3. Impacts and effectiveness of logging bans in natural forests: People’s Republic of China - Yang Yuexian

BACKGROUND

Distribution of natural forest resources

The fourth inventory of national forest resources in China indicated that natural forests total 87.3 million ha, representing 65 percent of the 133.7 million ha of total forest area. These forests can be divided roughly into three categories: natural forests under protection, scattered natural forests, and natural forests that urgently require protection. Natural forests under protection total approximately 20 million ha and account for 23 percent of natural forests. Scattered natural forests total 17.7 million ha and account for 20 percent. Natural forests urgently requiring protection are concentrated near major rivers such as the Yangtze, Yellow and Songhuajiang Rivers, around large-scale water control projects, and at the core zones of important mountains. These are located in the provinces and autonomous regions of Tibet, Sichuan, Yunnan, Guizhou, Hunan, Jiangxi and Hubei (the Yangtze River basin); Qinghai, Gansu, Ningxia, Shaanxi and Shanxi (the Yellow River basin); and Jilin, Heilongjiang and Inner Mongolia (the Songhuajiang and Nenjiang River basins). Together, these forests total 49.6 million ha, or about 57 percent of all natural forests in the country.

The Chinese Government and the State Forestry Administration (SFA) have always given significant attention to natural forest protection and several laws and regulations have been formulated to protect these forests. Forest protection includes monitoring and control of timber harvesting, establishment of nature reserves, development of integrated wood utilization and afforestation. These activities play important roles in reducing the loss and depletion of natural forests, but extensive utilization has yet to be adequately resolved.

In 1998, the Government imposed logging bans on natural forests in the upper reaches of the Yangtze River and the middle and upper reaches of the Yellow River to halt the deterioration of the natural environment and safeguard sustainable development. As part of this plan, the Natural Forest Conservation Program (NFCP) to cover China’s chief natural forest areas was formally initiated.

Current state of natural forest resource protection

The Government and the SFA, executing forest management on behalf of the State, have initiated laws, regulations and programs to enhance natural forest protection, including:

1. Normalizing felling systems and controlling the consumption of wood from natural forests. Timber output has been reduced systematically since the early 1980s; selective cutting is replacing traditional large-scale clear cutting.

2. Expediting the development of nature reserves and parks with natural forests as the main constituent component. China has already successfully established the Xishuangbanna and Hainan tropical rainforest nature reserves. The Changbai Mountain, Wuyi Mountain and Shen Nong Jia nature reserves emphasize the protection of different forest vegetation types. The Wo Long and Di Qing nature reserves protect rare and endangered animal species, such as the giant pandas, golden monkeys and Manchurian tigers. The national forest parks of Er Mei Mountain, Huangshan Mountain and Zhang Jia Jie highlight forest-based ecotourism as a priority. Several forestry centers stress research and teaching.

3. Developing the wood-based panel industry to reduce dependence on natural forests. As of the end of 1998, the annual output of fiberboard and particleboard made from logging and processing residues totalled 1.4 million m³ and 1.1 million tons respectively, which helped reduce the annual consumption of standing timber by approximately 5.1 million m³.

4. Cultivating additional planted forest resources to reduce the reliance on natural forests. China has established timber and fuelwood plantations since the early 1950s. By the end of 1998, 17.5 million ha of timber plantations and 610 000 ha of fuelwood plantations had been established. These types of plantations play an important role in reducing harvests in natural forests.

In mid-1998, the Government decided to remove large areas of natural forests from timber production. This was carried out first in the ecologically fragile upper reaches of the Yangtze River, the middle and upper reaches of the Yellow River and the upper reaches of the Songhuajiang River. Strengthening the management of natural forests to maintain and restore ecological functions, China began large-scale protection of natural forests.

Evolution of macro-policies relevant to natural forest protection since 1949

Since founding the People’s Republic of China in 1949, the Government focused mainly on developing the economy. Forestry science and technological information received relatively lower priority. The consequent lack of public awareness about the importance of forest resources resulted in a dramatic decline in China’s natural forest area. From the 1950s to the 1990s, forest harvesting took place in virgin forests and natural secondary forests. China has recently raised awareness about the importance of preserving the natural environment. The country has subsequently shifted from a mentality of exploitation to one of preservation.

While the forests were being harvested to fuel the developing economy, certain sectors of the Government were concerned with the level of timber consumption. Several events and initiatives illustrate support for forest protection, even during early stages of the country’s economic development. At the first national forestry conference, held in 1950, a guiding principle of “protecting forests in an all-round way, afforestation in key localities, rational felling, and rational utilization” was formulated. In 1962, the late Premier Zhou Enlai stressed the need to reconcile better forest management and utilization with forest protection during an inspection of northeast China’s forest area.

In the 1970s, the Ministry of Forestry (MOF) revised the “Management Measures of Felling and Regeneration.” The main components of these measures include banning clearcuts around large reservoirs, lakes and near major rivers and their first and second order tributaries. Clearcuts were also restricted in natural forests and ecologically fragile areas.

In 1979, China promulgated the Forest Law,¹ Wildlife Protection Law, and Regulations on Wildlife-based Forest Reserves. These laws were the first to use legal means to enforce forest protection. They include clear stipulations about the felling and utilization of forests and natural resources, especially the protection of tropical rainforests and wildlife. After participating in the United Nations Conference on Environment and Development (UNCED), Rio de Janeiro, Brazil in June 1992, the Chinese Government formulated several forest protection directives, including the “Guidelines of Forest Activities,” and the “Action Plan on Biodiversity Maintenance.”

Unfortunately, the guiding principles, policies, and regulations regarding the protection of natural forests and the control of over-cutting were not effectively implemented. More than two-thirds of the natural forests have suffered varying degrees of destruction. Protected natural forests are less than one-third of China’s total forest area, the majority of which are nature reserves designated as special purpose areas, or natural forests in Tibet that are very difficult to access by loggers. In 1993, Hainan province first proposed a logging ban for its 320 000 ha of tropical rainforests, which was subsequently approved by the People’s Congress in 1994.

In 1997, President Jiang Zemin called on the people to rebuild a beautiful northwest China by restoring degraded natural areas. The following year, the Government decided to ban logging in natural forests in the upper reaches of the Yangtze River, the medium and upper reaches of the Yellow River, and in State-owned forests in 17 provinces of northeast China, Inner Mongolia and Hainan by establishing the NFCP. The decision was reflected in the “Suggestions of Central Committee and State Council on Reconstruction after Flood, Harness of Rivers and Lakes and Water Conservancy Project Construction.”

