China is planning to ban commercial logging in all natural forests by the end of 2016. This is an extension of a program which commenced in 1998 with a purpose to allow forests to recover from decades of over-logging and to help restore forest ecosystems and their resilience. This brief explores some of the anticipated economic and ecological implications of the forthcoming expansion of restrictions on commercial logging in China’s natural forests.

China, which logs about 49.94 million cubic meters of natural forest each year, initiated a landmark pilot program to ban all commercial logging of natural forests in key forest zones in Northeast China's Heilongjiang Province in April 2014. Now the country will implement a ban on commercial logging of State-owned natural forests by end 2016.

The article points out that over 50% of the timber China consumes and processes comes from imports much of it thought to be from illegally harvested sources. There is a concern that this domestic logging ban may lead to an increase in those illegally harvested sources.

Environmental Investigation Agency, London-based, released a report saying that an alarming escalation of timber flowing into China has been there over the last three years. The majority of trees being cut down was driven by very wealthy Chinese people, who consider luxury products as a status symbol. 153 Chinese nationals were arrested for illegal logging in Myanmar, but were released in July after receiving a presidential pardon.

Regions along the porous Myanmar-China border have been a source of smuggled illegal timber to satisfy the growing demand from Chinese industry. Stripping natural resources in this way has prompted some resentment in Myanmar towards its more prosperous neighbour, and China has since protested at the harsh sentence. The border regions, which include Kachin state, have seen higher levels of conflict since 2011 between the Myanmar government and Kachin separatists. This escalation may provide sufficient cover for the illegal logging activity to take place.

32 indigenous villagers in Cambodia’s north-eastern area, Stung Treng province, called on local forestry officials to crackdown on illegal saw mills and to provide them with protection after they received death threats from unsanctioned loggers of luxury timber. The 32 villagers are community activists, and they vowed to keep fighting illegal logging in their local area despite the threats. The environmental watchdog Global Witness said in a report in February that China’s voracious demand for luxury furniture is the driver behind the multimillion-dollar illegal trade in rosewood in Cambodia.

Russia’s Federal Security Service (FSB) is working with environmentalists to combat illegal logging in the country’s Far East. Activists from WWF described long term collaboration with officials from Russia’s former KGB service in the effort to combat corruption and illegal timber exports as “unusual” but also unavoidable. WWF has been providing training for local customs officials on how to spot illegal species. A 2013 report by the Environmental Investigation Agency estimated that 96% of the valuable hardwoods harvested in the Russian Far East end up in China, while at least 80% of all felled trees have been logged illegally.

China's Heilongjiang province, which borders Russia to its north and east, contains 18.5 million hectares of state forest - more natural forest than any other province in the country. However, since the mid-twentieth century, Heilongjiang has had over 600 million cubic meters of timber extracted from its woodlands. Now, China is trying out a complete ban on commercial logging in the province's state-owned forests. Forestry experts predict that this trial ban will allow forests to regenerate hence, replenishing timber supplies, but will also push the industry to focus on improved forest management. According to the State Forestry Administration, to ensure that the ban is enforced and implemented over its intended time frame, the central Chinese government has allocated 2.35 billion yuan ($375 million) per year to cover forestry workers’ living costs between 2014 and 2020. If the ban succeeds, it could be extended throughout northeastern China and Inner Mongolia.

A report published by Landesa and Rights and Resources Initiative (RRI) looks at Asia Pulp and Paper’s acquisitions of forest lands from the mid-1990s to the early 2000s in Guangxi and Yunnan provinces where it leased large blocks of collectively-owned forests for conversion to industrial eucalyptus plantations. The report finds that the principle of Free, Prior, and Informed Consent (FPIC) by local peoples was not applied in some areas, and that both APP and local regulators failed to abide by all laws governing land acquisition. The report acknowledged that APP "cooperated fully" with the researchers and is currently reviewing the problems.

China has halted commercial logging by state firms in forests in the vast north-eastern province of Heilongjiang bordering Russia, home to much of the country’s timber industry, a move experts see as a significant step to curb over-exploitation of timber. The central government has allocated 2.35bn yuan a year to cover forestry workers’ living costs between 2014 and 2020. During the last century, warfare and unrest depleted and damaged the forests. More recently, economic growth has taken a further toll. There are concerns about the long-term ecological impacts if management of the forests does not improve with the region being an important agricultural zone and concerns about deforestation disrupting rainfall patterns.

Recognising the severe impact illegal logging is having on tax revenue generation, the Lao government has launched a pilot program to track the source of timber from sawmills and wood-processing plants. Demand for the valuable hongmu (redwood) timber from neighbouring China is thought to be driving illegal logging in the country. The pilot program requires all logs in sawmills and wood-processing plants to be inspected before export and to lay a framework for documentation that they are derived from legal sources, according to the reports.

