Forestry in China has undergone dramatic change, transforming from intensive resource exploitation into globally significant ecological restoration. China is currently one of the world's leading countries in terms of growth in forest area.
Forest resources: profile and particularities
China's total forest area is approximately 195–220 million hectares, covering around 23% of the country's territory. The particular character of its forestry lies in its dual nature. Forests are divided into ecological, or so-called public-benefit, forests, whose priority is nature conservation, and commercial forests intended for timber production. It must be emphasised that China is the world leader in artificially established forests – plantations – which help to reduce the pressure on natural forests. In north-eastern China – Manchuria – coniferous forests dominate, while in the south there are tropical and subtropical mixed forests, including extensive bamboo stands.
Forest governance in China
China has no full private ownership rights to land, but a complex system of use rights has been established. State-owned holdings account for around 40% of the total forest area and are located mainly in the north and south-west. They are managed by state forest enterprises and companies. Collective ownership accounts for around 60% and is characteristic of the southern part of the country. The land belongs to rural collective organisations, and since the 2008 reform households can also acquire use and management rights, usually for terms of 30 to 70 years, which also include rights to the trees. China's principal forest supervisory body is the National Forestry and Grassland Administration (NFGA), which develops policy and quotas and oversees nature conservation.
Regulations and nature conservation requirements in China. “Ecological civilisation”
Forestry is regulated by the Forest Law of the People's Republic of China, substantially revised in 2019. Its main provisions include felling quotas. Every five years the state sets strict logging quotas to ensure that forest growth exceeds harvesting volumes. Since the late 1990s China has introduced a general ban or sharp restrictions on timber extraction in nature reserves and ecologically sensitive zones. Over the past decades forestry in China has undergone dramatic change, shifting from intensive timber extraction to large-scale afforestation and nature conservation. Amendments to the Forest Law entrenched sustainable management as a priority, striving towards an “ecological civilisation”.
Notably, the law makes tree planting and forest protection a duty of every Chinese citizen. Strictly prohibited are the destruction of ancient and rare trees, grazing in young stands, and the unauthorised conversion of forest land to other uses.
Although Latvia is in a different region, our nature conservation principles are quite similar to those set out in the country led by the Chinese Communist Party. More detailed requirements on the retention of biologically important structures are included in China's nature conservation forest management regulations. Likewise, when planning economic activity in specially protected areas, both in China and in Latvia the general regulations on specially protected nature territories must be observed.
Collective forest reform in China
China's collective forest reform is one of the most ambitious stages of land reform, one that has substantially changed the lives of millions of people, whereas Latvia's forest management system is based on an entirely different ownership structure and on European legal practice.
Before the reform, forests belonged to village collectives, and residents had little interest in tending them because the profits were not shared fairly. China allowed collective forest land to be divided among households. Chinese citizens received use-right certificates, similar to lease rights for 70 years. These rights may now be sold, given away or pledged to a bank as security for a loan. This attracted private capital into forest planting. As a result, China's forest area and growing stock increased, because people at last felt themselves to be the “owners” of a specific parcel rather than merely passive observers.
Specific parallels between Chinese and Latvian regulations
Despite the differences, both countries have strict rules protecting the forest estate. In both Latvia and China, converting forest land into building land is very difficult and expensive. In both countries illegal felling carries criminal liability, and there is an obligation to regenerate the stand. China is moving towards a more “capitalist” model in collective forests in order to promote efficiency, while Latvia is trying to balance the traditional freedom of private owners (which, unfortunately, is not going well) with ever stricter European environmental requirements.
Forest governance and nature conservation requirements
China uses a classification-based system to separate economic objectives from environmental protection. There are ecological, or “public-benefit”, forests. These are intended for soil and water protection and for biodiversity. Felling here is strictly restricted or prohibited. Commercial forests are used to produce timber and other products such as fruit and bamboo. They are managed on market principles. The new law prohibits the transport or processing of any illegally obtained timber, requiring companies to keep data records.
Since 1998 a comprehensive ban on commercial logging in natural forests has been in force, particularly in the Yangtze and Yellow River basins. China has set a target of increasing forest cover to 25% of the country's territory by 2030.
The Chinese are currently building a new national park system in order to protect the most valuable ecosystems and endangered species.
Support and compensation in Chinese forestry
China's forestry support and compensation system is one of the most ambitious in the world, and since 2024 it has been substantially reinforced by new legislation aimed at promoting the “green” economy and reducing poverty in rural regions.