To effectively implement the logging ban of 1998, the following measures are being taken. First, a special team of forestry police and full-time guards is being employed to enforce forest protection and suppress illegal cutting. Second, forest workers are being re-deployed and resettled. Third, several small investment projects are being introduced in phases to demonstrate the potential for new profitable State-owned and private activities. Fourth, provincial Governments are receiving funds from the national Government to assist workers unemployed as a result of the logging bans. Fifth, retirees receive a pension from the national Government to reduce the cost to State enterprises. Sixth, the Government is offering tax and credit breaks to encourage commitment to development projects.

Experiences of natural forest resources protection

During China’s 50 years of organized forestry and forest protection activities, there have been both successful experiences and bitter lessons. The main successes are:

• a policy framework for balancing protection with harvesting and utilization of the natural forests was gradually elaborated;
• the country’s forestry development strategy was adjusted to gradually increase afforestation and systematically reduce timber output;
• measures were taken to ensure that forest regeneration would keep pace with logging;
• large-scale establishment of tree plantations was launched, especially for producing timber and fuelwood;
• industries were encouraged to use logging and processing residues to reduce waste and dependence on natural forest resources;
• forest enterprises were encouraged to develop non-forest and non-wood industries to reduce the reliance on natural forests; and
• nature reserves and forest parks were established to expand the protection of natural forests.

The main mistakes and lessons drawn from the experiences in natural forest protection are:

1. Since the overriding goal of forest management in China has been timber production, sustainable management principles have not been fully accepted. Between 1949 and the mid-1980s, exploitable resources in most State-owned forest bureaus sharply declined and the country entered a “resource crisis.” China’s overall “economic difficulty” encouraged ever-increasing harvests of forest resources to generate revenue. This vicious circle intensified the destruction of natural forests.

2. The integration of administrative and commercial activities in the State forest bureaus was an important cause of over-harvesting natural forests. During the initial phase of operation, almost all the 136 State-owned forests were natural forests. The forest bureaus had to generate funds for public security, courts and schools, but they were also responsible for carrying out Government functions. As the population in forest areas continued to increase, the amount of funds needed for public services also grew, and the forest bureaus were compelled to harvest more timber to generate revenue.

3. The issue of separating ownership from operation rights has not been solved. The forest bureaus are responsible for both forest production and cessation of illegal felling. In the past especially when they encountered issues that conflicted with their interests, they usually acted in favor of economic returns. In addition, since the bureaus have been ineffective in enforcing timber harvest laws, farmers continued to indiscriminately clear forests to create farmland.

Hundreds of years of warfare, climatic changes and human activities have diminished the area and quality of China’s natural forest resources. This decline has continued to worsen, as manifested in the following ways:

1. Soil erosion has seriously affected 3.7 million km², with an increase of 10 thousand km² per year. Heavily eroded areas in the Yangtze and Yellow River basins alone totalled 1 million km². Excessive siltation is not only a threat to the normal operation of key water control projects such as the Gezhou Dam, Three Gorges and Xiao Long Di, but also affects agriculture and economic development.

2. China’s desert has reached a size of 2.6 million km² and is increasing by more than 2 460 km² each year. Water flow in major rivers has also become more erratic, with some rivers ceasing to flow or flowing intermittently for long periods.

3. From the 1950s to the 1990s, natural disasters increased both in terms of area impacted and rate of occurrence (Table 5). In 1998, an extraordinary flood in the Yangtze River valley resulted in a direct economic loss of 166.6 billion yuan², a level of destruction seldom seen in history.

4. Fifteen to twenty percent of China’s plant and animal species are threatened by habitat deterioration. Of the 97 animal species under the Government’s first-class protection, 20 are on the verge of extinction.

Year	Area affected by natural disasters	Area affected by floods
1952-1959	10 466	4 963
1960-1969	17 731	5 854
1970-1979	11 584	2 243
1980-1989	20 390	5 528
1990-1997	24 982	8 544

Source: China Calamity Report

The goals of the NFCP are to:

• achieve basic improvements of the natural environment in the upper reaches of the Yangtze River in 5 years and a remarkable improvement in 10 years;
• achieve basic improvement of the natural environment in the middle and upper reaches of the Yellow River in 10 years and a remarkable achievement in 20 years, including reforestation and greening of waste lands;
• implement forest protection measures in northeast China, Inner Mongolia, Hainan and Xinjiang to rehabilitate the natural forests, improve stand quality and ecosystem functions; and
• ensure that programs to rehabilitate China’s natural environment are successful and ongoing for several decades.

The specific objectives are to:

• reduce timber harvests from natural forests by 19.9 million m³ from 1997 to 2003;
• conserve 41.8 million ha of natural forests in the upper reaches of the Yangtze River, upper and middle reaches of the Yellow River, and in Inner Mongolia, Northeast China, Xinjiang Ugur Autonomous Region and Hainan Province; and
• establish 21.3 million ha of timber plantations from 2000 to 2005 in the upper reaches of the Yangtze River and the upper and middle reaches of the Yellow River.

The total forest area covered by the NFCP is 123.7 million ha that includes 56.2 million ha of natural forests and 11.8 million ha of plantations (Table 6).

Table 6. Area of forests covered by China’s National Forest Conservation Program (thousand ha)

Region	Forest area	Natural forests	Plantations	Open woodland & shrub-land	Land with immature trees	Non-forested land	Other forest-land
Yangtze basin	55 150	22 800	5 890	15 680	960	9 810	10
Yellow basin	34 400	7 580	3 870	7 130	960	14 830	30
N. E. & Inner Mongolia	31 690	24 390	2 050	580	1 370	3 270	30
Hainan	410	320	0	10	10	70	-
Xinjiang	2 040	1 100	0	600	20	260	60
Total	123 690	56 190	11 810	24 000	3 320	28 240	130

Nearly all commercial logging in natural forests in 13 provinces in the upper reaches of the Yangtze River and the middle and upper reaches of the Yellow River will be banned by the beginning of 2000. This will ensure protection of 30.4 million ha of natural forests. In 2000, the timber output in this area will be decreased to only 1.1 million m³, a 91.6 percent reduction.

A significant decrease in State-owned timber output in northeast China and Inner Mongolia will continue past 2000. At the same time, the timber output in the Xinjiang forests will also decrease significantly. In 1997, the timber output from these forests was 18.5 million m³. By 2003, the projected output will be 11 million m³.

In 1997, the timber output from all the natural forests included in the NFCP was 32.1 million m³. It decreased to 29.3 million m³ in 1998, and to 22.8 million m³ in 1999. It is expected that timber output will be further reduced to 12.1 million m³ by 2003 (Figure 16).

