Gateway to international timbertrade

China

Forest resources

According to FAO Global Forest Resources Assessment 2015, China has around 208  million hectares of forest land, which constitutes to 22% of the total land area. Forest land cover in China has grown for the last 25 years, with a gain of around 1.1% forest cover per year, as a result of the Natural Forest Protection Program, which reduced timber production from natural forests, together with a tree planting programme. (FAO + TFT).

Around 11.6 million hectares (5.6%) are primary forest, 117.7 million hectares (56.5%) are  ‘otherwise naturally regenerated forests’, and the remaining part of almost 79 million hectares (38%) is planted forest. The ten most important tree species (groups) from natural forests are Quercus, Betula, Larix gmelinii, Pinus massoniana, Pinus yunnanensis, Picea asperata, Abies fabri, Cupressus funebris, Cunninghamia lanceolata and Pinus densata.

China has now the largest plantation area in the world, principally of fast-growing species. The top ten tree species in the Chinese forest plantations are Cunninghamia lanceolata, Populus, Eucalyptus, Larix gmelinii, Pinus massoniana, Pinus tabuleaformis, Cupressus funebris, Pinus elliottii, Robinia pseudoacacia and Quercus.

China currently has the highest afforestation rate of any country in the world, increasing its forest cover from 12% thirty years ago to more than 21% in 2013. The country is continuing to implement policy measures to increase the quality and quantity of its forests and aims to bring forest coverage to 23%, or 223 million hectares, by 2020. China's State Forest Administration (SFA) optimistically expects domestic timber supply to rise from 180 million m3 /annum in 2010 to reach 300 million m3/annum in 2020, whilst at the same time it also anticipates that industrial demand (not including private use or fuel wood) will increase to 467 million m3 /annum (excluding recovered paper), leaving a deficit of 167 million m3/annum. However, ITTO reported the deficit had reached 150 million m3 in 2011 and believes the gap has grown to over 180 million (roundwood equivalent) by 2015.

Ownership of China’s forestland is divided between the state (42,5%) and collectives (57.6%), whilst the ownership of commercial growing stock for production purposes is 42.2% state-owned, 37.5% collective-owned and 20.3% privately-owned. State-owned forests are principally located in the Northeast and Southwest and are primarily managed by either state-owned forestry enterprises or state forest farms, while collectively-owned forests, mainly plantations, are situated in the south (TFT). In some cases, overlapping land ownership  can lead to a complex land tenure situation, laying a foundation for land related  conflict and confusion as well as conversion of natural forest to plantations.

According to Article 4 of the Forestry Law, Chinese forest stands are classified in the following categories:

  • Timber stands (35.2%): forests and trees mainly at timber production, including bamboo groves
  • Protection forests (45.6%): forests, designated for protection, inclusive of forests for water and soil protection, wind protection and farmland and forestland protection
  • Forests for special uses (7.5%): forests designated for national defence, environmental protection and scientific experiments
  • Fuel wood forests (0.9%): forests designated for production of wood-based fuel.
  • Economic forests (10.8%): trees mainly aimed at the production of fruits, edible oils, soft drinks and ingredients and medicinal ingredients.

Production and export

In order to meet this domestic and export-oriented demand, huge amounts of raw wood materials must be either produced domestically or imported from abroad. Domestic supply of industrial wood has failed to keep up with China’s industrial manufacturing capacity due to a low level of per-capita forest resources and the government’s policies on the protection of natural forests. To meet the wood supply deficit in the country, China has become the world’s largest importer of timber.

The reduction in housing construction in China has resulted in a substantial decline in the importation of forest products during 2015, reports the Wood Resource Quarterly (WRQ). The total value of imported softwood logs and lumber has fallen 25% and import prices have declined almost 30%. This has been a consequence of the slowdown in the Chinese economy, which has not only reduced construction activities but also consumer spending on home remodelling and furniture.

Primary timber products are mainly processed and consumed within the country, as can be observed from the table below (source: FAOSTAT, data 2014).