Kenya has recently seized a shipment of $13 million worth of rosewood illegally harvested in Madagascar and bound for Hong Kong. The writer highlights the trend of illegal shipments through Hong Kong and notes that as neither Hong Kong nor China has laws banning illegal timber, border authorities cannot intercept it unless it is CITES-listed. According to estimates only 16 per cent of China’s processed timber is then exported, so there is a huge domestic market that is not subject to regulations preventing the use of illegally-harvested timber.

Experts are concerned that a new export ban on raw timber from Myanmar which came into effect from 1st April could have little effect due to a lack of clarity from the government on how the ban would work in practice and the effects of the ongoing conflict in Kachin state in the north of the country which borders China. NGO EcoDev claims that very little of the timber that crosses the border into China is actually sourced in border areas where the government are fighting the Kachin Independence Army on the pretext of cracking down on illegal logging. Field research has found that many of the logs actually come from government-controlled areas suggesting collusion between the authorities and the rebels. They also note that it is very hard to track the chain of custody of logs to determine their legality as so much comes from the deep jungle.

Monks and villagers in Ubon Ratchathani’s Khemmarat district of Thailand have teamed up to protect their 100-year old Siamese rosewood forest from illegal logging gangs. The rosewood trees in this area have grown naturally for 100 years, and most are more than six metres high. By closing the temple doors during the night, the monks are preventing illegal logging gangs from entering the temple and cutting down the trees. Most illegally cut rosewood trees are transferred to China via Laos and Vietnam. During 2008 – 2014, over 27,000 pieces of Siamese rosewood have been confiscated by police and some 395 offenders arrested.

The pattern of overseas investment and cooperation by Chinese timber enterprises is evolving rapidly. Chinese forestry enterprises have invested around US$1.3 billion in some 20 countries mainly for timber harvesting, primary processing as well as a growing interest in wood product manufacturing.

The China Forest Certification Scheme (CFCS) has been endorsed by the PEFC General Assembly. There are already about 2 million hectares of forests in China CFCS-certified, and more than 200 professionals have participated in the CFCC auditor training over the past years to be able to respond to the expected increase in demand for certification services following the endorsement by PEFC. According to PEFC’s website China is not only the largest manufacturer of forest products, they are also the ‘among the five countries with the largest forest area in the world’.

Lumber Liquidators, the top-selling flooring retailer in the US, is currently under investigation over whether it has been importing illegally logged wood products from the Russian Far East in violation of the US Lacey Act. The company is now facing class action lawsuits from investors following criticism from a noted hedge fund adviser who has argued that the recent increases in the company’s profit margins have come, in part, by increasing imports of illegally harvested wood from China and the Russian Far East.

The Myanmar Timber Merchants Association claims that illegal logging incurs costs Myanmar US$ 200m every year. The most affected areas in Myanmar are Kachin and Shan states near the Myanmar-China border as well as Kayin and Kayah states near the Myanmar-Thai border.

Myanmar’s Ministry of Commerce has revealed that US$ 17 million worth of timber was recently found to have been smuggled from Myanmar to China via illegal routes avoiding official checkpoints along the road to Muse, Myanmar's border town with China. Most of Myanmar’s trade is with China and Thailand and with Chinese import restrictions on some agricultural products from Myanmar, local exporters find it difficult to get health recommendations from China for their exports, creating a growing illegal trade.

A report from the UK- and US-based Environmental Investigation Agency (EIA) has said that up to 80% of the hardwood harvested in the Russian far east is logged illegally. The EIA say the demand for this material comes from Chinese sawmills and subsequently their western customers. The material that is of most concern is illegally logged Russian oak. US wood flooring retailer, Lumber Liquidators, was named in the report as being heavily reliant on Chinese suppliers who allegedly mainly sell illegally logged material. The EIA say the US and EU regulations on illegal logging are important pressure points where they now have the ability to intervene – before now, and without this pressure, illegal logging in Siberia has seen rapid expansion. Despite industry incentives from the Russian government, incredible demand from China has led to Chinese sawmills establishing just over the China-Russia border. EIA’s investigations suggest that most of these mills rely on a supply of illegally logged timber.

Regional instability in Myanmar has led to growing incidents of illegal timber extraction, with the products being sold in to China. There are a lack of incentives for state and regional governments to properly enforce forestry operations as they are not entitled to benefit from the resources that are legally extracted. Ministers in the Myanmar central government want to see more autonomy given to state and regional governments to encourage stronger local policing and tighter control of the country’s resources.