China
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Last updated: 2014
Laws & Regulations
Forestry Laws
As China’s economy has strengthened and living standards have risen, China’s demand for international timber and wood products has also grown substantially in recent years. It has also created an urgency for China to address its timber and wood production policies, forest governance and efforts to fight illegal logging. As a common via point in international processing of wood products, China is a common target and destination for illegally sourced and processed wood products. To combat the illegal products coming into and leaving China, the Republic’s Government has made efforts to address the issue head. Although a non-comprehensive list of applicable Chinese statutes and regulations, below is a collection of policies all operators working in China should know.
All Chinese forest lands are owned by the Republic of Chinese. Use-rights are allowed, and distribution responsibilities are assigned to state owned forest farms or bureaus, collective farms, or private enterprises. Mixed broadleaved secondary forests cover northeastern china and are the result of widespread clear-cutting decades ago. China imports most of its wood, and numbers have been increasing. In 2011 China imported nearly 250 million cubic meters of timber, as compared to less than 100 million cubic meters of exported timber in the same year.
Constitution of the People’s Republic of China (as amended 2004)
China’s Constitution and the legislation based on it provide the basis for China’s land tenure system. There are currently two types of land ownership in China: State ownership and collective ownership. Since constitutionally all land in China belongs to the people, local people are given use rights, but not tenure, for the property they occupy. Typically the collectively-owned land is allocated to small entities, such as individuals, communities, etc.
The State and managers of collectively-owned lands can decide whether and how to transfer use rights to parties such as state- or private-owned enterprises, individuals, and NGOs. Circulation to third parties is also possible, with restrictions (see Chapter VIII, Use Rights). Anyone can hold use rights, including foreign entities.
The Forestry Law (1998), amending Law from 1984
The Chinese Forestry Law of 1998 identifies five forest types: protection forests, special purpose forests, timber forests, economic forests, and fuel forests. These types can be further categorized as either for public benefit or commercial use. If a forest is identified as a public benefit forest, it is supposed to remain in a natural state to provide ecological and human health benefits. Commercial forests, on the other hand, are intended for revenue producing activities. In 2010, commercial forests comprised 57% of Chinese forests. Protected Forests and Timber Forests are the dominant forest designations in China. forest planning guides, and other forest-related policies dictate allowable and prohibited uses in forests. The law is fairly ambiguous about allowable and prohibited uses, with the exceptions of strongly encouraging afforestation and restricting timber harvests.
- Timber Harvesting- The State requires annual timber felling quotas to be set every five years, which effectively create a “ceiling” on maximum harvests. The goal is for the annual rate of timber growth to exceed consumption. The law provides limited direction about where and how timber harvest may occur, but it is very clear about strictly prohibiting timber harvest in certain types of special purpose forests, such as in nature reserves, ancient and historic sites, revolutionary memorial places, etc. To harvest timber, companies must have a timber harvesting license (Forestry Law, Article 32).
- Afforestation- Here, the Forestry Law is a clear advocate for afforestation, even calling it “an obligation that citizens should fulfill.”
- Long-term Forestry Plan- The “long-term forestry operating plan” should be approved by the relevant Forestry Administration, which supporting documents. The Plan must: (1) protect the ecological environment and promotion of sustainable economic development; (2) consider only existing forest resources; (3) be compatible with the overall land-use, water and solid conservation plan for the city, village or town impacted. At the same time, the long-term forestry plan must also include: (1) a forestry development target; (2) the ratio of forest categories; (3) forest land protection and use planning, and (4) tree planting and afforestation plan. (Forestry Law Regulations, Articles 12, 13).
Regulations for the Implementation of the Forest Law (2000)
The 2000 regulations to the Forestry Law define the rules and procedures of the forest registration system. Under the regulations, forest management and administration must be thoroughly planned and adhere to the approved working procedures for forests, trees and woodland areas. It also provides the rules for the operation, supervision and administration for timber harvesting in specific forest districts. The regulations also highlight the various penalties for non-compliance.
- Harvest Quotas- Individuals and companies must obtain a logging permit to harvest trees. The Chinese Government decides on the overall logging quota each year, but demand always exceeds the annual quota. Because there is little accountability and transparency in quota distribution, the process has become a rent-seeking tool for local forestry officials and agencies in many regions. Additionally, the flaws in the system inevitably lead to illegal logging.
The State and managers of collectively owned lands (i.e. a form of community property) can decide whether and how to transfer use rights for their respective lands. Transferring forest resource use rights is permitted, but it does not apply to wildlife, mineral resources or underground materials found on the land (Forestry Law, Article 5). Use rights in forests in touistic places, historic sites and/or in nature reserves, national parks or protected areas are not transferable. It is also illegal to transfer use rights when ownership of those use rights are disputable (Forestry Law, Article 6). There are three ways to obtain use rights: (1) bidding; (2) auction or (3) agreement (Forestry Law, Article 9,10,11). These use-rights transfers require documentation - a Forest Authority Certificate or Contract. Note that anyone can hold use rights, including foreign entities. The owner of use rights still has to abide by county and township land use plans and the government has to approve any changes to those plans. Article 15, Forestry Law (Amended 1998).
Forest Authority Certificate/ Use Right Contracts
The Chinese Government issues “certificates” of use while managers of collective lands issue “contracts.” Anyone receiving use rights for collective lands should receive at least two documents: a certificate from the local government and a contract from the collective land managers. The certificate should contain “substantially the same content as the contract but will be issued and sealed at the county level or higher and not bearing local signatures. A company must hold a valid Forest Authority Certificate or Contract to operate legally in the forests. Similarly, anyone logging the forest or using harvested wood for commercial sales must report its use in the State’s annual timber production plan ( Forestry Law Regulations, Article 29).
