Indufor’s Dongliang (Kimi) Shi attended the Forum of Jointly Promote Responsible Wood Trade & Investment in the BRI Countries earlier in September. Below is a brief overview of the timber trade and investment situations and trends between China and the Belt and Road Initiative (BRI) countries. Source: Timberbiz
Key insights presented below on the timber trade under the BRI – China’s overseas economic and political engagement strategy are mainly from two Chinese scholars, Mr Chen Yong, researcher from the Research Institute of Forestry Policy and Information in Chinese Academy of Forestry; and Mr Tang Zhen-zhong, the Director of Information Centre in China Timber & Wood Products Distribution Association (CTWPDA).
The Status of Timber Trade and Investments between China and the BRI countries:
- The total forest area in the major BRI countries (Russia, Indonesia, India, Turkey, Thailand, Vietnam, etc.) represents 30.5% of the global forest area.
- The value of the forest product trade between China and BRI countries in-creased from US$48 billion in 2013 to US$72 billion in 2021.
- The volume of logs and sawnwood that China imported from BRI countries increased from 30 million m3 in 2013 to 41 million m3 in 2021.
- China’s cumulative direct investment in BRI countries from 2013 to 2020 was US$139.85 billion, of which US$3.2 billion was related to forest investment.
- Over 500 Chinese forestry enterprises invested in 19 BRI countries including Russia, the Association of Southeast Asian Nations (ASEAN), Uzbekistan, Kazakhstan, etc.
- Chinese forestry enterprises invested in about 60 million hectares of forest land in BRI countries, providing 30 000 jobs in the host countries in addition to the exports of Chinese labourers.
- More private forestry enterprises are joining the overseas forest investment and the investments are shifting to the integration of logging, processing and trade.
Challenges, Opportunities and Suggestions for the Forest and Forest Industry Supply Chain Development between China and BRI countries:
Challenges:
- Ecological issues caused by illegal logging and trade are one of the key issues restricting the development of a sustainable BRI timber supply chain.
- Global factors (such as the pandemic, geopolitical risks, the US-China trade conflicts, and the global inflation and economic downturn) challenge supply chain resilience and deteriorate the international trade environment.
Opportunities:
- Building a common high-quality supply chain is in the shared interest of both China and BRI countries. Both aim at moving from wood sourcing to industrial production.
- Continuously improved bilateral, multilateral, and regional cooperation mechanisms can increase and expand trade within the supply chains.
- The high and stable domestic demand in China for timber products can guarantee the efficiency and increase of timber and wood product exports from BRI countries.
Suggestions:
- Continue and expand forestry investment and trade cooperation with BRI countries under the BRI development framework.
- Accelerate the establishment of forest resource cooperation zones integrating timber harvesting, processing, logistics and services in BRI countries.
- Set up a government-bank-enterprise cooperation platform to expand business financing channels.
- Build and improve the domestic timber storage, processing, and trade bases in China.
- Accelerate the connection with international organizations and their regulations such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).
- Chinese Government to help foster leading Chinese forestry enterprises in the global value chains to improve the supply chain control capability.
- Strengthen guidance and supervision of the cooperation, aimed at China’s political risk mitigation.
The Belt and Road Initiative (BRI) is China’s overseas economic and political engagement strategy with a focus on infrastructure development, unimpeded trade, people-to-people bonds, financial integration, and policy coordination, which aims to ensure trade and supply chain connectivity for China. As of March 2020, 138 countries and 29 international organizations had signed co-operation agreements for the BRI.