Figure 16: Timber output from natural forests under China’s National Forest Conservation Program

According to NFCP plans, strict logging bans will be implemented in 41.8 million ha of natural forests. Protection and management of these forests will be strengthened either through specially assigned personnel or with contracted local forest workers or forest farmers. Small groups will be established to work in restricted forests, remote mountainous regions, and less accessible and sparsely populated areas. Individual contractors will be hired to oversee densely populated areas, and those that are adjacent to farmlands. The individual contractors will be given rights to use forest resources in their assigned areas. Profits will accrue to them as long as the protection and management of the natural forests are not compromised. Natural forests without marketable resources will be monitored by special patrols. Logging bans are also expected to be imposed in other forests, open woodland, shrubland and afforested land with immature trees.

To control soil erosion and improve the natural environment of the Yangtze and Yellow River basins, logging of natural forests will be banned and protection and management activities will be intensified. About 21 million ha are expected to be afforested from 2000 to 2010.

The State-owned forest bureaus will have to lay off 1 million workers as a result of the logging bans. A key issue is the generation of alternative employment opportunities. Some workers formerly engaged in harvesting will be employed in protection and management jobs. Employment will be generated in the plantation sector and by developing non-timber forest product industries. Workers not interested in alternative jobs will be paid a lump sum settlement allowance of up to three times their previous year’s average wage. Forest industrial enterprises will establish, as and when needed, a redeployment service center to retrain unemployed forest workers and provide them with basic living expenses and medical care, as well as old-age and unemployment benefits.

Policies and measures

Administrative measures

Local Governments will adopt an administrative system to ensure proper implementation of the NFCP. Task forces will be formed and group leaders identified at the provincial and local Government levels.

Government documents mandating specific logging bans will be issued in support of the NFCP. After the catastrophic floods in 1998, logging of natural forests was banned along stretches of the Yangtze and Yellow Rivers, as well as in Sichuan, Yunnan, Chongqing, Gansu, Shaanxi and Qinghai, with resolutions from local Governments to strengthen protection of their natural resources.

Monitoring natural forest protection efforts by grassroots units will be stressed. Field visits by Premier Zhu Rongji, as well as officials of the SFA, State Council, provincial and local Governments are being made to ensure firm commitment to forest protection under the new program.

Financial measures

Funds for the NFCP will be provided primarily by the central Government, with supplementing input from local Governments. The Center for NFCP under the SFA is currently formulating regulations and rules for allocation and use of funds. Local Governments will also be required to bear approximately one-third of the loss of local revenues resulting from the logging bans and restrictions.

Technical support measures

Since the 1970s, the forestry sector has developed many innovations through collaborative research and has used them in natural forest protection. Further research should be promoted, along with field application of suitable knowledge and technologies.

A sound management system and monitoring at all levels will be necessary for proper implementation of the NFCP. A system for quality control will also be established, accompanied by technical standards for project construction, scientific index system, expert consultation, and feedback, in accordance with the NFCP design and standards.

Training is crucial to implement the NFCP. Training will be programmed at three levels. The central forestry department is responsible for training managerial and key technical personnel at the provincial level. The provincial divisions will train managerial and key technical personnel at the prefecture, county, and forestry bureau levels. Finally, county units will focus on the training of forestry cadres, key technicians and farmers at township and village levels.

ECONOMIC ASSESSMENT OF THE NFCP

Impacts on timber production

An analysis of China’s historical timber production and supply reveals distinct regional characteristics. The proportion of timber production from 1949 to 1997 by forest area and regions³ is shown in Figures 17 and 18, based on data from the former MOF and the SFA.⁴ The majority of the domestic timber was from State-owned forests in the northeast, northwest, and southwest.

The implementation of the NFCP will have divergent impacts on timber production in different regions. Timber output from the southwest and northwest State-owned forests will decrease significantly. This may stimulate southern China and other areas to expand timber production. In fact, the southern collective forest area has increased its supply of timber and is currently the leading source of timber produced in the country. The proportion of timber from plantations will also be increased. The central and western regions, which used to be China’s main timber producing areas, will very likely be most affected by the NFCP. Implementation of the NFCP also provides a great opportunity for the eastern region to cultivate forest resources and develop timber production.

Figure 17. Proportion of timber production by forest area in China, 1950-1997

Figure 18. Proportion of timber production by region in China, 1950-1997

Impacts on industrial timber supply

China’s timber comes chiefly from domestic producers, and includes that which is harvested from both State-owned and non-State forests. The targeted annual harvest of State-owned forest timber was 61.7 m³ from 1983-1997. The lowest amount actually harvested was 52.3 million m³ in 1983, while the highest was 67.7 million m³ in 1995. Timber from non-State sources, which was not included in annual harvest targets, totalled more than 19 million m³ per year between 1984 and 1991, and was over 20 million m³ per year from 1992 to 1997 (Table 7).

Table 7. Volume of China’s domestic timber production, 1983-1997 (million m³)

Year	State-owned forest production	Non-State forest production	Total
1983	52.3	-	52.3
1984	63.9	19.7	83.6
1985	63.2	19.5	82.7
1986	54.8	17.0	71.8
1987	64.1	19.8	83.9
1988	62.2	19.2	81.4
1989	58.0	19.7	77.7
1990	55.7	18.9	74.6
1991	58.1	19.7	77.7
1992	61.7	20.9	82.6
1993	63.9	21.7	85.6
1994	66.2	24.4	90.6
1995	67.7	25.0	92.7
1996	67.1	24.8	91.9
1997	64.0	23.6	87.6

Note: Source for State-owned forest production: Statistics Department of SFA

Non-State forest production: estimated from various sources

Table 8. Industrial timber consumption by sectors in China, 1993-1997 (thousand m³ and percent)

Sector	1993		1994		1995		1996		1997
	Volume	percent	Volume	percent	Volume	percent	Volume	percent	Volume	percent
Construction	57 240	67.7	63 390	66.2	52 300	59.0	56 850	62.2	58 300	63.9
Furniture	2 550	8.9	12 190	12.7	12 680	17.2	12 680	13.9	12 000	13.2
Coal mining	6 860	8.1	8 050	8.4	7 900	8.8	7 900	8.6	7 640	8.4
Paper	5 770	6.8	3 780	6.0	7 610	7.9	7 610	8.3	6 950	7.6
Stationery	3 290	3.9	2 460	2.6	2 330	2.6	2 480	2.7	2 500	2.7
Vehicle & ship	2 130	2.5	2 190	2.3	2 210	2.6	2 210	2.4	2 160	2.4
Chemical	700	0.8	720	0.7	750	0.8	730	0.8	710	0.8
Sleepers	700	0.8	560	0.5	540	0.6	540	0.6	530	0.6
Chemical fiber	2 130	0.4	390	0.4	390	0.5	390	0.4	380	0.4
Total	84 610		95 730		88 620		91 390		91 170
Plywood	5 320		6 520		18 980		12 260		19 250