Environmental Protection Law (1989)
The Environmental Protection Law of China aims to prevent and control environmental pollution and other public risks by discouraging parties or individuals from causing harm or damage to the environment. The objectives of this Law are to protect and improve the environment; prevent and remedy pollution; safeguard human health, and promote modern development. All enterprises, institutions or individuals must prevent pollution and damage to the environment when they choose their sites and while designing, planning and executing their projects. Similarly, this law requires parties to submit an environmental assessment to the environmental protection department to obtain approval before use may start. Law provides for: (i) full integration of environmental protection into development planning; (ii) promotion of environmental education; (iii) obligation of individuals and parties with use rights to protect the environment; (iv) assurance that Government bodies, at central, provincial, regional and municipal levels, will supervise and administer China’s environmental protection activities.
Environmental Impact Assessment Law (2003)
This Law builds off the Environmental Protection Law and adds to the EIA framework by (1) expanding the EIA mandate to government plans, not just construction projects, and (2) making public participation a requirement. Similarly, the EIA Law also adds a Strategic Environmental Assessment (or plan-based) element to the existing EIA process. Under this second assessment, other sectors must also undergo an EIA; this includes projects related to: industry, agriculture, energy, transportation, urban development, tourism, and natural resource development.
Land Administration Law (1998, 2004)
The Land Administration Law addresses China’s need to unite its land priorities. In doing so, the most recent amendments created the requirement for General Land Use Plans. The plans are required and must reflect the priorities and requirements of national economic and social development programs, national land consolidation, environmental protection, carrying capacity, and the requirements of construction projects. By incorporating different land uses, this law helps land use planning consider other priorities that may also alter land use and development patterns. Some examples include China’s Grain to Green program, the Natural Forest Protection Program, and Open up the West program.Regulations for the Implementation of the Land Administration Law of China (1998) (in English).
Natural Forest Protection Program (NFPP)
The NFPP is a 50-year program (expiring in 2050) intended to protect forest resources and biodiversity, and to improve overall environmental quality in ecologically fragile areas. It developed in response to major flooding in the upper parts of the Yangtze and Yellow Rivers that was made worse by widespread deforestation and land degradation in the areas. As a result, the State Forestry Administration created the NFPP and proposed that 95 million hectares of natural forest be protected under the NFPP. Today, NFPP has banned logging in 13 provinces and relies on strict logging quotas elsewhere. It is working for better performance targets for state forest companies, and earning subsidies for afforestation and reforestation by local people. The overall goals of the NFPP are to reduce round wood production in the areas of concern and to afforest or reforest as well.
Provisions on the Administration of Certification of Environmental Management System (EMS)
The EMS is supposed to ensure certification, promote sustainable use of natural resources, save energy and reduce consumption and waste, minimize pollutant emissions, and protect the environment. Chapter II and III lay out the administrative authorities connected with EMS certifications and the steps to follow. The China Guidance Committee for Certification of Environmental Management System is in charge of overseeing and administering EMS activities and certification.
Guide on Sustainable Overseas Forest Management and Utilization by Chinese Enterprises In 2009, the Chinese State Forestry Administration (SFA) and the Ministry of Foreign Commerce (MOFCOM) developed a series of voluntary guidelines to govern the conduct of Chinese overseas businesses in the forest industry. This Guide applies to Chinese businesses that are harvesting, processing and using timber in other countries. The Guide is voluntary, but provides an excellent foundation for Chinese companies to develop better, legal practices and relationships in foreign countries. At present, they are voluntary and in some regions rarely followed, but they could be a stair step to more stringent rules in China’s future.
Timber and Wood Products Spot Trading Platform
This national online trading platform will be open nationally and will provide a comprehensive timber industry service platform and will encompass trading, information and pricing centers to promote domestic and international market development. The platform provides the opportunity for Chinese timber importers to form purchasing alliances to enhance their bargaining abilities so that Chinese companies will have a better negotiating position in the international timber trade.
Processing/Manufacturing Laws
Processing and manufacturing enterprises must have the appropriate licenses and permits to operate. Today, many Chinese manufacturing and processing companies work with imported material, mostly roundwood. (See Article 3 of the Regulations of the People’s Republic of China for Controlling the Registration of Enterprises as Legal Persons (amended as per Decision of the State Council on Amending the Regulations for Controlling the Registration of Companies; Article 34 of the Regulation on the Implementation of the Forestry Law).
The timber processing company must be legally registered and hold a valid Timber Processing Certificate (TPC), if it is processing in the forest areas. If processing is occurring outside of forested areas, a TPC is not required. It should hold a business registration certificate issued by the industry and commerce administration authority. The TPC will be issued by the State Forestry Administration (See Article 34 of the Forestry Law Regulations).
Trade Laws
Articles 23, 24, 27, 77 & 79 of Company Law (as amended 2005)
The company must be registered with the Industry and Commerce Administration. It should hold a business registration certificate as well as an import/export operating license, if the business is directly involved in import and export. View Customs Law of China (in English).
Clear evidence of official documentation for imported and exported timber products should be available. These may include all or some of the following: packing list; invoice; bill of lading; customs declaration forms; receipts for payment of appropriate tariffs; sales contract; shipping order; verification form of inward remittance (which comes from the Exchange Control Administration); delivery order. Regulations on the Administration of Import and Export of Wild Animals and Plants (2006) (in English).
All Import and Export Quarantine Inspection documents and procedures must be adhered to. Quarantine Certificates for both import and export forestry products are issued by the Entry and Exit Inspection and the Quarantine Agency in each port.
Transport Laws
Rules on the Origin of Export Commodities
These rules were generated to improve the control over the origin of export commodities and to promote the development of foreign relations and trade. The People’s Republic of China Export Commodity Origin Certificate is a certificate testifying that the People’s Republic of China is the origin of the export commodity. An export commodity under application for a Certificate of Origin must comply with the origin standards set out in the article. View Article 36 of the Regulations Implementing the Forestry Law (in English)
Clear evidence of documents and licenses for all enterprises involved in timber products transportation must be available. Timber transporters and carriers transporting timber not belonging to State management timber sources must have a valid timber transportation certificate issued by a Forestry Administrator at or above county level.
