the strong timber product import riod studied than are timber products. Pulp and paper growth occurring between 1997 and 2003. As a result, products currently account for about 60 % of China’s logs and lumber now make up the bulk of China’s tim- forest product imports by RWE volume. Their strong ber product imports, with over 25 million m3 of logs growth reflects not only a rise in the quantity of pa- and 7.9 million m3 RWE of sawn wood imported in per demanded, but also in quality criteria. That is, as 2003. the quality requirements of both China’s domestic pa- Trends in timber product data reveal the Chinese per market and her export-oriented sectors rise (e. g. economy’s increasing capture of the value added of high quality paperboard for packaging), the nation is moving away from a predominantly straw-based pulp 5 In brief: In order to compare and aggregate volumes of tim- and paper industry towards greater use of (often im- ber products and pulp and paper, various types of forest pro- ported) wood-based fibers (He et al. 2004). ducts are converted to round wood equivalent volumes (RWE). Aside from logs, a conversion factor is used to convert a pro- 3 The data reflect direct imports to Mainland China only, while duct’s physical volume in units (m3) to its RWE volume in cu- Hong Kong and Taiwan are treatad as supplying regions rath- bic meters (m3 RWE). For example, one m3 of lumber = 1.43 m3 er than destinations. RWE of lumber, while 1 m3 of logs = 1 m3 RWE of logs. For the 4 Xiufang Sun et al., ,China’s forest product import trends, sake of clarity, the text will designate which volumes are m3 1997-2002: Analysis of customs data with emphasis on Asia RWE (except in the case of logs). Otherwise, units of m3 with- Pacific supplier countries‘, Forest Trends and CIFOR, 2004; out RWE designation, when used for a single type of product, and WWF Forests for Life Programme, TRAFFIC Rufford should be interpretedy as physical cubic meters. Conversion Foundation and World Bank/WWF Alliance, ,China’s Wood factors to calculate RWE are sourced mainly from FAO, with Market, Trade and Environment‘ (eds. Zhu Chunquan and special pulp conversion factors provided by the China Paper Rodney Taylor, 2004). Association. 229 Meeting China’s demand for forest products natural resources, as imports enter China in a less pro- Pulp and paper cessed state. While higher value-added imports (ply- wood, veneer, fiberboard, etc.) made up almost half of As with timber products, trends in pulp and paper im- China’s timber product imports by value in 1997, by ports between 1997 and 2003 show the Chinese eco- 2003 logs and sawn wood constituted 78 % of total nomy’s increasing capture of value added (Figure 3). import value. A comparison of plywood to sawnwood Sharp increases in pulp imports constitute the bulk of imports further illustrates this trend. In 1997, ply- growth in the pulp and paper category and have mo- wood imports were 3.73 million m3 RWE and sawn- ved the segment from one in which paper has histori- wood imports were 1.89 million m3 RWE.