China's Lumbering Economy Ravages B

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The Washington Post

March 26, 2001, Monday, Final Edition

China's Lumbering Economy Ravages Border Forests; Logging Industry Taps
Unregulated Markets for Wood

BYLINE: John Pomfret, Washington Post Foreign Service

DATELINE: PIANMA, China

This Chinese town hard on the border with Burma smells of wood.
Sawdust floats through the air like pollen. Fires crackle in roadside
restaurants. Pianma's tallest structure is a mountain of logs more than
50 feet high. And trucks weighed down with timber trundle through
town daily.

Pianma, 1,500 miles southwest of Beijing on the far edge of Yunnan
province, is one of China's gateways into the forests of northern
Burma, where for the last several years a massive, unregulated
and largely unnoticed timber trade has stripped bare hundreds
of square miles of ancient tropical forests. As such, Pianma is a
vantage point to view the mounting appetite of the Chinese
economic giant that is emerging and spreading its reach to the
rest of Asia and the world.

The economy -- at more than $ 4 trillion it is 22 times bigger
than it was in 1978 -- has led the charge toward renewal of what
many Chinese regard as their rightful influence on the country's
Asian neighbors.

China is the biggest investor in Mongolia, for instance, and buys
more than half its cashmere. China has challenged Russia for
influence in several Central Asian countries, including Kazakhstan
and Kyrgyzstan, where Chinese investments vie with Moscow's
and Chinese bicycles, electronic goods and other gadgets are
pushing Russia's out.

To the south, China has improved ties with Vietnam, and
Chinese firms are some of the most aggressive investors in that
country. Chinese firms have also plowed money into Nepal and
Cambodia.

China's growing economic influence has sometimes aroused
passions in the region. Mongolia moved several years ago to ban
Chinese firms from participating in its privatization process.
Government and cashmere industry officials routinely blame China
for the collapse of their textile industry. Local officials in Siberia
have spoken about their fears of a "Chinese invasion," although
negotiations are underway for Chinese crews to cut down trees
in Russia.

Here in Pianma, where men saunter the streets with pistols and
prostitutes gather on street corners offering laborers a quick
massage and more, people have been trading lumber for years.
But the boom, truckers and lumberjacks say, really began in 1998.
That was the year China issued a ban on logging to protect its fast-
disappearing forests and to halt massive soil erosion that contributed
to deadly floods.

"You have a situation where an environmentally beneficial policy in
China created incentives to destroy forests in other parts of the
world,"  said Jim Harkness, director of the China office of WWF,
a conservation organization formerly known as the World Wildlife
Fund.

 From 12 provinces in 1998, the logging ban was extended to 18 in
2000. No logging is allowed in the upper reaches of the Yangtze or
Yellow rivers. Logging has been reduced in Manchuria, Inner
Mongolia, the northwestern Xinjiang territory and elsewhere. In all,
740,000 wood workers have been laid off, according to research
by WWF. China's timber production plummeted 97 percent from
1997 to 2000, when only 1 million cubic meters were produced.

Preparations for China's entry into the World Trade Organization
have also sparked an increase in timber imports. Tariffs on forestry
products have fallen drastically as China seeks to prepare for a more
open trading system. In many places around China's borders, no
tariffs are charged for logs.

In that atmosphere, thousands of out-of-work laborers flooded
this town and regions all along the borders after 1998, looking
for wood to feed an unquenchable demand for chopsticks,
furniture and paper. China's imports of logs skyrocketed from
less than 5 million cubic meters in 1998 to more than 10 million
in 1999 and between 14 million and 15 million last year.

Steven Johnson, a statistician at the International Timber Trade
Organization, estimates that within a few years China will surpass
the United States, Japan and the European Union as the world's
biggest importer of logs, although its imports of all wood products
are still a fraction of the world total.

"The logging ban played a role," a World Bank official said, "but
the trend was already there. As China gets richer, it's natural that
it will consume more wood."

On paper, Burma supplies less than 10 percent of the imports,
or 740,000 cubic meters, according to statistics collected by the
timber trade group. But no one in this swath of western Yunnan
province believes those numbers.

