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2010-09-13 | Policy Brief

Forest Market Model for China—— based on results of model simulation and projection

He, Hui and Jintao Xu, 2010. Forest Market Model for China, Project Reports. EEPC, Peking University.
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As China quickly becomes the world largest market and supplier of forest products over the past decade, her domestic policy change and ensuing supply trends becomes interesting to many. As being increasingly recognized, changes of China’s domestic policy and wood supply have had drastic impacts on world market and global forest resources. Despite the significance of the issue, understanding of China’s unique policy framework, institutional foundation and future supply trends in forest products remains limited.

This project analyzed trends of China’s round wood supply, demand and trade, and policy factors behind these trends. The basic conclusions are that world market, competitiveness of China wood processing industry, and China’s domestic policy changes, will shape the future pattern of timber market in and outside China. The trend of timber supply inside China is very unclear to the world and credible information is very limited due to lack of rigorous investigation and analyses. This project is a first step to fill the analytical and information gap.

Through modeling efforts and empirical analyses, some future trends are revealed. Although domestic timber supply will increase significantly by year 2030, due to policy change and improved productivity in plantation forests, demand for timber imports will remain strong and growing. Unlike the projection by the government, this project predicts that by year 2030 China will remain a major timber importer, and the volume of timber imports will be three time as high as the level of year 2007, the base year of this project analysis. The high demand for timber imports will have great impacts on world market, trade balance of China, as well as forest management in importing countries (especially developing countries). Significant efforts should be in place to ensure this trade pattern don’t compromise the world effort to enhance sustainability of forest ecosystem which is ever so important when the world is looking to forest sector as a main instrument to mitigate the impact of climate change.