Sources: Yearbook of Light Industry; Strategy of Forestry Development in 21 Century; Economic and Technological Indices of Peasant Used Timber

Table 9. Volume of timber available for China’s domestic consumption (million m³)

	1993	1994	1995	1996	1997
Domestic timber production*	85.6	90.6	92.7	91.9	87.6
Imports	8.2	7.5	6.9	7.3	9.1
Exports	4.5	5.8	7.9	7.3	8.6
Timber available for domestic consumption	89.3	92.3	91.7	91.9	88.1

Note: Timber available = domestic timber supply + imports - exports

Comparing the volume of timber available (Table 9) against the actual volume consumed (Table 8), it can be seen that the volume of timber available is on the decline, while domestic consumption is increasing slightly (Table 10). During the years when there was a deficit in the balance (1994 and 1997), the balance from previous years were used to meet the demand. However, if the trend of decreasing supply and increasing demand were to continue, then the surplus from previous years would not be sufficient to keep up with demand.

Table 10. Volume of timber available for China’s domestic use and actual consumption (million m³)

	1993	1994	1995	1996	1997
Timber available for domestic consumption	89.3	92.3	91.7	91.9	88.1
Actual domestic consumption	84.6	95.7	88.6	91.4	91.2
Balance	4.7	-3.4	3.1	0.5	-3.1

By 2003, the NFCP targets to reduce timber production from the natural forests by 19.9 million m³. Under such circumstances, the gap between supply and demand would become more acute and China would very have to seek alternative supply sources, most likely through expanding its forest plantations and imports.

Impacts on timber prices

Despite the projected declines, existing stocks and imports will keep timber supplies stable until 2003. Therefore, domestic timber prices are not expected to change drastically in the short-term, except for the occasional price fluctuations. For example, timber prices were only slightly higher during the annual Fall Timber Trade Fair in Nanjing in 1998. Common tree species were approximately 5 percent more expensive after the logging ban was announced, and prices for species for special uses were approximately 10 percent higher. Prices are likely to continue to increase because the gap between supply and demand will widen.

Impacts on local non-industrial timber

Non-industrial timber is used mainly as fuelwood, or by farmers for general household purposes. Historically, consumers rely mainly on the natural forests to fulfil such needs. Fuelwood accounted for about 30 percent of yearly total consumption of forest resources, while household activities, including construction, utilized 20 percent. The NFCP, therefore, will also reduce non-industrial timber supply.

The Government is adopting a number of measures to encourage people to build brick and concrete homes instead of wooden framed houses. It is also promoting the establishment of fast-growing fuelwood plantations, development of alternative energy such as coal, gas, solar energy, biogas, and hydroelectricity, and improved stoves.

Sources of timber supply

Apart from its domestic sources, China has also relied on imports to meet its timber demands. However, the high foreign exchange rate makes this approach unattractive as a long-term measure. The NFCP logging bans, coupled with the deteriorating environmental conditions of the timberlands, render the domestic timber supply quite unpredictable. The optimum solution is a two-pronged approach of increasing imports and maximizing domestic timber production.

More intensive thinning and tending regimes of middle-aged and immature timber stands can help improve their productivity. Scientific and technological advances can also be used to increase the utilization rate of forest resources. Utilizing small-dimension logs for wood-based panels and pulp and paper offers further opportunities, and demands can be partially met by ensuring the use of non-timber substitutes. In addition, increasing the growth and yield of timber plantations through the use of improved planting stock and better management should not be overlooked.

These approaches, in conjunction with the imports of medium- and large-diameter timber and high-grade pulp and its products, can resolve the supply and demand imbalance. Other remaining issues include improving the levels of afforestation and silviculture, and identifying suitable land to extend the forest area.

Timber plantations as an alternative source of supply

After nearly 50 years of development, the area, stock and productivity of China’s timber plantations have increased significantly. Today, China has the largest area of plantations in the world, amounting to 34.3 million ha, of which 17.5 million ha are industrial timber plantations, with a growing stock of about 578 million m³.

The Government plans to gradually shift timber production from natural forests to plantations. However, the output from plantations is still below expectations and needed volumes. Plantations will supply 13.5 million m³ in 2000 and 39.3 million m³ in 2005 (Table 11). Chinese fir, Masson’s pine, larch, Chinese pine and cypress account for 88.5 percent of coniferous plantations. Poplar, eucalyptus, soft broadleafs, hard broadleafs and mixed broadleafs account for 92.8 percent of broadleaf species. Based on these projections, it may be possible for the plantations to become the main source of industrial timber if forest management practices are improved and the plantation areas and species structure are adapted to market demands.

Impact on the timber industries and international trade

Impacts on the wood industries

China’s wood industry consists mainly of sawmills, woodchip processing, and wood-based panel producers. The success of the industries is directly related to the availability of timber. The main source of raw material is timber from nearby forests under the control of the provincial departments of forestry and their affiliated local organizations.

Table 11. Volume of China’s timber plantation production by species (thousand m³)

	1994-1996	1997	1998	1999	2000	2005
Chinese fir	2 780.0	2 780.0	2 780.0	5 280.0	5 280.0	17 850.0
Masson’s pine	39.0	39.0	39.0	39.0	390.0	2 290.0
Larch	83.0	83.0	83.0	83.0	83.0	83.0
Chinese pine	0.4	0.4	0.4	0.4	0.4	60.0
Cypress	0.0	0.0	0.0	0.0	0.0	37.5
Others	263.0	263.0	263.0	263.0	263.0	1 580.0
Conifers subtotal	3 165.4	3 165.4	3 165.4	5 665.4	5 665.4	21 900.5
Poplar	1 750.0	1 750.0	5 760.0	5 760.0	5 760.0	14 580.0
Eucalyptus	170.0	110.0	110.0	110.0	1 290.0	1 990.0
Soft broadleafs	490.0	490.0	490.0	490.0	490.0	620.0
Hard broadleafs	32.0	32.0	32.0	32.0	32.0	32.0
Mixed broadleafs	60.0	60.0	60.0	60.0	60.0	120.0
Others	150.0	150.0	150.0	150.0	150.0	100.0
Broadleafs subtotal	2 652.0	2 592.0	6 602.0	6 602.0	7 782.0	17 442.0
Total	5 817.4	5 757.4	9 767.4	12 267.4	13 447.4	39 342.5

In 1998, shortly after the NFCP came into effect, State-owned wood processing enterprises were badly affected by the decline in production and export volumes. China’s output of wood-based panels declined by 35.9 percent to 10.6 million m³, sawntimber by 11.1 percent to 17.9 million m³ and woodchips by 17.4 percent to 4.4 million m³. The value of the State-owned wood processing industries decreased by 6.5 percent to 6.2 billion yuan, and that of related sawntimber and woodchip production by 4.8 percent to 2.6 billion yuan. Similarly, the export value of sawntimber and woodchips suffered a serious setback of 51.9 percent, dropping to 454.5 million yuan. Only the export value of wood-based panels, valued at 103.8 million yuan, showed an increase of 3.6 percent.