The validity of the timber transportation certificate is based on a valid timber harvesting license which verifies the legal source of the timber; and the “quarantine certificate,” which should be used together with the transportation certificate during the course of transportation. (See Article 36 of the Forestry Law Regulations and Article 4 of the Detailed Regulations on the Implementation of Plant Quarrantine Rules)
Timber consignment documents used during transportation should be complete and correct. The following conditions and document requirements should be complied with: the issuing authorities must be correct, and the issuing conditions must accurately list volume, log, and forest product records in accordance with officially required formats (See Articles 35 & 36 of the Regulations on the Implementation of the Forestry Law).
Tax Laws
If a foreign company has an establishment in China, it will be subject to China tax on all income effectively connected with that establishment. China does provide some tax exemptions and other preferences for projects related to agriculture, forestry, animal husbandry and fishery sectors, software and integrated circuit industry, major infrastructure projects, certain environmental projects, certain transfers of technology, etc. However, when it does require fees, evidence of all taxes, royalties, and fees must be paid in a timely manner and should be available for inspection. Receipts from the relevant agencies are acceptable proof of taxes paid. Forest related taxes include a value-added tax (VAT), reforestation fees, and fees for special agriculture, where applicable. The amount depends on the source. China encourages the import of logs over processed woods by requiring full import duties and value-added tax (VAT) on lumber, but zero import duties and only a reduced VAT on roundwood since it wants to encourage domestic production and to meet demand. In 2012, China had a 13% VAT on log imports. Forest products produced by forest owners are exempt from VAT, but small commercial entities pay 4%. Reforestation fees are collected by the government and used to promote reforestation and cultivation of trees around the country. Special agriculture taxes may be reduced or exempted entirely for log harvest companies, while companies which harvest state-owned forests in Northeast and Inner Mongolia are normally assessed special agriculture taxes of 5%. No special agriculture tax is levied for small-diameter timber (length under 2 meters and diameter under 8 centimeters). Tax rates change frequently and China is currently updating its VAT system. It is important to check regulations and rates frequently. For commonly processed timber products, the VAT is normally 17%. Entities with annual taxable sales volume of under 1.8 million yuan are considered "small commercial entities" and normally are assessed VAT at a rate of 4%. Taxes linked to exportation and importation of forest products should come with official receipts, which can be used as proof of payment. Companies also need to have proof of their payments of their Export/VAT and Consumption Taxes for wood. For forestry products imported from neighboring countries by small trading companies at borders, the import tariff and VAT are levied at 50%.
CITES Agreement Information
China ratified the CITES Convention in 1981. Currently, there are no commercially traded timber species from China listed on any of the CITES appendices.
However, it is important to note that three species that grow in China are listed on Appendix III by other countries. Russia has listed Pinus koraiensis, the Korean pine, while Nepal has listed Podocarpus neriifolius and Tetracentron sinense. As neighboring countries, buyers looking to purchase these species from China should ensure that the wood is from China or if the wood originated in one of the countries in question, that they are accompanied by the proper CITES permits in addition to the usual documents.
For more information on CITES and China, see the following resources:
Forest Resources
Resources Overview
China has some of the world’s greatest biodiversity within its borders. Its terrain is a mosaic of grasslands, forests, deserts and salt flats, barren lands, shrublands, wetlands, rivers, and streams, glaciers and coastland. Its forests-types are also a diverse mixture; there are cold temperate coniferous forests; broadleaf mixed forests; deciduous broadleaf forests; warm temperate coniferous forests; sub-tropical and tropical evergreen broadleaf forests; tropical and sub-tropical coniferous forests, and, of course, tropical rainforests.
Currently, China has approximately 200 million ha of forestland, which is 21% of the nation’s land area. These forests are concentrated in the northeastern, southwestern, and southeastern provinces of the country. The majority of China’s forested lands remain under state control and the area has been increasing at an annual rate of 1.4% over the last 20 years. Between 2005-2010, China gained 2.763 million ha of forest, but still, per capita forest resources are comparatively low. Prior to 1949 when China’s tropical and subtropical forests were heavily exploited, forest cover in China was much higher. It is believed that China’s forest growth is the result of new afforestation policies implemented in the early 2000s, which followed a period of high deforestation.
Naturally Occurring
Planted
Forest Management
Management Overview
As China’s demand and export of wood and wood products grows, it is facing increasing pressures to address its influence on illegal logging around the world. China has made efforts to improve its national environmental policies to balance expanding markets and to protect the country’s remaining natural forests, but civil society groups around the world continue to urge China to do more. National policies, plans and projects on forest conservation have been adopted and implemented in the past two decades, especially as studies continue to expose China’s role in driving illegal logging around the world. Recent efforts at improved forest management include a ban on logging within China’s primary forests. In addition, the Chinese government has increased its discussions and negotiations with the EU and the US to address illegal logging, and it established a Memorandum of Understanding (MoU) in 2006 with Burma and Indonesia to limit the flow of illegally sourced products from these countries into China.
Aside from international efforts, China has also established a domestic legislative framework on forest conservation. From constitutional clauses to statutes to implementing regulations and local law and regulations, China’s laws aim to clarify property rights related to forestland and forest management. It also implemented a national forest monitoring system to track illicit conduct. China is also trying to increase transparency and improve public awareness about illegal forestry. Despite this progress and China’s efforts to implement and enforce its legal forestry infrastructure, illegal logging and other degrading activities are ongoing around the country.
Transparency
According to Transparency International’s 2013 Corruption Perceptions Index, which measures perceived levels of public sector corruption in countries around the world using a score of 0-100 (where 0 is highly corrupt and 100 is completely clean), China is ranked 80 out of 177 countries assessed. It scored a corruption index rating of 40 out of 100, meaning it is perceived as a fairly corrupt country. These numbers were very similar to China’s 2012 perceived corruption numbers as well.