The principal exported primary timber product is plywood, and to a much lesser extent sawnwood and veneer. The main products China exports are processed products, particularly wooden furniture, plywood, joinery and paper. No exact statistics on total number of wood processing mills in China exists. It is reported that China wood industry consists of 100,000 individual companies, and most of them are small and medium sized enterprises (SMEs). Data from China Forest Industry Association show that there are more than 6,000 plywood manufacturers, more than 10,000 veneer mills, and 650 particleboard mills. National Economic Census showed China has 25,000 furniture manufacturers, while China Furniture Association says the number could be doubled if small mills were counted. More than 50% of China’s wood products manufacturers are privately owned (EFI, 2011). The industry has developed particularly in and around the ports of Zhangjiagang, Shanghai, Shenzhen, Lianyugang and Nanjing.

The wide range of export destinations of the Chinese wood products industry can be observed from the graph below, although USA and Japan are the most important ones.

Sources of information

 

Legality framework

The State Forestry Administration (SFA) is the central agency responsible for China’s forestry activities, under the State Council. The SFA is responsible for policy making, plantation establishment, conservation and wood industry management. The SFA is also leading China’s international process against illegal timber and associated trade from the country, together with the Ministry of Commerce, Ministry of Foreign Affairs and Customs.

The national Forest Law has been in place since 1984, and was most recently revised in 1998. China’s 13th Five-Year Plan, announced in May 2016 sets out binding economic and environmental targets that include:

  • Increasing total forestland coverage (to 23.04%)
  • Increasing nature reserve area (to 17% of the total land area)
  • Increasing forest stock volume (to 16.5 billion m3)

As required by the Forest Law, timber harvesting requires a valid Forest Authority Certificate or Tenure Certificate stating who has the authority over the forest (in case it is not the Chinese State). One of the key documents for harvesting is the Timber Harvesting Licence (“Wood Harvesting Admission Certificate”). For conversion into deforested land (usually for construction) the companies should also have an official approval document permitting conversion of land use, issued by the relevant Forestry Administration.

Companies are liable to pay taxes to national or local government (or both) to authorize their management and harvesting. The company should pay value added tax where appropriate.

Transport of timber is also subject to regulation. Timber carriers / hauliers must have a valid timber transportation certificate giving details of what is being transported, its origin and destination. Each timber transport must be accompanied by a Plant Quarantine Certificate. The timber processing company must hold a business registration certificate indicating that it is legally registered in accordance with the laws. The timber processing company (located in the forest area) must also be able to show a valid Timber Processing Certificate.

For export of timber, validity of the documents and certificates needs to be ensured and endorsement required by relevant authorities as appropriate, to include packing list, Invoice, bill of lading, customs declaration form, receipts of appropriate tariffs, sales contract, shipping order, verification form of inward remittance (by Exchange Control Administration) and delivery order. Related documents and certificates should be submitted by the import and export company as per pertinent laws and regulations. Official receipts should be available for audit.

The Chinese government controls the legality of domestic timber. Most stakeholders will comment that the Chinese laws are reasonably appropriate and adequately enforced. Documentation at district levels of source of origin of Chinese timber still poses some difficulties for some manufacturers, and manufacturers complain of the complexities and extra cost of implementing the extra due diligence requirements.(Baseline study China)

 

Key documents

The below listed key documents are based on the applicable legislation and are considered to play a key role in demonstrating legal origin. The full list of applicable legislation is accessible from the Forestry Legality Alliance website (http://declaration.forestlegality.org/risk-tool/countries/544/laws). A list of necessary documents can be found here. The following overview gives important documents necessary for forest product exporters from China.

