Global Policy Forum

By David Lague

China's insatiable appetite for timber, combined with its ban on cutting trees domestically, is only speeding up the destruction of major forests across Asia, often through illegal logging.

If ever there was a perfect demonstration of the law of unintended consequences, this was it. In the summer of 1998, China imposed a sweeping ban on logging after the worst flooding in almost half a century. Experts agreed that excessive tree-felling in the upper reaches of the Yangtze and other river systems had contributed to floods that killed more than 4,000 people and forced more than 18 million from their homes. The ban certainly slowed the destruction of China's forests. However, it also forced Chinese industry to turn to imports to meet the burgeoning need for timber. That's how a flood in China became a disaster for the forests of Southeast Asia and Russia.

Clearly, Beijing didn't anticipate this outcome and it's unfair to single out China for blame. But inevitably the country's gnawing hunger for timber and timber products is accelerating the felling of some of the world's remaining major forests. To make matters worse, international agencies and green groups say that illegal loggers are taking advantage of entrenched corruption in timber-producing countries to supply much of this demand.

"For Indonesia I think there is evidence to suggest that large amounts of illegal logs are going into China," says David Kaimowitz, director-general of the Centre for International Forestry Research (Cifor), an international research institution based in Bogor, Indonesia. A United Nations analysis of timber statistics for 2002 shows that China's reported imports of logs from Indonesia were more than 200 times higher than the figures reported by Indonesian customs.

As Beijing's harvesting ban took hold in the late 1990s, China suddenly became the world's second-biggest timber importer behind the United States. On current trends it won't be much longer before it is No. 1. Figures compiled by Cifor, which is funded by 50 governments and agencies, and Forest Trends, a non-governmental organization based in Washington, show that the value of China's total timber, pulp and paper imports soared 75% from $6.4 billion in 1997 to $11.2 billion by 2002. "You have a country that is growing at 8%-9% where its own domestic supply of forest products is decreasing so it has created huge demand for forest products from the region," says Kaimowitz.

For example, Russia's huge coniferous forests, particularly in Siberia and the Russian Far East, are also being plundered to satisfy demand from China. According to UN figures, China imported 17 million cubic metres of logs from Russia last year, a 70% increase on 2001. Green groups estimate that almost 60% of logs imported into China come from Russia and at least 20% are illegally felled and smuggled across the long, poorly policed border.

Vladivostok-based environmental activist Anatoly Lebedev believes the real volume of illegal logging could exceed 70% of the total, with corrupt officials and criminal gangs on both sides of the border playing a major role. Lebedev and fellow activists complain that efforts to combat illegal loggers are hampered by inadequate laws, poor monitoring and the widespread forgery of documents and permits. "Law-enforcement culture is very weak in Russia," he says.

Environmental groups are also monitoring the alarming impact of demand from China on logging in Burma, Cambodia, Laos, Vietnam, Thailand and Papua New Guinea. In a report released on October 7, the London-based environmental watchdog, Global Witness, accused the cash-strapped military regime in Rangoon of excessive logging in some of the world's largest remaining tracts of virgin tropical forest. The report said investigations along Burma's border with China showed that extensive swaths of pristine forest in Kachin state had been taken to supply the China trade. "People's livelihoods are being destroyed," Global Witness said. "China must stop logging in Burma immediately to allow time for proper planning that will ensure the forests are used for the benefit of people in Kachin state rather than Chinese logging companies."

While local and international green groups protest, there is no prospect that demand will ease as long as China's economic boom rolls on. In fact, demand for imported raw materials for China's low-cost timber-manufacturing industries is almost certain to increase sharply. These industries are highly competitive because of the low cost of labour and are making major inroads into foreign markets.

United States furniture makers, for instance, charge that Chinese wooden bedroom furniture exports to the United States have tripled in value from about $400 million in 2000 to an estimated $1.2 billion this year. The U.S. Commerce Department in December launched an investigation into complaints that Chinese-made bedroom furniture was being dumped in America at prices below fair value. And China also exports wood and wooden products to countries much nearer to home. In Indonesia, timber companies even complain that plywood from China is made from illegally exported Indonesian logs. The imported plywood ends up cheaper than local products because Indonesian taxes aren't paid on it.

Even if the U.S. decides to impose punitive tariffs on Chinese furniture exports in 2004, the industry can still find solace in strong domestic demand. China's National Bureau of Statistics said on December 15 that furniture sales had jumped more than 43% in November from a year earlier because of a home-buying spree as increasingly affluent Chinese migrate to towns and cities. A recent study by the conservation group WWF forecasts that China's domestic supply of industrial wood will reach 114 million cubic metres by 2010, leaving a shortfall of 99 million cubic metres that will have to be satisfied by imports.

Industry analysts note that the rise in demand from China is particularly devastating for Asia both because of its timing as well as its momentum. Forests were already badly depleted after decades of harvesting--first for the U.S. and European markets and more recently because of Asian demand from countries such as Japan, Taiwan and South Korea--before China kicked in as a major market. What's worse, in many countries conservation policies were only just beginning to bite when China's economy took off and such protective measures are unlikely to be strong enough to withstand the hike in demand.

Managing China's requirements is vital for the survival of some of the world's most valuable remaining tracts of forest. In Indonesia, Cifor estimates that 2 million hectares of forest were harvested in 2001 to produce almost 60 million cubic metres of timber products. More than 80% of this was illegally logged. "It is very clear that this kind of logging is not sustainable," says Kaimowitz.

Despite this grim outlook for Asia's major remaining forests, there are signs that Beijing is willing to work with foreign governments and green groups to try to end the trade in illegal logs and timber products. In December 2002, China signed a preliminary agreement with Indonesia that is aimed at halting the trade in illegal logs. However, many environmentalists are sceptical that this will have any impact until Jakarta tackles graft surrounding the logging and timber industries. There are also high hopes that China will join international efforts to certify legally logged timber so that it can be tracked from forest to end-user.

Beijing is also coming under pressure to relax its logging ban selectively so that designated forests can be harvested on a sustainable basis. At the same time, green groups including the WWF are encouraging China to improve and expand its commercial timber plantations, which could replace a big proportion of imports if managed efficiently.

Some foreign-owned timber plantation companies now see China as a potentially lucrative market and are expanding their holdings. The Toronto-listed Sino-Forest Corp., which operates plantations in southern China, plans to list a subsidiary, Sino-Wood, in Hong Kong early in 2004 with the proceeds to be used to fund expansion on the mainland. "China will be a suppliers' market for 20 years," predicts Sino-Forest Chairman Allen Chan.

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