The main reasons for the high levels of illegal timber exports from Russia are the porous border with China, limited or complete lack of border controls and law enforcement, lack of reliable documentation and other processes, and corruption (Seneca Creek 2004: 107).
Many timber exports from Russia are illegal because the timber involved comes from illicit sources. Exports of timber from Russia may also be illegal because they are carried out clandestinely, are falsely declared or mislabelled, or are exported by use of forged export and transport documentation or bribery (Ottitsch, Moiseyev & Kazusa 2005: 12; Pye-Smith 2006:
10–11; Vandergert & Newell 2003: 303, 305). Observers estimate that a total of US$32 is paid in bribes for every cubic metre of hardwood sold for US$140 at the Chinese border.
The bribes include payments to government forestry officials, environment inspectors and customs officials, and also to militias and local gangs for protection (Pye-Smith 2006: 5).
Clandestine exportation involves, for example, ‘high value hardwood logs that are placed on the bottom of the [train] car and [covered] with lower value spruce or larch logs’ (Seneca Creek 2004: 111). Alternatively, timber is brought into China through small, more remote border crossings or across unpatrolled rivers (Vandergert & Newell 2003: 304). Another pattern of illegal exportation, especially from the Russian Far East, involves exports in excess of authorised volumes by use of temporary export declarations. These are used for individual shipments that are part of bigger and ongoing exports and do not require exact specification of the quantities involved. Only at the end of each month are exporters required to provide accurate figures. By that time, the authorities cannot, however, verify the declaration and it has become common practice to under-report actual volumes exported (Pye-Smith 2006:
10–11; Seneca Creek 2004: 111).
People’s Republic of China
the main points of importation of Russian timber into China is said to have 400 sawmills (Pye-Smith 2006: 11). In 2007, China produced approximately 56 million cubic metres of logs, 25.676 million cubic metres of sawn timber, 20.756 million cubic metres of plywood and 3 million cubic metres of veneer (ITTO 2007: 54).
Processing of timber in China requires government permits, although these are often difficult to obtain, especially when quotas are limited (Zhu, Taylor & Guoqiang 2004: 8).
Consequently, it can be assumed that some sawmills operate illegally. From one perspective, many small mills and processing facilities have been closed recently as wood processing is increasingly concentrated in a small number of new large wood and wood-fibre mills. From another perspective, the liberalisation of China’s economy has enabled almost unrestricted foreign direct investment into the timber industry, which has greatly increased China’s wood processing capacity. Much of the investment is made into pulpwood plantations and large pulp and paper processing facilities. Cheap labour and China’s increasingly open economy are the main incentives for foreign investment in this industry. It has been estimated that China’s pulpwood processing capacity will expand from 12.8 million cubic metres in 2000 to 29 million cubic metres in 2015 thus further fuelling the demand for timber imports (Stark &
Cheung 2006: 18; Zhu, Taylor & Guoqiang 2004: 11, 24).
China is also among the leading producers of wooden furniture, which frequently involves use of high-quality tropical hardwood imported into the country. With demand for furniture from China growing in domestic and foreign markets, it is expected that this sector will continue to grow and thus further raise the demand for imported roundwood, especially for tropical timber species found in Indonesia, Malaysia and Papua New Guinea (Zhu, Taylor
& Guoqiang 2004: 17). Moreover, given the low manufacturing costs in China, foreign companies from Hong Kong, Taiwan, Singapore and Malaysia are expected to continue making big investments in the wood manufacturing industry thus further increasing production capacities (Stark & Cheung 2006: 25; Zhu, Taylor & Guoqiang 2004: 19–20).
Exports
Wood exports from China have increased greatly in recent years, with some sources suggesting a 3.5-fold growth between 1995 and 2004 with growth rates further accelerating in recent years (Greenpeace 2006: 23). Greenpeace has estimated that China exported wood-derived products of a comprised volume of 35 million cubic metres in 2003 and 40 million cubic metres in 2005 (Greenpeace 2006: 23). The value of wood product exports has risen from US$3.6b in 1997 to US$17.2b in 2005 (White et al. 2006: 10).
The timber and timber products exported from China almost exclusively involve processed material. Export of roundwood is extremely limited because the government has restricted exports of primary products such as logs. In 2007, China only exported 4,000 cubic metres of logs (ITTO 2007: 55). Instead, the government encourages exports of value-added timber
products, which now constitute about 99 percent of all exports. The wooden furniture and plywood sectors have seen the greatest growth in exports in recent years. The value of wooden furniture exports alone is said to have risen seven-fold since 1995, exceeding US$7.1b in 2005 (Greenpeace 2006; ITTO 2007: 25), reaching a volume of 12.7 million cubic metres in 2005 (White et al. 2006: 11). Plywood exports rose to 8.8 million cubic metres in 2007, making China the world’s largest exporter (ITTO 2007: 55; White et al.
2006: 11). Paper and woodchips comprise the remaining 11 million cubic metres of exports (Stark & Cheung 2006: 21, 24; Zhu, Taylor & Guoqiang 2004: 18). Exports of veneer and sawn timber (676,000 and 103,000 cubic metres respectively) are small in comparison (ITTO 2007: 55).
The main destinations for timber products exported from China are neighbouring countries in East Asia, and also Taiwan, Hong Kong and the United States. The United States, the European Union and Hong Kong are also the main destinations for wooden furniture from China made from species such as merbau, jatoba and teak. Plywood (made from meranti and other species) and paper are mostly exported to Japan, the Republic of Korea, the United States and Taiwan (Greenpeace 2006: 24; ITTO 2007: 25; Pye-Smith 2006:15;
Stark & Cheung 2006: 24; White et al. 2006: 11; Zhu, Taylor & Guoqiang 2004: 18–19).
Table 21: Suspicious wood exports by type of wood, China, 2002 Total exports
(’000m3)
Suspicious volume, total
(’000m3)
Suspicious volume, % of
exports
Suspicious volume, % of
production Softwood
Roundwood 4 1 30.0 0.0
Lumber 250 79 31.5 1.5
Plywood 515 162 31.5 1.5
Hardwood
Roundwood 691 207 30.0 1.0
Lumber 535 164 30.6 3.9
Plywood 1,273 389 30.6 4.6
Source: Seneca Creek (2004: 15–16)
China’s wood exports are seen as a major source of illegal timber products; levels of timber exports from China are very high and Seneca Creek has estimated that approximately 30 percent of all softwood and hardwood exports, raw and processed, are ‘suspicious’
(Table 21). While the exports themselves are legal under Chinese law, they frequently involve products that are made of illegally sourced timber. Consequently, the timber trade route via China has been described as a way to ‘launder’ timber that has been illegally logged elsewhere (Stark & Cheung 2006: 15, 18).
Further information about the circumstances of illegality is not available. It is known and documented that much of the timber used in wood production in China has been harvested
or otherwise obtained or imported illegally, and that many transactions depend on bribes (see section‘People’s Republic of China: Illegal logging’, p. 76 and section ‘People’s Republic of China’, p. 124). There is no specific evidence to suggest that some elements of China’s wood processing industry are more prone to use timber from illegal sources than others, except one report citing evidence about Chinese manufacturers producing plywood with illegally sourced veneer facing (White et al. 2006: 12).