Many small-scale enterprises had operated with outdated equipment and inefficient management. There had been little accountability for costs and revenues, and basic elements of competitiveness were frequently lacking under the former centrally planned system. However, they managed to maintain profitable production levels because raw material was inexpensive and easy to acquire. Since the implementation of the NFCP, harvested volumes have declined significantly forcing several enterprises to reduce or halt production.

Several private forest product companies have also been affected by the NFCP. In 1998, the production levels for wood-based panels, sawntimber and woodchips decreased by 5.9 million m³, 2.5 million m³ and 730 000 m³ (44.5, 14.0 and 40.3 percent) respectively. Located near economic centers and along the coastal areas, they are more exposed to market forces, and derive their raw material from domestic and international suppliers. Nonetheless, many firms had to sharply curtail their production.

Impacts on the international trade of timber products

China increasingly depends on timber imports, particularly hardwood logs and wood-based panels (Table 12). Log imports from 1981 to 1997 totalled 93 million m³, averaging 5.5 million m³ per year, or 9.4 percent of the country’s timber supply. The greatest volume of log imports was 10.7 million m³ in 1988, accounting for 19.1 percent of the total log supply that year. During the 1980s, overall timber and wood product imports increased at an average annual rate of 8 percent, except in 1981. However, while the volume of imports generally increased during the 1990s, the share of imports as a percentage of total wood supply declined at a rate of about 8 percent per year. One exception was imports of sawntimber, which exhibited a reverse trend. Sawnwood imports, which averaged about 1 percent of domestic production in the 1980s, increased noticeably in the 1990s.

Table 12. Volume of China’s major forest product imports, 1981-1997 (thousand m³)

Year	Log	Sawntimber	Plywood
1981	1 871	75	259
1982	4 652	132	514
1983	4 413	162	304
1984	7 956	600	573
1985	9 820	148	824
1986	7 818	165	621
1987	7 180	98	1 406
1988	10 675	392	1 352
1989	6 410	125	1 073
1990	4 193	252	1 377
1991	4 097	306	1 463
1992	4 670	974	1 585
1993	3 459	1 208	2 229
1994	3 335	896	2 109
1995	2 583	851	2 083
1996	3 186	933	1 777
1997	4 471	1 325	1 489
Total	92 989	8 642	21 038

Source: China Customs Statistics

Table 13. Volume of China’s major forest product exports, 1988-1997 (thousand m³)

Year	Logs	Sawntimber	Plywood	Veneer
1988	314	3	8	-
1989	475	4	9	-
1990	91	86	21	2.
1991	135	98	22	4.
1992	237	923	238	72
1993	155	330	45	16
1994	91	390	106	17
1995	97	408	129	21
1996	64	383	177	20
1997	63	387	438	3

Source: China Customs Statistics

Table 14. Volume of China’s log and sawntimber imports, 1998 and 1999 (m³)

Category	1998	1999	Percent increase
Logs	4 190 000	9 010 000	115.0
Sawntimber	1 468 905	2 428 743	65.3
Total	5 658 905	11 438 743	102.1

Source: China Customs Statistics

Category	1998	1999	Percent increase
Wood and wooden products, charcoal	1 725 551	2 615 575	51.6
Softwood and softwood products	11 603	12 054	3.9
Wood pulp and other pulp	1 000 872	1 478 052	47.7
Total	2 738 026	4 105 681	50.0

Source: China Customs Statistics

Russia is also emerging as an important supplier of logs and forest products to China. Currently, China mainly imports logs and pulp from Russia. South American and African countries are important sources of selected tropical hardwood logs. Southeast Asian countries such as Indonesia, Malaysia, Laos, Cambodia and Myanmar are also important due to their close proximity. China has imported particularly large volumes of plywood and dipterocarp logs from Indonesia and Malaysia, and high-quality timber from Myanmar. It is expected that China will also look to Australia and New Zealand as suppliers of timber imports in the future.

Impact on Government tax revenue and budgets

Government tax revenue and budgets will definitely be affected by the logging restrictions and the subsequent decline in timber production, particularly in areas where timber is a main source of income. Tax revenue from timber production and sales is earned primarily through Agriculture and Forestry Special Production taxes, value-added taxes, income taxes, business taxes, and other fees in accordance with local conditions. The Agriculture and Forestry Special Production tax is set at 16 percent, the value-added tax at 17 percent, income tax at 33 percent, and the business tax between 3 and 20 percent.

According to a survey conducted by the SFA after the implementation of the NFCP, the revenue for Lijiang prefecture of Yunnan province decreased by 126.83 million yuan annually. Estimates for Sichuan province indicated that its revenue was expected to decrease by 680 million yuan in 1998. Income from timber-related industries in the Ganzi, Aba and Liangshan prefectures averaged 80 percent of their total revenues, with Xinlong County in Ganzi topping the list at 98.3 percent. Xiangtang and Heishui counties in Aba (two poverty-stricken areas) are also highly dependent on timber revenues, which accounted for 91 percent and 86 percent of their total revenues, respectively. After the logging bans were implemented, the total revenue for Aba decreased by 30 million yuan in 1998. The Wenchuan paper mill, an affiliated enterprise of the Aba prefecture, with fixed assets of 130 million yuan, has stopped operations due to raw material shortages. Similarly, Leshan, whose forestry sector accounted for 61.42 percent of local revenue, lost 200 million yuan in 1998. Ermei, a famous timber-producing county, saw a decline of more than half its revenue (about 120 million yuan).

