China's pulp and paper sector: an analysis of supply ... · China’s pulp and paper sector:...
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D. HE and C. BARR President of China Economic Consulting, Inc. and a Ph.D. Candidate in Economics at North Carolina State Uni- versity, based in Raleigh, North Carolina, USA Senior Policy Scientist with CIFOR’s Forests and Governance Program, Bogor, Indonesia Email: [email protected] and [email protected]China’s pulp and paper sector: an analysis of supply-demand and medium term projections 1 SUMMARY This study summarizes recent trends in China’s paper and paperboard sector and projects supply and demand for each of the major grades through 2010. Baseline projections suggest that China’s aggregate demand will grow from 48.0 million tonnes in 2003 to 68.5 million tonnes per year in 2010. With domestic production projected to reach 62.4 million tonnes per year, China is expected to dominate global capacity expansion for most major grades. China’s annual demand for fibre furnish across all grades is projected to rise from 40.2 million tonnes in 2003 to reach 59.6 million tonnes by 2010. Of this, approximately 58 % will come from recovered paper, 25 % from wood-based pulp, and 17 % from nonwood pulp. This rapid growth has far-reaching implications for forest sustainability and rural livelihoods both within China and throughout the Asia-Pacific region. It will place new strains on China’s domestic wood supply and may exacerbate forest conversion and illegal logging in key supplier countries, in addition to providing both threats and potential income opportunities for small- holder tree growers. Keywords: China, paper and paperboard, pulp, wood fibre, supply-demand trends 254 International Forestry Review Vol. 6(3-4), 2004 INTRODUCTION China’s unprecedented economic growth over the last 15 years has led to a sharp increase in demand for paper and paperboard products. During this period, the country’s aggregate consumption of paper and pa- perboard has grown by 9.6 nearly 10 % per year, rising from 14.6 million tonnes in 1990 to 48.0 million ton- nes in 2003. To meet this demand, domestic produc- tion of paper and paperboard has grown at a similar pace, expanding from 13.7 million tonnes in 1990 to 43.0 million tonnes in 2003. Accounting for over 50 % of the world’s overall growth in paper and paper- board production since 1990, China is now the se- cond largest producer globally, surpassed only by the United States. There is a general consensus among industry ana- lysts that China’s demand for paper and paperboard, as well as domestic production, will continue to ex- pand at a very rapid pace for at least the medium term. However, forecasts of China’s consumption for 2010 have varied widely in recent years, ranging from the FAO’s projection of 48 million tonnes (Zhang et al. 1997a) to projections of 60 million tonnes or more by leading commercial analysts (Jaakko Pöyry 2000, URS Forestry 2002) 2 . Recent market studies also project in recent years have projected that by 2010, China will consume approximately 60 million tonnes of paper and board products annually, and that most of this will be supplied by domestic producers 3 . These projections raise a number of fundamental questions regarding the raw material supply for China’s paper and board industry - most notably, ,How much fibre will be needed to support China’s growing demand over the years ahead ?‘ ,What types of fibre will the coun-try’s paper and board industry consume ?‘ and 1 This article has been adapted from Dequan He and Christo- pher Barr (forthcoming) ,China’s pulp, paper and paper- board sector: an analysis of supply and demand trends and projections to 2010‘, to be published by the Center for Inter- national Forestry Research (CIFOR) and Forest Trends. 2 It should be noted that even within the FAO literature, esti- mates of China’s future paper and paperboard consumption have varied widely. For instance, the FAO Provisional Out- look for Global Forest Products Consumption, Production and Trade to 2010 (Zhang et al. 1997b) projected that Chi- na’s total demand would reach between 59.5 million tonnes and 65.6 million tonnes by 2010, depending on the country’s general economic growth and other variables. However, this estimate was revised downward quite substantially in the FAO’s Trends and Outlook for Forest Products Consumption, Production and Trade in the Asia-Pacific Region (Zhang et al. 1997a), which used a different set of assumptions to project that China’s total demand would reach 48.1 million tonnes in 2010. 3 See, for instance, Jaakko Pöyry’s 2001 multi-client study entit- led China Forest Industries: Opportunities and Challenges - Pulp and Paper; and URS Forestry’s 2002 multi-client study entitled The Chinese Pulp and Paper Industry; Present Posi- tion - Future Prospects. A discussion of how these studies’ forecasts compare to the projections offered in the present study is provided in He and Barr (forthcoming).
China's pulp and paper sector: an analysis of supply ... · China’s pulp and paper sector: an analysis of supply-demand and medium term projections 1 ... of paper and board products