As a major destination for timber and distribution point for processed wood products, China is a strategic player in the fight against corruption in the global forestry sector. As a result, Transparency International’s China office established a Forest Governance Integrity unit in China in 2009. Working with seven other forestry units in the Asia Pacific region, TI China has developed a number of risk assessment tools to identify priorities in anti-corruption practices in forest governance and to chart their progress .
These risk mapping and monitoring tools are now in the process of being adapted to China’s specific context. A consultation meeting has been held with participants from civil society organizations including Greenpeace and the Forest Stewardship Council along with private sector participants, to discuss and provide inputs into the Transparency International tools.
World Bank Worldwide Governance Indicators (WGI) The World Bank compiles a set of Worldwide Governance Indicators for all world economies. These indicators are important barometer in terms of risk assessment. The WGI country reports are based on the six following aggregate governance indicators: Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. Countries are ranked (percentile rank model) for each of the six governance indicators on a scale from 0 to 100 where 0 corresponds to lowest rank and 100 corresponds to highest rank (better governance). Access the 2013 Worldwide Governance Indicator for China.
Management Links
- English Database for the Laws of the People's Republic of China
- Chatham House Illegal Logging Portal: China
- Forest Trends Report: Chinese Overseas Investment in Forestry andIndustries with High Impact on Forests (2014)
- WWF-GFTN Legality Framework: China
- The Nature Conservancy Report: Protecting China's Biodiversity (2012)
- Forest Trends, et al. Report: Tropical Hardwood Flows in China:Case Studies of Rosewood and Okoumé (2012)
- Landesa, et al Report: A Case for Farmers and Rural Communities’ Right to Compensation Under China’s Natural Forest Protection P
- Timber and Wood Products Distribution Association Presentation: Overview of China's Timber Market (September 2013)
CITES Agreement Information
China ratified the CITES Convention in 1981. Currently, there are no commercially traded timber species from China listed on any of the CITES appendices.
However, it is important to note that three species that grow in China are listed on Appendix III by other countries. Russia has listed Pinus koraiensis, the Korean pine, while Nepal has listed Podocarpus neriifolius and Tetracentron sinense. As neighboring countries, buyers looking to purchase these species from China should ensure that the wood is from China or if the wood originated in one of the countries in question, that they are accompanied by the proper CITES permits in addition to the usual documents.
For more information on CITES and China, see the following resources:
Forestry Laws
As China’s economy has strengthened and living standards have risen, China’s demand for international timber and wood products has also grown substantially in recent years. It has also created an urgency for China to address its timber and wood production policies, forest governance and efforts to fight illegal logging. As a common via point in international processing of wood products, China is a common target and destination for illegally sourced and processed wood products. To combat the illegal products coming into and leaving China, the Republic’s Government has made efforts to address the issue head. Although a non-comprehensive list of applicable Chinese statutes and regulations, below is a collection of policies all operators working in China should know.
All Chinese forest lands are owned by the Republic of Chinese. Use-rights are allowed, and distribution responsibilities are assigned to state owned forest farms or bureaus, collective farms, or private enterprises. Mixed broadleaved secondary forests cover northeastern china and are the result of widespread clear-cutting decades ago. China imports most of its wood, and numbers have been increasing. In 2011 China imported nearly 250 million cubic meters of timber, as compared to less than 100 million cubic meters of exported timber in the same year.
Constitution of the People’s Republic of China (as amended 2004)
China’s Constitution and the legislation based on it provide the basis for China’s land tenure system. There are currently two types of land ownership in China: State ownership and collective ownership. Since constitutionally all land in China belongs to the people, local people are given use rights, but not tenure, for the property they occupy. Typically the collectively-owned land is allocated to small entities, such as individuals, communities, etc.
The State and managers of collectively-owned lands can decide whether and how to transfer use rights to parties such as state- or private-owned enterprises, individuals, and NGOs. Circulation to third parties is also possible, with restrictions (see Chapter VIII, Use Rights). Anyone can hold use rights, including foreign entities.
The Forestry Law (1998), amending Law from 1984
The Chinese Forestry Law of 1998 identifies five forest types: protection forests, special purpose forests, timber forests, economic forests, and fuel forests. These types can be further categorized as either for public benefit or commercial use. If a forest is identified as a public benefit forest, it is supposed to remain in a natural state to provide ecological and human health benefits. Commercial forests, on the other hand, are intended for revenue producing activities. In 2010, commercial forests comprised 57% of Chinese forests. Protected Forests and Timber Forests are the dominant forest designations in China. forest planning guides, and other forest-related policies dictate allowable and prohibited uses in forests. The law is fairly ambiguous about allowable and prohibited uses, with the exceptions of strongly encouraging afforestation and restricting timber harvests.
- Timber Harvesting- The State requires annual timber felling quotas to be set every five years, which effectively create a “ceiling” on maximum harvests. The goal is for the annual rate of timber growth to exceed consumption. The law provides limited direction about where and how timber harvest may occur, but it is very clear about strictly prohibiting timber harvest in certain types of special purpose forests, such as in nature reserves, ancient and historic sites, revolutionary memorial places, etc. To harvest timber, companies must have a timber harvesting license (Forestry Law, Article 32).
- Afforestation- Here, the Forestry Law is a clear advocate for afforestation, even calling it “an obligation that citizens should fulfill.”
- Long-term Forestry Plan- The “long-term forestry operating plan” should be approved by the relevant Forestry Administration, which supporting documents. The Plan must: (1) protect the ecological environment and promotion of sustainable economic development; (2) consider only existing forest resources; (3) be compatible with the overall land-use, water and solid conservation plan for the city, village or town impacted. At the same time, the long-term forestry plan must also include: (1) a forestry development target; (2) the ratio of forest categories; (3) forest land protection and use planning, and (4) tree planting and afforestation plan. (Forestry Law Regulations, Articles 12, 13).
Regulations for the Implementation of the Forest Law (2000)
The 2000 regulations to the Forestry Law define the rules and procedures of the forest registration system. Under the regulations, forest management and administration must be thoroughly planned and adhere to the approved working procedures for forests, trees and woodland areas. It also provides the rules for the operation, supervision and administration for timber harvesting in specific forest districts. The regulations also highlight the various penalties for non-compliance.