Such discouraging impacts need to be addressed and resolved for the NFCP to be successful. Looking from a broader and long-term perspective, the NFCP will have positive and far-reaching impacts on the sustainable development of the national economy and society as a whole. It will effectively help slow down the deterioration of China’s environment and reduce the frequency and adverse impact of natural disasters, thereby lessening the strain on the national economy and budgets.

Serious soil erosion has caused increased siltation in the Yangtze River and created a “suspended river” in the Jinjiang River section. The water level of the river is several meters higher than the riverbanks during the flooding periods, and is held back only by embankments. During the past four decades, Jinjiang has spent a huge amount of resources to build a 3 600 km wall along the Yangtze River and 30 000 km of embankments along its branches and tributaries.

The catastrophic floods in 1998 affected hundreds of millions of people and caused extensive damages to riverine areas. The State reacted by greatly increasing funding for flood control projects. During the months before the onset of the next flooding season, the State invested 46.5 billion yuan in water conservation projects. The cost for the embankment projects on the Yangtze River alone totalled 7.8 billion yuan.

Despite efforts to control flooding, serious economic and social costs continue to plague China. Flooding of the Yangtze River is increasing in frequency from about once to four times per decade. At the same time, water flow has become more erratic. In 1997, the river ceased to flow for 226 days, causing severe droughts, which again affected the economy adversely.

The NFCP, therefore, represents one way to help reduce the enormous financial and social costs of natural disasters. China’s overall economy is currently being restructured and capital resources are scarce. Expenditures redirected to deal with natural disasters only reduce China’s ability to address necessary restructuring issues. The NFCP will ultimately free capital resources for China’s development.

If the economies of forested areas are to improve, the local economy must also be restructured to focus on a broader-based and diversified system. Along with the traditional forest-dependent processing activities, new economic growth points and industries, including the development of tourism, cash tree crops and other suitable forestry and animal husbandry, need to be considered.

To counter the financial difficulties associated with the logging ban in the Sichuan province, members of the provincial Political Consultative Conference identified the following priorities:

• develop the province’s water resources, mining, and tourism and stabilize these sectors of the economy;
• establish stable agriculture and animal husbandry sectors by selecting and improving leading financially-viable enterprises, adjusting product and output structures to provide for a broader mix of goods and services, and integrating agricultural enterprises and farm households into the market economy;
• promote animal husbandry within the rural economy;
• apply modern forest management technologies to enhance the environmental functions of forests such as soil and water conservation; and
• fully utilize natural plant resources as a source of edible fungi, wild food and medicinal herbs.

The Aba prefecture decided to promote tourism to offset the timber revenue losses. It attracted 163 000 tourists in 1998, earning 152 million yuan, a 128 percent increase in revenue from 1997 and a 130 percent increase in the number of tourists. Revenue earned from tourism is now 30 percent of the prefecture’s GDP.

Distribution of the costs of implementing the NFCP

Several diverse activities, involving a large number of all stakeholders, are necessary to facilitate the implementation of the NFCP. Authorities directly overseeing the affected forests will have to simplify the administrative structures and cut expenses. The national Government will have to compensate local Governments for losses incurred as a consequence of the logging ban. Industries will need to implement managerial and economic reforms, re-deploy and compensate unemployed workers. Small private processing firms using timber from protected forests must find alternatives to continue operations or dissolve their companies and settle their obligations to creditors and employees.

The Government must also deal with the widespread rural dependence on fuelwood. Substituting coal or electricity for fuelwood may be an option in some places. The development of fuelwood plantations should also be encouraged.

The costs associated with implementation of the NFCP will be borne by the State, local Governments, private firms and individuals. Most of the compensation will be borne by the central Government, while the provincial Governments will pay a lesser portion. The direct cost to the State and local Governments is the loss of tax revenue from timber and other forest products. The central Government spent 4.3 billion yuan in 1998 and 6.1 billion yuan in 1999 to help implement the NFCP. Private firms will bear the cost of lowering or halting production. Workers will be affected by redundancies. Forest farmers lose by not being able to harvest timber and fuelwood.

ASSESSMENT OF ENVIRONMENTAL IMPLICATIONS OF THE NFCP

Biodiversity

According to the bio-geographic zoning criteria used in the Summary of China’s Biodiversity Protection, key protected natural forests include:

• Northeast China: Heilongjiang, Jilin;
• North China: Shaanxi, Shanxi, Henan, Hubei
• Northwest China: Inner Mongolia, Ningxia, Gansu, Xinjiang;
• Tibet-Himalaya: Qinghai, Tibet;
• Southwest China: Yunnan, Sichuan, Chongqing;
• Central China: Guizhou; and
• South Tropical China: Hainan.

China’s forests contain some of the richest biodiversity in the world due to the country’s large size and the extremely variable geographic conditions. Unfortunately, humans have destroyed much of the natural forests. More than half the habitats have disappeared in nearly two-thirds of the provinces. Protection of natural forest resources is therefore urgently needed as a means to conserve biodiversity.

China has ranked its provinces according to their relative priorities and importance for protection of biodiversity, with Grade A provinces being accorded the highest priority, Grade B second priority, and Grade C the last priority. The country’s four Grade A priority provinces (Yunnan, Sichuan, Xinjiang and Jilin) and seven Grade B priority provinces are all included the NFCP (Table 16).

Table 16. Status of protected natural forests by provinces in China

Province	Land area (km2)	Forest area (km2)	Plant species close to extinction	Reserves		Priority
				Area (km2)	Number
Heilongjiang	455 000	152 944	16	4 172	16	B
Jilin	189 000	60 789	24	7 999	7	A
Shaanxi	207 000	44 714	36	1 842	7	B
Shanxi	157 000	8 100	14	624	4	C
Henan	167 000	14 199	25	723	16	C
Hubei	186 000	37 790	44	1 467	6	B
Inner Mongolia	1 158 000	137 401	20	0	0	C
Ningxia	66 000	951	6	935	6	C
Gansu	450 000	17 690	32	10 374	19	B
Xinjiang	1 650 000	11 209	24	100 021	21	A
Qinghai	721 000	1 945	10	7 731	4	B
Tibet	1 228 000	63 203	31	2 097	7	B
Yunnan	383 000	91 965	154	11 635	30	A
Sichuan	566 000	59 108	78	27 019	63	A
Guizhou	176 000	23 093	65	1 335	9	C
Hainan	34 100	2 420	-	737	31	B

Note: Sichuan’s data include Chongqing

Soil erosion and fertility

Soil erosion has been one of China’s main environmental problems hindering the development of the national economy. According to a 1990 remote sensing survey, the area affected by erosion amounted to 3.7 million km², or 38.3 percent of China’s total land area. The annual amount of eroded soil was 5 billion tons. This is the equivalent to 1 centimeter of surface soil of the total area of farmland, with a further loss of nitrogen, phosphorus and potassium that is equivalent to over 40 million tons of standard fertilizer. The implementation of the NFCP should reduce soil losses substantially.