Under the regulations of China's State Council, which came into force on 1 July 2024, China has become the first country in the world with comprehensive legislation on ecological compensation. The state provides direct financial transfers, or subsidies, to individuals and communities engaged in forest protection in important ecological zones. By November 2024, almost half of China's forests and grasslands were already included in these compensation schemes. A special Public-Benefit Forest Compensation Fund has been established, compensating farmers and communities for production losses arising from the ban on commercial logging in protected forests. In recent years compensation rates have been increased by roughly 50% in order to give millions of rural residents a real incentive to preserve existing forest stands rather than clear them for agricultural purposes.
China has created a unique programme called “Grain for Green”. It is one of the world's largest payment-for-ecosystem-services programmes, with total investment already exceeding 69 billion US dollars. Farmers receive cash payments for converting land of low agricultural productivity, such as slopes, into forest or grassland. Payments are made only after official confirmation has been received that the survival rate of the planted trees exceeds 85%.
China is actively developing forest carbon trading systems, which allow forest owners to earn income by selling carbon sequestration credits to companies that must reduce their emissions. “Horizontal compensation” is also being encouraged, whereby wealthier regions, for example downstream areas that benefit from clean water, pay poorer upstream regions for conserving forests
Funding is rising rapidly
Central ecological compensation funds currently amount to almost 200 billion yuan (approximately 27.6 billion USD) a year, and local government funds add a further 100 billion yuan or so. More than 200 million farmers and livestock keepers derive direct financial benefit from these programmes. Thanks to these mechanisms, by the end of 2024 China had already reached forest cover of 25.09%, one of the fastest rates of increase in the world. For foreign investors, involvement in Chinese forestry requires navigating between the general Foreign Investment Law and specific sectoral restrictions set out in the annual “Negative List”.
Under the latest requirements set in 2024, foreign capital cannot be involved at all in the logging and primary processing of natural forests and rare tree species, such as valuable tropical timber.
Projects involving the breeding of new tree varieties or seed production usually require a local partner, and the Chinese side must retain control or at least a 34% share.
Commercial forest planting – plantations – and the further processing of timber are for the most part open also to wholly foreign-owned companies, provided they are not located in strategically sensitive zones. For example, to start a forestry project a foreign investor must choose either a WFOE or a JV. Most often a WFOE (Wholly Foreign-Owned Enterprise) is set up; the “scope of activity” – the Business Scope – must then be defined, since operating outside it is unlawful. The entrepreneur then registers with the Administration for Market Regulation to obtain a business licence and receives special permits from the National Forestry and Grassland Administration.
Since the land belongs to the state or to collectives, the investor must conclude a long-term lease agreement for the forest land use rights. A forest authority certificate is issued, confirming the right to manage a specific area.
Even in commercial forests, each logging operation requires a separate permit from the local forest district. Species certificates and quarantine documents, meanwhile, are required if seedlings are imported or timber exported.
Opportunities in China's “green” projects
China is currently making a particular effort to encourage foreign investors to take part in carbon sequestration projects by registering forest areas under China's voluntary emission reduction scheme – CCER. Since 2024 China has tightened the liability of intermediaries – auditors and law firms – and a foreign investor is required to engage a locally certified consultant who verifies the project's compliance with environmental and investment rules.
Logging and the timber industry in China
Domestic timber production has stabilised at around 100–120 million cubic metres a year. Growth is constrained by the ban on felling in natural forests, and most of the timber comes from artificially established plantations. On average 6–7 million hectares are afforested each year. China is carrying out the world's largest afforestation project in order to combat desertification in the north – the “Great Green Wall” project.
China is the world's largest producer of wood products, and in this sector the country accounts for around 30–40% of the world market. China supplies enormous volumes in plywood and MDF board production, using both domestic poplar wood and imports. China's paper industry, too, is a rapidly growing sector, based on eucalyptus and bamboo pulp
China's dependence on external resources
Since domestic production cannot cover consumption, China imports more than 50% of the timber it needs, and this is an enormous market. The main sources of timber are Russia, New Zealand, Germany and South-East Asia, which supplies the Chinese with tropical timber.
China wants to shift from importing roundwood to importing sawn timber. This is driven by China's wish to reduce the volume of processing residues and by the roundwood export restrictions introduced by other countries, such as Russia.