- Harvest Quotas- Individuals and companies must obtain a logging permit to harvest trees. The Chinese Government decides on the overall logging quota each year, but demand always exceeds the annual quota. Because there is little accountability and transparency in quota distribution, the process has become a rent-seeking tool for local forestry officials and agencies in many regions. Additionally, the flaws in the system inevitably lead to illegal logging.
The State and managers of collectively owned lands (i.e. a form of community property) can decide whether and how to transfer use rights for their respective lands. Transferring forest resource use rights is permitted, but it does not apply to wildlife, mineral resources or underground materials found on the land (Forestry Law, Article 5). Use rights in forests in touistic places, historic sites and/or in nature reserves, national parks or protected areas are not transferable. It is also illegal to transfer use rights when ownership of those use rights are disputable (Forestry Law, Article 6). There are three ways to obtain use rights: (1) bidding; (2) auction or (3) agreement (Forestry Law, Article 9,10,11). These use-rights transfers require documentation - a Forest Authority Certificate or Contract. Note that anyone can hold use rights, including foreign entities. The owner of use rights still has to abide by county and township land use plans and the government has to approve any changes to those plans. Article 15, Forestry Law (Amended 1998).
Forest Authority Certificate/ Use Right Contracts
The Chinese Government issues “certificates” of use while managers of collective lands issue “contracts.” Anyone receiving use rights for collective lands should receive at least two documents: a certificate from the local government and a contract from the collective land managers. The certificate should contain “substantially the same content as the contract but will be issued and sealed at the county level or higher and not bearing local signatures. A company must hold a valid Forest Authority Certificate or Contract to operate legally in the forests. Similarly, anyone logging the forest or using harvested wood for commercial sales must report its use in the State’s annual timber production plan ( Forestry Law Regulations, Article 29).
Environmental Protection Law (1989)
The Environmental Protection Law of China aims to prevent and control environmental pollution and other public risks by discouraging parties or individuals from causing harm or damage to the environment. The objectives of this Law are to protect and improve the environment; prevent and remedy pollution; safeguard human health, and promote modern development. All enterprises, institutions or individuals must prevent pollution and damage to the environment when they choose their sites and while designing, planning and executing their projects. Similarly, this law requires parties to submit an environmental assessment to the environmental protection department to obtain approval before use may start. Law provides for: (i) full integration of environmental protection into development planning; (ii) promotion of environmental education; (iii) obligation of individuals and parties with use rights to protect the environment; (iv) assurance that Government bodies, at central, provincial, regional and municipal levels, will supervise and administer China’s environmental protection activities.
Environmental Impact Assessment Law (2003)
This Law builds off the Environmental Protection Law and adds to the EIA framework by (1) expanding the EIA mandate to government plans, not just construction projects, and (2) making public participation a requirement. Similarly, the EIA Law also adds a Strategic Environmental Assessment (or plan-based) element to the existing EIA process. Under this second assessment, other sectors must also undergo an EIA; this includes projects related to: industry, agriculture, energy, transportation, urban development, tourism, and natural resource development.
Land Administration Law (1998, 2004)
The Land Administration Law addresses China’s need to unite its land priorities. In doing so, the most recent amendments created the requirement for General Land Use Plans. The plans are required and must reflect the priorities and requirements of national economic and social development programs, national land consolidation, environmental protection, carrying capacity, and the requirements of construction projects. By incorporating different land uses, this law helps land use planning consider other priorities that may also alter land use and development patterns. Some examples include China’s Grain to Green program, the Natural Forest Protection Program, and Open up the West program.Regulations for the Implementation of the Land Administration Law of China (1998) (in English).
Natural Forest Protection Program (NFPP)
The NFPP is a 50-year program (expiring in 2050) intended to protect forest resources and biodiversity, and to improve overall environmental quality in ecologically fragile areas. It developed in response to major flooding in the upper parts of the Yangtze and Yellow Rivers that was made worse by widespread deforestation and land degradation in the areas. As a result, the State Forestry Administration created the NFPP and proposed that 95 million hectares of natural forest be protected under the NFPP. Today, NFPP has banned logging in 13 provinces and relies on strict logging quotas elsewhere. It is working for better performance targets for state forest companies, and earning subsidies for afforestation and reforestation by local people. The overall goals of the NFPP are to reduce round wood production in the areas of concern and to afforest or reforest as well.
Provisions on the Administration of Certification of Environmental Management System (EMS)
The EMS is supposed to ensure certification, promote sustainable use of natural resources, save energy and reduce consumption and waste, minimize pollutant emissions, and protect the environment. Chapter II and III lay out the administrative authorities connected with EMS certifications and the steps to follow. The China Guidance Committee for Certification of Environmental Management System is in charge of overseeing and administering EMS activities and certification.
Guide on Sustainable Overseas Forest Management and Utilization by Chinese Enterprises In 2009, the Chinese State Forestry Administration (SFA) and the Ministry of Foreign Commerce (MOFCOM) developed a series of voluntary guidelines to govern the conduct of Chinese overseas businesses in the forest industry. This Guide applies to Chinese businesses that are harvesting, processing and using timber in other countries. The Guide is voluntary, but provides an excellent foundation for Chinese companies to develop better, legal practices and relationships in foreign countries. At present, they are voluntary and in some regions rarely followed, but they could be a stair step to more stringent rules in China’s future.
Timber and Wood Products Spot Trading Platform
This national online trading platform will be open nationally and will provide a comprehensive timber industry service platform and will encompass trading, information and pricing centers to promote domestic and international market development. The platform provides the opportunity for Chinese timber importers to form purchasing alliances to enhance their bargaining abilities so that Chinese companies will have a better negotiating position in the international timber trade.
