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Hardwood Project Trade

China Wood Trade Market

U.S. Imports of Wood Products from China

OVERVIEW

China is deficient in forest resources given its large land area and over 1.3 billion population. Per capita forest coverage in China is estimated at only 0.12 hectares, about one fifth of the global average, one fourth of the U.S. level (Zhu, Taylor, and Feng 2004, Science Press). However, China plays an important role in the global forest products market, both as a producer and consumer due to its rapid domestic economic growth and export demand.

China’s total forest product imports increased significantly between 1997 and 2005, more than tripled in volume (roundwood equivalent) from 40 million to 134 million cubic meters, and more than doubled in value (White et al. 2006, Forest Trends). The imports increase can be explained by the fact that domestic supply of industrial wood has failed to keep up with China’s growing demand, therefore a large part has to be imported to meet the demand. China’s industrial roundwood production declined from 68 million cubic meters in 1995 to 44 million cubic meters in 2002, then increased to 48 million cubic meters in 2003 (Hyde et al. 2003, Zhu, Taylor, and Feng 2004, Science Press). Including the estimation of undeclared industrial production, China’s own forest and plantations produced 79 million c ubic meters of industrial use in 2003. However, the demand of domestic use and export were about 173 million cubic meters (RWE), including 138 million cubic meters (RWE) of log volume for domestic use and an additional 35 million cubic meters (RWE) for export. The huge gap of 94 million cubic meters (RWE) was filled by importing from other countries (Zhu, Taylor, and Feng 2004, Science Press).

Even though China will increase its logging quota from a previous 223 million cubic meters to 248 million cubic meters in the 11th Five-Year (2006-2010), and China government has released a wood resource conservation and substitution policy, the huge gap between supply and demand of timber products still exists (USDA Gain Report CH6052). Moreover, the new structure of timber production is mainly composed of plantation, accounting for 63 percent of total logging quota, more high quality timber products need to be imported.

IMPORTS BY PRODUCT TYPE

Since 2001, logs and sawnwood (lumber) have dominated imports, making up 85 percent of China’s total timber import volume(Zhu, Taylor, and Feng 2004, Science Press). Until 2007, timber imports has been keeping the increasing trend. About 37.1 million cubic meters of logs, were imported in 2007, of which 37% were hardwood logs, and the remaining were softwood logs (USDA Gain Report CH7057). Approximately 6.55 million cubic meters of sawnwood were imported, of which 58% were hardwood lumber. 

HARDWOOD PRODUCT IMPORTS

China imports of hardwood products, mainly hardwood logs and lumber, have remained above 14 million cubic meters since 2003. The main hardwood products that China imported from the U.S. were temperate hardwood lumber. In 2007, the share of lumber imported from the U.S. by China was approximately 16.4% following Russia which accounted for 24.2%.

Tropical hardwood Products have dominated China’s hardwood import market since 2004. However, the supply of tropical hardwoods may decrease year by year (USDA Gain Report CH6052). Tropical timber imports from Malaysia, Indonesia, and Myanmar have been substituted by other suppliers such as Papua New Guinea and Gabon, due to the restrictive measures imposed by these exporting countries. In addition, Russia government has increased log export tariff, which will drive the global price of logs to a higher level due to its large share in the global market. With heavy dependence on log imports from Russia, China’s log imports will be affected. As a major temperate hardwood product supplier of China, the U.S. wood product exports to China are expected to increase due to China’s import gap as well as Chinese customers’ preference on U.S. hardwoods in the interior decoration and furniture industry.

IMPORTS FROM THE U.S.

The U.S. had ever been the largest exporter to China in 1985 with $533 million. However, it was replaced by Indonesia in 1995, with export value decreasing to $60 million, which was resulted from the changes in product demand occurring in China (Zhang 2006). In the 1980s, softwood logs and veneer/plywood were the main import products. The U.S. was the largest supplier of China’s imports at that time. In the late 1980s and 1990s, the U.S. share of total imports declined dramatically due to high international prices of softwoods leading to China’s significant decrease in softwoods imports. China had to source more relative cheaper raw materials from countries in South East Asia and Africa, such as Indonesia and Malaysia.

