China plans to invite foreign investment in a gigantic forestation and papermaking program that is expected to involve 200 billion yuan (US$24 billion) over the course of a decade, officials said in Beijing on February 16.

The central government has approved a national plan to build a complete industrial chain between the forestation and paper making sectors by 2010, said State Development and Reform Commission (SDRC) official Liu Tienan.

Liu, who heads the SDRC's Industry Department, said at a press conference held in Beijing that the move is being made to meet the rapidly growing demand for paper and ease mounting industrial pressure on the environment.

The program includes planting five million hectares of fast-growing trees in the southeastern coastal areas. The country will also build large paper mills near the forestation areas, which will supply the mills with the majority of their raw materials.

The SDRC is planning to construct three or four large wood pulp mills in the southeastern coastal region. Each will have an annual production capacity of 500,000 tons or more.

It will also direct investment to several construction projects for bamboo pulp mills in southwest China. These mills will each have an annual capacity of 100,000 to 500,000 tons.

For the past decade, improvements in Chinese living standards have led to double-digit annual growth in paper consumption. In 2003, China used 48 million tons of paper and paperboard, accounting for 16 percent of the world's total consumption.

However, China has very limited original forest resources that can be used for logging. Instead of wood, China's papermaking industry uses straw as the main raw material. But the processing of straw fiber consumes far more water and produces more pollutants than wood fiber.

Waste from paper mills has become a real headache for residents of many regions in China. In October 2000, wastewater from paper mills in Qian'an City, in north China's Hebei Province, destroyed the entire harvest of more than 200 hectares of aquatic farms in Bohai Bay.

The China Paper Association predicts that the nation’s paper consumption will reach 70 million tons in 2010. Liu Tienan said that by that time, China will be able to add production capacity of 5.5 million tons of wood pulp by implementing the national program.

In the meantime, the country will upgrade existing paper mills in north and northeast China and close down small papermaking factories with annual capacity of less than 17,000 tons.

Liu said the Chinese government will provide only a small part of the 20 million yuan investment, mostly as seed money to encourage enterprises to participate in the program.

The government welcomes the private sector and foreign investors to participate in the program, announced Liu. The central authorities will allow qualified papermaking companies to float shares on the stock market and will encourage mergers, joint ventures and regroupings between state-owned enterprises and private and foreign investors.

China will introduce advanced technology and methods of papermaking and pollution control from other countries, and use overseas personnel and expertise to develop papermaking equipment. In addition, the country will cooperate with organizations around the world in cultivation, firefighting and pest and disease control in forestation, according to Liu.

Industry analysts believe the papermaking industry has huge market potential. Its growth will also push up demand for other industries such as agriculture, packaging, printing, chemicals, machinery and transportation.

(Xinhua News Agency February 17, 2004)