Processing/Manufacturing Laws
Processing and manufacturing enterprises must have the appropriate licenses and permits to operate. Today, many Chinese manufacturing and processing companies work with imported material, mostly roundwood. (See Article 3 of the Regulations of the People’s Republic of China for Controlling the Registration of Enterprises as Legal Persons (amended as per Decision of the State Council on Amending the Regulations for Controlling the Registration of Companies; Article 34 of the Regulation on the Implementation of the Forestry Law).
The timber processing company must be legally registered and hold a valid Timber Processing Certificate (TPC), if it is processing in the forest areas. If processing is occurring outside of forested areas, a TPC is not required. It should hold a business registration certificate issued by the industry and commerce administration authority. The TPC will be issued by the State Forestry Administration (See Article 34 of the Forestry Law Regulations).
Trade Laws
Articles 23, 24, 27, 77 & 79 of Company Law (as amended 2005)
The company must be registered with the Industry and Commerce Administration. It should hold a business registration certificate as well as an import/export operating license, if the business is directly involved in import and export. View Customs Law of China (in English).
Clear evidence of official documentation for imported and exported timber products should be available. These may include all or some of the following: packing list; invoice; bill of lading; customs declaration forms; receipts for payment of appropriate tariffs; sales contract; shipping order; verification form of inward remittance (which comes from the Exchange Control Administration); delivery order. Regulations on the Administration of Import and Export of Wild Animals and Plants (2006) (in English).
All Import and Export Quarantine Inspection documents and procedures must be adhered to. Quarantine Certificates for both import and export forestry products are issued by the Entry and Exit Inspection and the Quarantine Agency in each port.
Tax Laws
If a foreign company has an establishment in China, it will be subject to China tax on all income effectively connected with that establishment. China does provide some tax exemptions and other preferences for projects related to agriculture, forestry, animal husbandry and fishery sectors, software and integrated circuit industry, major infrastructure projects, certain environmental projects, certain transfers of technology, etc. However, when it does require fees, evidence of all taxes, royalties, and fees must be paid in a timely manner and should be available for inspection. Receipts from the relevant agencies are acceptable proof of taxes paid. Forest related taxes include a value-added tax (VAT), reforestation fees, and fees for special agriculture, where applicable. The amount depends on the source. China encourages the import of logs over processed woods by requiring full import duties and value-added tax (VAT) on lumber, but zero import duties and only a reduced VAT on roundwood since it wants to encourage domestic production and to meet demand. In 2012, China had a 13% VAT on log imports. Forest products produced by forest owners are exempt from VAT, but small commercial entities pay 4%. Reforestation fees are collected by the government and used to promote reforestation and cultivation of trees around the country. Special agriculture taxes may be reduced or exempted entirely for log harvest companies, while companies which harvest state-owned forests in Northeast and Inner Mongolia are normally assessed special agriculture taxes of 5%. No special agriculture tax is levied for small-diameter timber (length under 2 meters and diameter under 8 centimeters). Tax rates change frequently and China is currently updating its VAT system. It is important to check regulations and rates frequently. For commonly processed timber products, the VAT is normally 17%. Entities with annual taxable sales volume of under 1.8 million yuan are considered "small commercial entities" and normally are assessed VAT at a rate of 4%. Taxes linked to exportation and importation of forest products should come with official receipts, which can be used as proof of payment. Companies also need to have proof of their payments of their Export/VAT and Consumption Taxes for wood. For forestry products imported from neighboring countries by small trading companies at borders, the import tariff and VAT are levied at 50%.
Transport Laws
Rules on the Origin of Export Commodities
These rules were generated to improve the control over the origin of export commodities and to promote the development of foreign relations and trade. The People’s Republic of China Export Commodity Origin Certificate is a certificate testifying that the People’s Republic of China is the origin of the export commodity. An export commodity under application for a Certificate of Origin must comply with the origin standards set out in the article. View Article 36 of the Regulations Implementing the Forestry Law (in English)
Clear evidence of documents and licenses for all enterprises involved in timber products transportation must be available. Timber transporters and carriers transporting timber not belonging to State management timber sources must have a valid timber transportation certificate issued by a Forestry Administrator at or above county level.
The validity of the timber transportation certificate is based on a valid timber harvesting license which verifies the legal source of the timber; and the “quarantine certificate,” which should be used together with the transportation certificate during the course of transportation. (See Article 36 of the Forestry Law Regulations and Article 4 of the Detailed Regulations on the Implementation of Plant Quarrantine Rules)
Timber consignment documents used during transportation should be complete and correct. The following conditions and document requirements should be complied with: the issuing authorities must be correct, and the issuing conditions must accurately list volume, log, and forest product records in accordance with officially required formats (See Articles 35 & 36 of the Regulations on the Implementation of the Forestry Law).
Forest Products
Production Status
Despite the mortgage crisis in the United States in 2007 and the economic recession of 2008, which both hampered China’s timber and wood products markets, the Chinese logging industry has rebounded and between 2008 and 2013 annualized revenue increases of 7.8%. As a result, China is now the world’s largest timber and wood products trader, both as a consumer and producer. In 2012, China’s timber and wood products manufacturers exported nearly $20 billion worth of hardwood furniture and flooring, totaling 337 million cubic meters of material. The majority of exports were sent to the United States (33%), followed by the EU (17%), Japan (7%). Although the United States is the main trading partner for China for exports, recent trends show growth in the Middle East, South America and Africa. In 2013, China imported predominately softwood timber species, including: red pine and pinus sylvestris (18%), white pine (16%), larch (8%), radiatea pine (37%), and a mix of other species (22%). Its top four producers are: (1) China Longjiang Forest Industry (Group) General Corporation, (2) China Inner Mongolia Forestry Industry Group; (3) Greater Higgnan Mountains Forestry Group, and (4) China Jilin Forestry Industry Group. Explore China’s Forest Sector Imports and Exports.