China’s timber imports from Russia increased significantly since 1998. Nearly two thirds of China’s total log imports and over 80% of softwood imports are from Russia (Sun 2006). In 2004, Russia, Malaysia and Indonesia became the top 3 exporters to China, and the U.S. was the 4th largest exporter with wood products values of $366 million (Zhang et al. 2006). In 2007, Russia, U.S and Canada became the top 3 lumber exporters to China. Most lumber that the U.S. exported to China were temperate hardwood lumber.

Most U.S. hardwoods are used in China’s furniture and interior decoration sector. The U.S. hardwoods are well accepted by Chinese customers especially in metropolitan areas such as Shanghai, Beijing, Guangzhou, and Shenzhen, in view of their outstanding characteristics such as natural outlook, exceptional texture, different color, multiple species and reasonable grading etc.

China Exports of Wood Products to the U.S.

OVERVIEW

China has rapidly become the world’s largest exporter of wood products in value terms, especially for wood furniture, and is the second largest market for industrial timber, pulp, and paper in the world, outranked only by the U.S.

China’s wood product exports have grown rapidly since 1998 and now account for a substantial proportion of China’s imports (Zhu, Taylor, and Feng 2004, Science Press). Japan had been the largest importer of China’s wood products from 1985 to 1995. The U.S. was the third largest importer of wood products in 1995. However, it surpassed Japan and became the largest export market of China’s wood products in 2004. China’s exports will continue to increase due to the lower labor cost and making full use of existing infrastructure. China will also increase wood product imports in response to a growing economy, rising living standards and alleviation of conflicts between supply and demand caused by insufficient forest resources. 

FURNITURE EXPORTS

China’s growth in the wood products export market has been driven in large part by the wood furniture, plywood, and paper since 1999 (Zhu, Taylor, and Feng 2004, Science Press). Wood furniture exports account for over one third of China’s total timber product exports each year. China now has over 50,000 furniture enterprises of various production scales, and employs approximately 5 million people. In 2005, the total production value of the furniture industry reached $18 billion (RMB 138.904 billion), up 27.40% over the same period of 2004 (China Furniture Market Report 2007). China’s furniture industry is geographically centralized primarily in the South and East of China. Approximately 30% (by value) of the total furniture production in China and 50% of the export are from one South province, Guangdong (The Funiture Industry (Case Goods) 2003).

China’s furniture exports had increased by 335% from 1994 to 2001, replacing Italy as the largest furniture export country in the world (The Funiture Industry (Case Goods) 2003). China’s furniture exports to the U.S. have increased 1300% since 1997, and replaced Canada as the largest exporter of furniture to the U.S. market (US Imports for Consumption). In 2006, the value of U.S. furniture imports from China was over $12 billion, accounting for 49.30% of U.S. total furniture import value. Wood household furniture made up 41.40% of furniture imports from China).

INFLUENCING FACTORS

The reasons that China became the largest furniture importer partner to the U.S. can be concluded as the following factors: (The Funiture Industry (Case Goods) 2003)

  • expanding powerful production capacity
  • adoption of new technology
  • lower cost
  • quality improvement

The combination of low labor costs ($0.50-0.75/hour) and cheap imported raw materials has enabled China to provide a wide range of products for the international market at highly competitive prices (China’s Forest Product Exports 2005). Besides the advantages of price, the quality of Chinese furniture has been improved greatly with the help of U.S. producers and different services companies. Even though the US Department of Commerce imposed anti-dumping duties on some Chinese wooden bedroom furniture producers/exporters in late 2004, with affected products value between $1.1 and 1.4 billion, China’s Customs statistics for the first four months of 2005 didn’t show significant decrease in wood furniture exports to the US (China’s Forest Product Exports 2005).