China's forest areas cover 4.6% of the total in the world with 174.90 million hectares. The forest coverage only reaches 18.21%, far lower than the world average level of 61.52%. The forest reserves are 12.46 billion cubic meters and still do not amount to 3% of the total reserves in the world. The forest area per capita is 0.132 hectares, not reaching 1 / 4 of the world average level. The forest reserves per capita are 9.421 cubic meters and do not reach 1 / 6 of the world average level. The forest reserves per hectare are only 84.73 cubic meters which is equal to 84.86% of the world average level. From the perspective of forest area per capita, China is short in the forestry resource and far behind other countries which have abundant forest resources.

Market overview

In the first quarter of 2008, China imported 8,514,700 cubic meters of logs, decreased 11.53 per cent year-on-year; unit price was 164.42 U.S. dollars per cubic meter, increased 22.25% than 134.5 U.S. dollars in 2007. There is a large demand for timber by the paper manufacturing industry, followed by the furniture and wood fixture industries. In 2007 the total amount of machine-made paper and paperboard output in China was 77.87 million tons. The output of wood-based panels was 88.3858 million cubic meters, up 18.98 per cent year-on-year; wooden flooring was 343.43 million square meters, up 46.77 per cent year-on-year, a significant increase.

Opportunity for Canadian Lumber Exporters

Canada lumber exports to China are driven primarily by demand from China's Pulp industry, furniture manufacturers and construction sectors. The decline in China's forest production began prior to China's logging bans and is largely a consequence of the depletion of China's mature natural forests. Eighty percent of China's state forest enterprises have exhausted their mature timber resources and cannot support their own mills. A major user of lumber, the housing sector, seems likely to continue to grow. Paper consumption is likely to continue to shift away from non-wood fiber to wood-based papers, including recycled paper. Demand for raw material for plywood mills and pulp and paper mills remain strong.

Canadian businesses must understand the unique China market characteristic

The Housing market boom in China has greatly increased residential housing construction and the resulting demand for interior decoration such as flooring, moulding and wall panels. The market prices of major imported wood from main markets are published in network newsletters. However, communication between the markets is infrequent and imperfect. Therefore the prices for a similar product in a different market could vary quite substantially.

Distribution of wood products in China have no system at all, in other words, there is no picture that can represent the current distribution channels for wood products. Most of import deals were done by middle sized business in personal connection format only.

"West Strategy" heavily drives lumber demand in the next 10 years. The Chinese government has shifted it attention form coastal regions to the seven west interior provinces, which covers 56% of China's land area. It is believed that this national strategy will bring tremendous opportunities to Canadian business.