“China has increased its total import of wood products and shifted to importing less processed materials. For 2010, log imports increased 22% by volume and 49% by value from 2009. In 2012, China imported 38,831,975 cubic meters of roundwood, with a value of over $7.5 billion dollars. Russia continues to be China’s foremost supplier of logs and second largest supplier of sawn timber. In 2012, China imported 11.18 million cubic meters of logs and 6.21 million cubic meters of sawn timber from Russia. However, Russian export taxes are contributing to a growing decrease in Russian imports. As a result, this has increased lumber imports from elsewhere to offset the difference. The largest increases for both log and lumber exports to China are coming from Canada and the USA. With a large processing industry dependent on resource imports, countries supplying China are those with available supply and favorable policies. Other major log and lumber exporters to China include: New Zealand, USA, Papua New Guinea, Canada, and Thailand.
The furniture manufacturing industry are mainly located in Southeast area and Yangtze Delta area near Shanghai. There are about 6000 manufacturing companies in Guangdong Province in Southeast China, with an employment of about 1 million people. There are about 2600 furniture manufacturing companies in Zhejiang Province in Yangtze Delta area, with an employment of about 250,000 people and the manufacturing industry in this area is growing quickly. The pulp and paper industry are also mainly located in eastern part of China, close to the sea.
The demand for timber is also driven by the pulp and paper manufacturing industry, not just flooring and furniture. In 2007 the total amount of machine-made paper and paperboard output in China was 77.87 million tons, which has increased 18.07 per cent year-on year. Comparatively, the output of wood-based panel was 88.3858 million cubic meters, up 18.98 per cent year-on-year; wooden flooring reached 343.43 million square meters, up 46.77 per cent year-on-year, a significant increase.
Contacts
Industry Associations
China Timber Circulation Association (CTWPCA)
CTWPCA advocates on behalf of Chinese business. It has advocated for great “guidance and support” from the Government on the new international timber requirements. It is also trying to address corruption in the timber import and export sectors. It hopes such efforts will help Chinese timber traders meet international standards.
Represents Canadian forest industry in China, and it promotes the growth and development in the use of wood in the construction sector in China. Members of Canada Wood include prominent wood product and technical organizations in Canada, and it is legally registered in Canada and China.
China National Forest Products Industry Association (中国林产工业协会 - CNFPIA)
The CNFPIA is a large, national association representing as many as 1200 members. Members encompass businesses, organizations and individuals from the timber production and processing industries, including flooring, wood-based panels and sawn wood. This organization was founded in 1988 and also backed by the State of Forestry Administration. This organization has similar functions to the China National Forestry Industry Association.
China National Forestry Industry Association (中国林业产业协会 - CNFIA)
The CNFIA is a large, national association that promotes the development of the forest industry in China. Members are from many sectors, including: timber production and processing, paneling, pulp, and forest machinery and chemical products. It also includes organizations engaged in forest tourism activities, civil society organizations, and research and educational institutions. Members can be state-owned companies, private companies, joint-ventures. The CNFIA was founded in May 2007. It is claimed as a non-profit social organization, but works very closely with the SFA.
China Timber and Wood Products Distribution Association (CTWPDA)
CTWPDA is a large, national association that promotes the timber industry, timber market development and the international timber trade according to the interests of its members. Its over 600 members are engaged in the production of wood products, forest products distribution, wholesale markets, research and other related industrial sectors in China. The groups established in 1985, approved by the Ministry of Civil Affairs, and wood and wood products (including bamboo and bamboo products, forged) related enterprises, voluntary groups and individuals nationwide, industry-based, nonprofit social organization. Professional Committee under the timber market, wooden doors and windows, wood flooring, engineered wood, veneer, wood preservation, mahogany and timber companies credit committees branches.
China National Furniture Association (CNFA)
The CNFA is a nationwide organization with 28 provincial and municipal associations, more than 3,000 corporate members throughout China. Its national presence gives it a dominant influence over China’s furniture industry and helps link the Chinese market with the overseas furniture industry.
Shanghai Building Material Industry Association
SBMIA is a societal economic association, which works across departments and regions, and with different types of building material enterprises to educate, conduct research, and design. The goal of SBMIA is “to serve the enterprise, to serve the industry, to serve the government, to maintain members’ legitimate rights and interests.” SBMIA is one example of the many industry associations throughout China; most regions have their own timber/wood product associations.
Civil Society Organizations
The China Dialogue is an online information source which makes current events within the environmental sector accessible to the public. Its goal is to provide up to date information about the environmental challenges happening in China and around the world. It provides stories and information in both English and Chinese on its website.
Conservation International (CI)
CI has worked with it Chinese partners to help implement the first reforestation project accepted under the Kyoto Protocol in China. This project is capturing the global value of carbon and delivering it directly to China. This work is benefitting species threatened by deforestation in China; the reforestation area is an important habitat for Pandas and Golden Monkeys, among others. .
The Global Environment Institute (GEI)
GEI is a Chinese non-profit, NGO that was established in Beijing in 2004. It helps design and implement market-based models for solving environmental problems, helping to develop an economically, ecologically, and socially sustainable future.
International Union for Conservation of Nature - China (IUCN-China)
IUCN has worked with the Sichuan Forestry College and the State Forestry Administration on forest conservation projects in Sichuan and Guangxi to conserve forest biodiversity, reduce illegal logging and promote the sustainable use of forest products for the benefit of the rural poor. It also carries out training workshops in principles of sustainable development for provincial and district level government officials.
The Nature Conservancy (TNC-China)
TNC has worked in China for 10 years. Their mission is to save endangered species; help safeguard the rich habitat and promote sustainable ecotourism; combat illegal logging; education for sustainability; introduce alternative energy technologies in rural homes and schools.
The BFS was established in 1955 by a group of foresters in Beijing. At present, BFS has over 2800 members who work in diverse forest related fields. Its members are dedicated to promoting. BFS mainly focuses on forestry related science promotion, environment protecting, capacity building, climate change mitigation, and watershed management through various activities.
