China's Construction Market: A New Star in the East - Statistical Data Included

AgExporter, Jan, 2001 by Roseanne Freese

In the absence of zoning and performance-based building codes, architects, engineers and site workers had to work from irregularly designed building specifications. Confronted with unfamiliar technologies and components, builders often put up complexes of less than adequate quality and, more often than not, had no strategies or services with which to repair or maintain structural integrity and appearance.

The good news is, these problems are being overcome and demand for reasonably priced, high-quality products is up. According to the China Furniture Association, more than half of consumers preferred furniture made by joint ventures and 3.5 percent preferred imported furniture over all other options. Twenty years ago the consumer did not even have these options. (Note, though, that while demand for better quality products is up, the domestic market is burdened with an oversupply of low-quality interior and panel products.)

Changing wood policies are making their mark as well. The Chinese government in recent years has substantially reduced logging throughout much of the country and has reduced tariffs on most logs and lumber to zero, while significantly reducing tariffs on other value-added wood commodities.

Last but not least, U.S. market education efforts are starting to kick in. The American Forest and Paper Association, the American Hardwood Export Council, the Softwood Export Council and APA--the Engineered Wood Association--through their representatives in Beijing, Shanghai, Guangzhou and Hong Kong--are embarking on a nationwide, multi-sector program to introduce Chinese architects, designers, trade associations and standards organizations to the structural, environmental and aesthetic benefits that uniquely exemp1ify American solid wood products.

With total Chinese solid wood imports moving toward a record $4 billion in 2000, there is much room to grow for all U.S. manufacturers of structural components, exterior and interior finished products and furniture products for the home and office.

While U.S. flooring and softwood plywood sales to China are down due to rapidly expanding domestic capacity, exports of hardwood and softwood lumber, hardwood plywood, moldings and many other major value-added products have increased strongly.

The author is an agricultural economist in the FAS Forest and Fisheries Products Division.

WTO Spells Wood Trade Opportunity

China's accession to the World Trade Organization (WTO) will accelerate U.S. sales to China (including Hong Kong) that are already on track to exceed $200 million in 2000, making China our second- largest market in Asia and the eighth-largest market in the world.

Currently China's import tariffs on solid wood products average 11 percent, with tariffs reaching as high as 21 percent. There is also a value-added tax of 13 percent. China's accession to the WTO, however, includes a commitment to reduce the tariff rates on wood imports to an average of 4 to 7.5 percent by 2005.

For detailed information on China's WTO accession commitments for solid-wood tariff reductions, please see "China Announces WTO Offer for Wood Products" in the September 2000 edition of Wood Products: International Markets and Trade or online at: www.fas.usda.gov/ffpd/Newsroom/newsroom.htm