The Yangtze and Yellow River basins encounter the most severe soil erosion in China. The area affected by erosion in the Yangtze River basin increased to 620,000 km² in the early 1990s from 360 000 km² in the 1950s. The middle and upper reaches of the Yellow River cover 640 000 km² of the loess plateau, and soil erosion has affected 450 000 km² of the area.

Desertification

The western central region of China is affected by severe desertification, with grave impacts on industrial and agricultural production. In northern China, there are approximately 30 days of strong winds with very high dust levels per year, damaging more than 14 million km² of farmland and reducing grain production. The Lanzhou Institute of Desertification of the Chinese Academy of Sciences reported that 31.8 percent of desertification was induced by the destruction of natural vegetation, 28.3 percent by overgrazing, 25.4 percent by over-reclamation, and 8.3 percent by improper utilization of water resources. Direct economic losses caused by desertification total approximately 54 billion yuan per year.

Water resources

The average discharge of the Minjiang River in Sichuan decreased from 14.8 billion m³ when the People’s Republic of China was first founded in 1949 to 13.1 billion m³ in 2000, a drop of 11.5 percent. Between 1988 and 1997, the discharge of the Qinghai River, the source of the Yellow River, declined by 4 billion m³. From 1978 to 1987, the lower reaches of the Yellow River dried up seven times, the longest drought lasting 20 days. In recent years, droughts have become successively longer, lasting 226 days in 1997 and affecting 100 cities and 100 million people. Since China’s natural forests are located primarily in important watersheds of major rivers (Table 17), forest protection is crucial in solving the country’s water shortage.

Table 17. China’s natural forest resources by river basin

River basin	Area (thousand km2)	Percent of total area	Stock (billion m3)	Percent of total stock	Forest cover (percent)
Yangtze	25 510	29.2	2.351	28.1	22.0
Yellow	2 790	3.2	0.179	2.1	5.9
Zhujiang	7 060	8.1	0.327	3.9	26.7
Heilongjiang	31 440	36.0	2.873	34.3	40.2
Huaihe	540	0.6	0.016	0.2	8.3
Haihe	500	0.6	0.015	0.2	8.1
Liaohe	1 020	1.2	0.049	0.6	14.6
Songhuajiang	16 050	18.4	1.395	16.7	33.2

ASSESSMENT OF SOCIAL AND ECONOMIC IMPLICATIONS OF THE NFCP

Impacts of the logging ban on the employment of forest workers and forest farmers

Employment statistics indicate that 1.1 million forest workers, including those involved in road construction, mechanical repair, transportation, log depots, log processing, wood processing and logging, will lose their jobs when the logging bans are implemented. This will increase the pressure on China’s social welfare system. Proper redeployment of these workers is critical for the success of the NFCP. State and local governments and relevant private firms are developing several strategies to minimize the impacts on employment and, consequently, on China’s social welfare system.

Forest ownership is mainly held by the State, with minimal collective tenures. Private ownership of forests is limited mainly to mountainous plots maintained by farmers and trees scattered around their houses. These farmers would not be much affected by the logging ban and subsequent closure of small wood processing plants unless they are employees or seasonal loggers.

Efforts will be made to re-deploy laid-off employees to work in forest management and protection, afforestation and silviculture. It is estimated that one person will be re-employed in forest management or forest protection for every 187 to 380 ha of natural forests. The central Government will pay the salaries of employees in forest management and protection, whereas salaries of workers involved in afforestation, silviculture, and exploitation of resources will come from the capital improvement investment funds, private firms, and bank loans. Laid-off employees can also seek alternative employment on their own or through Government re-employment centers. They will receive a lump-sum severance pay equivalent to three times the average local wages from the central finance department. Finally, workers with private companies who cannot be reassigned and do not want to voluntarily terminate their contracts, can consult re-employment centers funded by the central financial department. They will also receive monthly unemployment benefits for up to three years. If they cannot find another job within three years, they will be given social welfare support to cover minimum living expenses. Local governments and private firms are also encouraged to retrain and help workers upgrade their skills, and to create new job opportunities.

Recent evidence indicates that laid-off production workers re-employed in forest management and protection are happy to accept the offer because the work is easier with almost the same pay. Those who found new jobs through the job centers often receive higher wages because they have acquired new skills through re-training.

Economic impacts

Impacts on the income of Government and private enterprises

Subsidies paid to State enterprises by the central Government and local financial departments as a result of the logging bans are higher than their foregone profits. For example, the Government paid the Da Xing An Ling Forestry Company in Heilongjiang province a 330 million yuan subsidy in 1998. Even after deducting workers’ social security costs, the firm’s actual net income was still 2.2 times more than the losses incurred by decreased production. Many other forest products firms have had similar experiences.

Impacts on the income of forest workers and farmers

Approximately 60 percent of the central Government funds paid to affected areas are used to subsidize employment costs for State enterprises. Workers re-employed in forest management and protection are paid approximately 8 000 yuan per year, which is between 700 and 5 511 yuan higher than their former wages. Although forest farmers would be losing income from seasonal harvesting and timber processing, it is likely that they can be contracted for other forestry-related work. To stabilize their income, the central Government will also give preferential credit and tax breaks for alternative income-generating activities such as to tree breeding and forest nurseries.

Many laid-off workers seeking new jobs elsewhere do not find work quickly. These workers often have few skills and little experience. Therefore, the Government and private sector should offer technical guidance, training, and services to mitigate social impacts.

Impacts on social welfare

Currently, the State is responsible for many social services and amenities, including pension, education and medical care. Some forest bureaus and enterprises even pay local government expenses. However, forest revenues that previously subsidized these benefits have declined due to reduced harvesting and environmental deterioration even before the logging bans were imposed.

Despite that scenario, the central and local governments guarantee that policies will be developed and funds made available to help forestry enterprises and communities to deal with social welfare problems. One measure includes transferring education, medical care, public security, legal institutions, and the people’s courts to the jurisdiction of local governments. Central and local financial departments will jointly bear the expenses of these programs with the local departments providing most of the funds. The central Department of Finance will also give high priority to secure investments in affected areas.