Harvesting

Forest Authority Certificate or Tenure Certificate
Forestry Administration Authority under the State Council
Other harvesting entities than State Owned Enterprises must have documents that describe their authority over the forest.
Timber Harvesting Licence (“Wood Harvesting Admission Certificate”)
The relevant Forestry Administration
Describes the right to harvest in the context of objectives, place, species, forest situation, coverage, reserve, harvesting means and regeneration measures for the trees.
Document permitting conversion of land use
The relevant Forestry Administration
For conversion into deforested land (usually for construction) the companies should have an official approval document issued by relevant Forestry Administration as well as the Forest Authority Certificate

Trade and export

Timber transportation certificate
Forestry Administration at or above county level.
Timber carriers / hauliers must have a valid “timber transportation certificate”, which gives details of what is being transported, its origin and destination.
Timber consignment documents
Forestry Administration at or above county level.
The timber consignment documents are used during transportation and must be complete and correct. They should be issued by the correct authorities and should indicate any issuing conditions, such as volume, material type and origin.
Plant Quarantine Certificate
China Inspection and Quarantine Services
Transported timber must be accompanied by a Plant Quarantine Certificate.
Business registration certificate
Industry and commerce administration authority
The timber processing company holds a business registration certificate, indicating that it is legally registered in accordance with the law. The company should pay value added tax where appropriate. Receipts from the relevant agencies provide proof.
Timber processing certificate
Forestry Administration above county level
The timber processing Company located at the forest area must hold a valid Timber Processing Certificate.

Bans and quota

China is planning to ban commercial logging in all natural forests by the end of 2016 in an extension of an ambitious program which was started in 1998 and whose purpose is to allow forests to recover from decades of over-logging and to help restore forest ecosystems and their resilience.

In 2014, the State Forestry Administration (SFA) launched a trial ban on commercial logging in state-owned natural forests in Heilongjiang Province, which has historically produced over 30 percent of China’s domestic log supply. Based on the results of the Heilongjiang trial, the SFA further expanded the trial ban to natural forest areas in other Northeast provinces starting from April 2015, and to the whole country by 2017.

The newly released China’s 13th Five-Year logging quota (2016-2020), which shows a logging quota of 254.036 million m3 for 2016-2020, reveals a 6.3% drop compared to 2010-2015 and shows that logging ban has been effectively enforced. A closer look at the logging quota for each province, particularly with an eye to plantations and natural forests, shows that there is no quota for commercial logging in natural forests nationwide.

Cites and protected spieces

There are no tree species found in natural forest in China covered by CITES (Appendix I, II or III).

China halts timber imports from 3 countries

On 8 April 2015, China’s National Endangered Species Office issued a directive suspending imports of CITES listed timber species (Pericopsis elata) and (Dalbergia cochinchinensis) from the Democratic Republic of Congo (DRC) and Laos. This restriction follows a directive from CITES Secretariat recommending all signatory countries to suspend trade in CITES-listed species from the DRC, the Lao People’s Democratic Republic and Nigeria until further notice due to the failure of these three countries to submit a National Ivory Action Plan.

National action on timber legality

The project on developing Chinese National Timber Legality Verification system was launched in December 2009 with the help of DFID, connecting China with UK and EU experience. It aims to develop a cost efficient legality verification system which is adapted to Chinese context, and could possibly develop to endorse wood products labelled under robust legality or certification standards from other importing countries, e.g. license issued by Indonesian Timber legality Assurance System (TLAS), VPA licenses, FSC certificates of forest certification or timber legality verification.

China has no Voluntary Partnership Agreement (VPA) with the EU, although the EU and SFA agreed to establish a Bilateral Coordination Mechanism (BCM) on FLEGT in January 2009. One of many tasks listed is to explore opportunities for EU and China to develop a shared approach towards legality verification schemes for timber and timber products implemented by timber exporting countries, including in the context of FLEGT VPAs. The BCM experts committee which consist of experts from both China and EU have drafted the work plan later 2009 for both Chinese and EU governments to consider.

Other national action of China has been the development of a National timber tracking system. The China Timber and Wood Products Distribution Association (CTWPDA) has announced that a National tracking, inspection and labelling system for wood products has been officially launched (April 2015) and that certificates of compliance have been issued to some enterprises using the system. Details of the tracking certificates which have been issued to the participating enterprises can be found on the CTWPDA website which at present is only in Chinese. The system covers wood-based panels, flooring, wooden doors, furniture, engineered wood, treated logs and redwood products.

