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China’s Forest Sector Markets

Policy Issues and Recommendations

By Sten Nilsson, Gary Bull, Andy White, Jintao Xu - IIASA, University of British Columbia, Forest Trends, CCAP
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China’s forest market has quickly become a dominant, if not the dominant, driver of investment and industry transition, affecting both forests and forest-dependent livelihoods globally. The future of the Chinese forest sector and its implications for the world is directly dependent on the future economic growth in China and its commitment to developing its domestic supply and manufacturing. China’s gross domestic product (GDP) already accounts for 13 % of the world’s output (at purchasing-power-parity), in 2004 China is probably the world’s third largest exporter, it is the largest recipient of foreign direct investments, and its imports have grown by 40 %. However, there are questions whether China will be able to maintain current economic growth. The fragile banks have increased lending too rapidly and helped fuel a property bubble as well as pushed the inflation above 5%. In addition there remains a lack of transparent institutions, evidence of corruption, dramatic income inequalities, inefficient state-owned enterprises and severe environmental pollution.