"I would say it's about twice that high," said Li Jiajing, a 44-year-
old driver, who said he moved 1,000 cubic meters last year
of teak, Chinese hemlock, walnut, dragon spruce and Chinese
pine. One recent day, he was preparing an 18-cubic-meter
truckload of three teak logs; the trunks were more than 10
feet in diameter, hundreds of years old.

Timber company officials estimate that more than 350,000
cubic meters move through Pianma alone each year. Large
amounts also come into China from Burma at towns farther
south along the border: Tengchong, Yingjiang, Zhangfeng,
Ruili and Wanding. And a Malaysian timber firm is building
a bridge across the Salween River, 60 miles north of Pianma
near Fugong, to bring in still more logs.

In 1988, there were only 13 small sawmills in Dehong prefecture,
a center of the new logging trade. Now there are more than 100.
Another 100 have sprouted up around Tengchong.

China's activities in the Burmese rain forests are mirrored on its
northern border. Imports of Russian logs have skyrocketed over
the past two years and outstrip the number from Burma. Russia
now accounts for 42 percent of all logs that flow into China. But
Russia's wood comes mostly from forests that specialize in faster-
growing softwood, while Burma's comes from tropical forests
where the trees are often hundreds of years old.

"It's an international tragedy because Burma possesses about
half of mainland Southeast Asia's forests," said Kirk Talbot, a
Washington-based expert on Southeast Asian forests. "The
combination of a military-backed junta [in Burma] and
unquenchable appetites in China is creating a disaster."

In theory, the military-run Myanmar Timber Enterprise
controls all Burma's lumber exports. But the Chinese are not
dealing with the government from Rangoon across from Pianma,
for Burma's political system has conspired to facilitate the denuding
of its forests.

In 1988, Burma's military-led government annulled the results of an
election. Concerned that thousands of dissidents who fled Rangoon
would be armed by insurgents who have operated for decades along
Burma's northern border, Burma's generals cut a deal with the rebel
forces: In exchange for permission to engage in business, the
insurgents promised not to arm the dissidents.

Logging concessions were a key sweetener. Burma's generals
gave these local leaders access to logging machinery and milling
equipment. Chinese businesses were soon operating in Burma,
bringing in lumberjacks and truckers and cutting down forests.

Burma and Yunnan, the neighboring Chinese province, are
home to an abundance of plant and animal life, from a dizzying
assortment of rhododendron species to the lesser panda.
There are more than 12,000 recorded species of trees in the
region, one of the most biologically diverse in the world.

Deforestation has ravaged its forests, however. In 1949,
the year of China's Communist revolution, half of Yunnan
province was forested, but today it is less than 10 percent.
In Burma, forest cover has dropped from 21 percent in 1949
to less than 7 percent today.

Environmentalists in Yunnan say the damage to Burma's forests
along the border has been severe. In 1997, one Yunnan-based
conservationist reported that Chinese loggers had cleared 35
miles into Burma. This year logging has moved 60 miles inside
Burma, he said.

"Burma used to be covered in huge trees like our Gaoligong Shan
area just across our border," said the environmentalist, who recently
journeyed to the border region. "Now you can climb to the top of
their mountains and all you see are roads and logging trucks and
barely any trees."

Most of China's deals are done with warlords in Burma's Kachin state,
which borders China.

"The warlords basically run one region and so they sell us all of their
  mountains," said Wang Jian, a businessman based in Pianma. "We're
in a difficult position because they change warlords all the time.
So our incentive is, once we get the contract, cut all the logs. So we
clear-cut. If we don't, and they change the warlords, we're going to
have to pay him as well."

That has angered China's environmentalists, who note that while
China bans the logging of its own hardwood forests, its policies
encourage lumberjacks and smugglers to cut down rare trees and
snare endangered animals in Burma and Laos.

But Kou Wenzhong, a senior official in China's forestry department,
said Chinese firms have a hard time making money in the region
despite the absence of regulation.

"We're trying to pay attention to Burma's environment as well," he
said in an interview in Beijing, "but when a warlord is changed over
there, they rip up the contract and things get very difficult. Lots of
contracts have been broken. There have been serious losses."