Third party certification

In October 2007, China issued its own forest certification standards (CFCS – China Forest Certification System), followed by a number of pilot projects to test such standards. The pilot includes forest management, chain of custody, non-timber forest products (NTFP), bamboo, production management of rare and endangered species, forest ecological environmental services, and other fields.  In February 2014, the China Forest Certification Scheme (CFCS) achieved endorsement by PEFC. The PEFC statistics March 2016 report a total area under certification amounting to 5,620,093 ha and 269 CoC certificates.

The FSC China National Initiative was launched in March 2006 to develop forest certification standards compatible to forest conditions in China. In June 2016, the country was reported to have 892,508 ha of FSC-certified forests. Chain-of-Custody (CoC) certification has grown even faster (4,472 in June 2016).

Besides these major initiatives there is also a valid SCS Legal Harvest certificate in China.

Sources of information

 

Contacts

State Forestry Administration (SFA)
As a Central agency under the State Council, the SFA is responsible for China’s forestry activities, such as policy making, plantation establishment, conservation and wood industry management. The SFA is growing more and more engaged in international policy dialogues regarding illegal logging. It was founded in 1949 as Ministry of Forestry and Farming. On November 5, 1951, it changed to Ministry of Forestry, and the farming section was transferred to Ministry of Agriculture.
Ministry of Environmental Protection
The Ministry of Environmental Protection manages the development, use and impacts associated with China’s natural resources. This Ministry monitors major eco-environmental construction work, rehabilitates sites following ecological damage, supervises and inspects nature reserves, scenic spots and forest parks; supervises conservation initiatives; proposes recommendations to the State Council on approving new national nature reserves, and oversees the monitoring of natural resource exploitation activities that may pose risk to ecological quality.
Ministry of Land and Natural Resources (MLNR)
The MLNR develops policies and regulations concerning cultivated land. It enforces control over the different purposes of land used for agriculture and organizes the protection of capital farmland. It is also the administrative body that supervises the development of unused land and cultivated land, land revitalization and reclamation so as to ensure the increase of cultivated land.
Ministry of Finance
Administering and supervising the central government expenditures for economic development, the appropriation for central government financed projects, and funds for technological innovation and new product testing.
Ministry of Commerce (MOFCOM)
MOFCOM’s responsibilities include formulating strategies, guidelines and policies for developing domestic and foreign trade and international economic cooperation. MOFCOM also handles the regulation of import and export commodities and processing trade, and compiles catalogues of import and export commodities and technologies.
Chinese Academy of Forestry (CAF)
CAF is a comprehensive, multi-discipline and public research institution affiliated to the State Forestry Administration (SFA). CAF is principally engaged in forest research of applied/basic sciences and strategic high technology research, developmental, and soft science studies. The department of Forest Policy and Information of CAF has good knowledge of FLEGT.
The China National Forest Product Industry Association (CNFPIA)
The CNFPIA is a large, national association representing as many as 1200 members. Members encompass businesses, organizations and individuals from the timber production and processing industries, including flooring, wood-based panels and sawn wood. This organization was founded in 1988 and also backed by the State of Forestry Administration. This organization has similar functions to the China National Forestry Industry Association.
China Timber and Wood Products Distribution Association (CTWPDA)
CTWPDA is a large, national association that promotes the timber industry, timber market development and the international timber trade according to the interests of its members. Its over 600 members are engaged in the production of wood products, forest products distribution, wholesale markets, research and other related industrial sectors in China.
The first international conservation organization invited to work in China, WWF has been active here since 1980.WWF China’s forest program targets: To conserve biodiversity and ecological processes of forests to secure sustainable development for present and future generations.
GFTN-China is the Chinese chapter of WWF's Global Forest & Trade Network (GFTN), WWF's initiative to eliminate illegal logging and improve the management of valuable and threatened forests.

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