Greenpeace China’s forestry program: 1) investigates, exposes and confronts the trade in illegal and destructive timber operations in China; 2) challenges governments and industry to end their role in unchecked forest destruction; 3) promotes alternatives and encouraging products certified by FSC, and 4) supports the rights of forest peoples.
The first international conservation organization invited to work in China, WWF has been active here since 1980.WWF China’s forest program targets: To conserve biodiversity and ecological processes of forests to secure sustainable development for present and future generations.
Rainforest Alliance Certification
Rainforest Alliance Certification is a program operated by the Rainforest Alliance, which offers a diverse set of certification and verification services. In China, Rainforest Alliance is training foresters, businesses, and other stakeholders on how to better protect wildlife habitat, soils and waterways and ensure decent conditions for workers, which will ultimately help operations earn certification to Rainforest Alliance and Forest Stewardship Council (FSC) Certification.
The China Office was established in 2007 in Beijing. The office is positioned to enhance the influence of TFT and Timber Trade Action Plan (TTAP) on projects in China.
Government Ministries
MOFCOM’s responsibilities including formulating strategies, guidelines and policies for developing domestic and foreign trade and international economic cooperation, and drafting laws and regulations governing domestic and foreign trade, foreign investment in China, foreign assistance, overseas investment and foreign economic cooperation. Further, MOFCOM is responsible for developing policies and proposals that promote small and medium-sized enterprises in commerce and trade, and to promote standardization and modern distribution modalities. MOFCOM also handles the regulation of import and export commodities and processing trade, and compiles catalogues of import and export commodities and technologies.
Ministry of Environmental Protection
The Ministry of Environmental Protection manages the development, use and impacts associated with China’s natural resources. This Ministry monitors major eco-environmental construction work, rehabilitates sites following ecological damage, supervises and inspects nature reserves, scenic spots and forest parks; supervises conservation initiatives; proposes recommendations to the State Council on approving new national nature reserves, and oversees the monitoring of natural resource exploitation activities that may pose risk to ecological quality.
Ministry of Land and Natural Resources (MLNR)
The MLNR develops policies and regulations concerning cultivated land. It enforces control over the different purposes of land used for agriculture and organizes the protection of capital farmland. It is also the administrative body that supervises the development of unused land and cultivated land, land revitalization and reclamation so as to ensure the increase of cultivated land.
Administering and supervising the central government expenditures for economic development, the appropriation for central government financed projects, and funds for technological innovation and new product testing; managing central government funds for comprehensive development of agriculture; formulating and supervising implementation of “General Principles on Enterprise Accounting”.
State Forestry Administration (SFA)
The SFA is responsible for national forestry affairs. The SFA is growing more and more engaged in international policy dialogues regarding illegal logging. It was founded in 1949 as Ministry of Forestry and Farming. On November 5, 1951, it changed to Ministry of Forestry, and the farming section was transferred to Ministry of Agriculture.
Beijing Forestry University (BFU)
One of the top higher education institutions specialized in forestry and the environment in China. BFU is under the Ministry of Education of China, and it was founded in 1952.
Northeast Forestry University (NEFU)
Founded in 1952, NEFU is one of the key universities working on forestry in China. NEFU is under the Chinese Ministry of Education.
Southwest Forestry University (SWFU)
SWFU was initially founded as the Department of Forestry in Yunnan University in 1939. After merging with Kunming College of Agriculture and Forestry and Yunnan Forestry College in 1978, SWFU became a separate institution affiliated with the State Forestry Administration. In 2000, SWFU was designated “an institution for joint development but predominantly managed by the Yunnan Provincial Government“. The University has become the only institution of higher learning that specializes in forestry in the Western Region of China.
Chinese Academy of Forestry (CAF)
CAF is a comprehensive, multi-discipline and public research institution affiliated to the State Forestry Administration (SFA). CAF is principally engaged in forest research of applied/basic sciences and strategic high technology research, developmental, and soft science studies. CAF consists of 19 research institutes and centers, and 10 branch academies, which are distributed in 18 provinces, regions and municipality in the country. The institution has continually contributed to strategic national forestry development and major national forestry programs making great contributions to the acceleration of forestry development, improvement of ecological environment, safeguard of ecological security and the building of ecological civilization in China.
Tools & Resources
WWF’s Global Forest & Trade Network and TRAFFIC have developed The Common Framework for Assessing Legality of Forestry Operations, Timber Processing and Trade - also known as the Common Legality Framework. Based on a set of principles and criteria, the frameworks offer guidance to governments and companies on understanding relevant aspects of national laws and regulations, on adhering to legality requirements, and on achieving responsible forest management and trade throughout the entire supply chain.
Legality frameworks are available for the following countries:
The Illegal Logging Portal, hosted and maintained by Chatham House, provides information on illegal logging and the trade in illegal timber. The country pages provide a brief overview of the forestry sector in the country, followed by a regularly updated list of news articles, reports, and other related contents.
Country pages:
The Spanish Timber Trade Federation (AEIM) has developed a risk assessment tool, "Madera Legal", that allows users to learn about timber producing countries. The tool includes information about main product categories sourced from these countries and legality and governance concerns, and provides a risk rating and recommendations for due diligence steps.
Madera Legal (website is only available in Spanish; use Google Chrome browser to auto-translate pages)
Global Forest Watch (GFW) is a dynamic online forest monitoring and alert system that unites satellite technology, open data, and crowdsourcing and provides access to timely and reliable information about forests. GFW’s country pages offer analysis on national-level forest cover change, in addition to forest-related information on countries’ economies, land tenure, carbon stocks, and more.
Sources
- CIA World Factbook: China
- Chatham House Illegal Logging Portal Country Profile: China
- FSC: Global Certified Forest Area (By Region): May 2012
- Forest Trends Paper: A Summary of China and the Global Market for Forest Products (2006) (in Chinese)
- Forest Trends Paper: China’s Forest Product Exports, an Overview of Trends by Segment and Destination (in Chinese) (2006))
- FAO Report: Global Forest Resource Assessment 2010 - China (2010)