CONCLUSIONS

Protecting the natural forests supports China’s policy of environmental protection and helps the country meets its commitments under international conventions. With an unevenly distributed forest cover of only 13.9 percent of the total land area, China needs more forests. Deforestation has not been effectively checked in many locations. Approximately 2 million ha of forestland have been converted to open woodland, shrubland, denuded land, and land for non-forest purposes each year. The Chinese Government considers environmental protection a basic national policy. Logging bans or restrictions are important for achieving this policy. In addition, the implementation of the NFCP is one of the Chinese Government’s means to fulfil its commitment to international agreements and global efforts to accelerate environmental protection.

The upper reaches of the Yangtze River and the middle and upper reaches of the Yellow River are the birthplaces of the Chinese civilization. They are sources of valuable raw materials and energy for economic development and the source of water for inhabitants in the valleys. However, overuse of the natural resources has slowed economic and social development. Deforestation is one of China’s greatest problems. Logging bans, afforestation and greening of degraded and sloping land are necessary to rehabilitate the Yangtze and Yellow River watersheds.

State-owned forests are important sources of income. Much of China’s timber comes from the Northeast and Inner Mongolia, and the Songhua and Nenjiang Rivers. The country’s main tropical rainforests are located in Hainan, a popular tourist region. The Xinjiang forest is an important water conservation area. Logging bans or reductions are necessary to rehabilitate the forest resource, improve the stand quality, and improve the ecological functions of these forest areas.

The NFCP is an important step to realize the country’s strategic objectives to protect and improve the natural environment. It also plays an important role in maintaining China’s social stability and in safeguarding sustainable development. In support of the NFCP, the Chinese Government has formulated relevant policies, endorsed enabling laws and regulations, and set up administrative, budgetary, and scientific structures to ensure that the NFCP objectives and tasks will be accomplished.

China’s NFCP will not only protect 56.2 million ha of natural forests but will increase the forest area by 22.7 million ha. It will help maintain China’s rich biodiversity, prevent soil erosion, and reduce the incidence of natural disasters. It will play an important role in reducing the financial pressures on the Government to provide relief for emergencies and disasters. It will help safeguard people’s lives and property and maintain social security. It will bring new opportunities and vitality to the economy, and transform economic growth patterns. China’s large-scale implementation of logging bans will also elevate the standard of living for many citizens.

Several countries have established successful forest protection programs. China has made a significant step in the right direction, thus attracting the attention of several developed countries. The next move is to participate in technical exchanges and cooperation with the international community to achieve the joint goal of natural forest protection.

POLICY OPTIONS AND NEW MEASURES

Prior to the 1980s, public awareness of the importance of protecting natural forests was poor and over-consumption of natural forest resources was common. Since then, China has strengthened its Forest Law, developed a logging quota system and made considerable progress in protecting its forests. With rapid economic development and ineffective enforcement, however, the logging quota was not observed and other forms of forest destruction took place, raising great concerns that the NFCP would fail. One assurance to prevent this from happening is to enforce supporting laws when implementing the logging bans.

Hainan and Sichuan provinces have formulated provincial regulations for natural forest protection that have gained enthusiastic support. Their positive experiences are now the basis for formulating national policies. Laws and regulations will be passed to give natural forests legal protected status. Organizations responsible for carrying out the duties will be identified, thus disassociating them from politics.

The NFCP is implemented by the SFA but involves numerous departments at the State, provincial, county and local levels. Proper planning and coordination are, therefore, very important. The objectives, scope, policies, responsibilities and implementing measures at each level must be clearly outlined and conveyed to all participants. The order of authority and command has to be identified and established at the State, provincial and county levels. Rules governing the management and funding of the NFCP should be formulated and an audit of the NFCP management and financial bodies should be incorporated. In addition, audits, public bidding, and supervision must be institutionalized.

Participation from all segments of society should be encouraged. A national campaign to raise public awareness of the importance and benefits of natural forest conservation is necessary. The State should fund the NFCP adequately. The reduction in local Government funds, loans and the redeployment of unemployed workers should be solved properly to instill the faith of the local Governments, forest industries and forest workers in the NFCP.

Although natural forest management and protection are very important for many aspects of the national economy and societal well-being, no permanent budget has been set aside for maintaining nature reserves. A policy must be formulated to mandate that the costs of maintaining the natural forest environment and forest protection are a public responsibility. Secure, long-term funds should be provided for these purposes. After years of deliberation, the prospects of establishing an adequate funding system are good. The relevant authorities should capitalize on current favorable public awareness and support, and implement such a policy to draw these funds from the national Government. The 1997 national Government revenue was about 150 billion yuan. If 3 percent would be used for ongoing management costs, 4 to 5 billion yuan per year would be available.

The means to achieve multiple-use forests have not received much attention at the local level. Several important questions are still to be answered:

• Should natural forests be managed for diversity?
• How should the forests be managed to maximize diversity?
• Should mature or over-mature forests be felled and utilized, or left to nature to take its own course?
• How should natural forests with logging bans be managed?
• Should non-timber resources in natural forests with logging bans be utilized?
• If yes, how should these forests be utilized?
• Should tourism, hunting and science education activities be allowed in protected natural forests?

Scientific research and development must support the implementation of the NFCP and find answers to these questions. The Government should fund research and development of non-wood substitutes for the construction, furniture and other wood-based industries to reduce the domestic demand for timber. For example, Longshen New Materials Co., Ltd. in Hunan province, has developed a non-wood substitute that has the appearance, feel and durability of wood. The product has surpassed the performance of some other products from Japan and has passed the scrutiny of the Chinese Commission of Science and Technology. Such products have the ability to substantially reduce the pressure on the natural forests and the Government should encourage their use.

Approximately one-third of the country’s wood consumption is for fuelwood. Solving the rural energy problem is an important issue. Rural biogas projects, and the use of coal and electricity should be promoted. Projects to develop wind, solar and geothermal energies should also receive Government support.

Logging bans in the natural forests are not the ultimate goal of the NFCP. Rather, the overall goal is to improve the economic, social and ecological benefits that forests can provide to society.

Logging bans have considerable economic impacts on forest industries. Redeployment of forest workers and support for non-wood and other non-forest-based industries will be important. Restructuring the economy and developing new industries must also be undertaken. The State should provide special loans and tax breaks to consolidate and expand natural forest protection. The key to effective forest protection in collective forests is support for farmers to find employment with wages comparable to those in forest industries. National commercial banks should use Government funds to provide special loans to farmers to support necessary economic restructuring.

It is also necessary to establish a preferential policy to support the cultivation of fast-growing and high-yielding plantations. Forestry authorities should select appropriate areas, and use good planning, design and technical approaches. Banks should provide special loans accordingly.