In China, the economy in the first quarter of 2005 beat analysts’ forecasts to grow 9.5% above Beijing’s official 8% and at a similar pace as the 2004 annual growth rate.
The figures marked the seventh consecutive quarter in which annualised growth has been stronger than 9%. The total value of China’s foreign trade has been predicted to reach $US1300 billion in 2004, up by over 15%.
Housing costs in China continue to rise. According to the National Bureau of Statistics, despite government efforts to put some brakes on the sector, prices rose 12.5% year-on-year during November 2005. Growth was actually higher in many major cities.
The question everyone is trying to answer is whether, like Australia and New Zealand, the real estate market is merely enjoying rapid development or heading towards a ‘bubble.
Given the trends in international timber and trade and changes in China’s timber resource base and economy, local analysts have made projections for China’s future timber imports and export trade. While few changes are expected in the number of countries supplying wood products to China, trade flows are thought likely to change.
Analysts expect log imports will still focus on Russia, Malaysia, Gabon, Papua New Guinea, Myanmar, Germany and New Zealand. However, Russian timber is expected to dominate imports. Russia, home to one-fifth of the world’s forests, supplies about half of China’s fast-growing raw timber imports, more than the next 12 suppliers combined.
China now trails only the US as a wood consumer; it has surpassed Japan as the biggest consumer of Russian wood and its appetite for forestry products is expected to continue growing rapidly over the next five years.
As expected, imports of logs and sawn-wood will increase but the proportion of sawn-wood to logs will change in favour of processed items, initially sawn wood. In terms of price, imported logs look set to continue to firm as supplies become tighter and as demand grows.
Russian timber is currently competitively priced, but analysts see these firming rather quickly. As prices for high quality timbers increase, demand will flatten and at some point, will begin to decline. Analysts expect this to be seen first for tropical timbers and will lead to increased softwood imports.
China has taken steps to reduce import tariffs on many products and this is expected to lead progressively to more diverse imports including increasing volumes of new and added value products. At the same time, imports of wood processing technologies will increase which, with the competitive production costs in China, will drive the expansion of exports. This expansion is going to create strong competition in overseas markets.
Growth in some of the other key Asian economies and in wood products trade is just as impressive. Wooden furniture exports for example in Vietnam rose 86% to $US1.05 billion from 2003 to 2004. Industry experts say the success is attributed to increasing global demand, strong promotional efforts, and extensive investment by local and foreign producers.
Vietnam’s wood exports to Australia in the first quarter of this year have surged by more than 24% over the same period last year. Australia currently spends roughly $US800 million each year on imported wood products, mainly furniture, doorframes and ornaments, areas the Vietnamese wood industry excels in. Though China currently remains Vietnam’s largest competitor in the Australian market, experts believe it will be easier for Vietnam to enlarge its market share as China is facing a potential anti-dumping litigation due to allegations of damage to the Australian wood industry.
According to the Australian Ministry of Trade, Vietnam’s furniture exports in the first four months of this year increased by 57% year-on-year to $US511 million thanks to mounting demands from the US and Japan. Vietnam has so far exported wood furniture to 120 counties and territories. The industry is targeting an export turnover of $US1.6 billion this year, 40% cent higher than last year, of which $US 500-550 million and $US 150-175 million is expected to come from the US and Japan, respectively.
In Indonesia, the timber industry is likely to get a boost as the government plans to increase the logging quota to better match capacity and help stabilise employment opportunities.
The Indonesian press is reporting the government is planning to revise the annual logging quota from 5.5 million cub m to somewhere between 20 and 30 million cub m.
At present, the industry has an annual installed capacity of about 42 million cub m. The great discrepancy between capacity and log availability has been cited as a key contributor to widespread illegal logging across the country. The logging quota increase is expected to result in an increase in the industry’s contribution to the state revenues of about $US9 billion from an estimated $7.8 billion in 2004.
