The Way Out for Shandong's Timber Industry Amidst China-US Trade Friction

Source: China Green Times

Since 2018, China-US trade friction has continued to escalate. The US has imposed high tariffs on Chinese goods, strengthened technical barriers and environmental certification requirements, severely impacting the global economic order and multilateral trading system, and bringing many uncertainties to China-US forest product trade अनुभ。

On February 1 this year, the US announced additional tariffs on Chinese goods exported to the US. Since then, the US has repeatedly imposed additional tariffs on Chinese goods exported to the US. Until May 12, a joint statement from the China-US Geneva economic and trade talks was released, with both sides pledging to establish a mechanism to continue consultations on economic and trade relations after taking relevant measures अनुभ。

Although China-US trade negotiations have made breakthrough progress, there are still many variables in the international environment, with multiple risks intertwined. In such a broad environment, Shandong Province's timber industry cannot stand idly by and needs to actively explore systematic response strategies, seek development opportunities amidst challenges, and achieve sustainable industrial development अनुभ。

I. Current Status of Shandong Province's Timber Industry

In 2023, Shandong Province had over 49,500 timber processing enterprises, ranking second nationally in industrial scale. Data from the "2024 Shandong Statistical Yearbook" shows that in 2023, Shandong Province's wood-based panel output reached 84.839 million cubic meters, of which Plywood 69.403 million cubic meters, Fiberboard 7.179 million cubic meters, Particleboard 8.066 million cubic meters. Wood-based panel surface Decorative panels output 23.626 million square meters. In the wood flooring industry, Solid wood flooring output was 0.399 million square meters, and engineered wood flooring output was 20.954 million square meters. In the furniture manufacturing industry, total furniture output was 53.117 million pieces, of which wooden furniture output was 39.195 million pieces, occupying a dominant position. In the paper industry, pulp output was 5.676 million tons, and machine-made paper and paperboard output was 26.372 million tons अनुभ。

Veneer atmospheric solar combined drying

Data released by Jinan Customs shows that in 2024, Shandong Province's export value of wood products was 22.04 billion yuan and furniture was 40.46 billion yuan, representing year-on-year decreases of 5.8% and 3.6% respectively. From the perspective of import and export structure, Shandong Province's timber industry has a rich variety of export products, including wood-based panels, wooden furniture, and paper products. Before the China-US trade friction, these products occupied a certain share in the US market and made significant contributions to Shandong Province's exports अनुभ。

From the perspective of the national forest product trade landscape, although China-US forest product trade is considerable in scale, its total trade volume and share have shown a downward trend in recent years. In 2024, the total bilateral trade volume of China-US forest products was 14.457 billion US dollars, accounting for 13.31% of China's total forest product trade. Although still ranking first, this percentage has significantly decreased from the peak of 21% in 2016 अनुभ。

Of this, China exported 10.937 billion US dollars of forest products to the United States, accounting for 75.64% of China-US forest product trade; imports from the United States amounted to 3.522 billion US dollars, accounting for 24.36% of China-US forest product trade. China's exports of forest products to the United States are mainly wood products such as wooden furniture, paper and paper products, and wood-based panels, with Shandong Province's timber industry's export products accounting for a certain proportion; imports from the United States are mainly raw material forest products such as wood pulp, logs, and sawn timber, which also provide important raw material support for Shandong Province's timber industry अनुभ。

II. Impact of China-US Trade Friction on Shandong Province's Timber Industry

First, unstable raw material supply. In terms of forest product imports, China's overall dependence on the US is in a low dependence range, at 7.37% in 2024, with log import dependence at 13.79%, sawn timber import dependence at 10.77%, and wood pulp import dependence below 10%. However, for Shandong Province's timber industry, the instability of the US market has had a significant impact on raw material procurement and production operations, and transportation costs have also risen due to the unstable trade environment अनुभ。

Timber Processing Workshop

Second, obstructed export markets. Recently, affected by China-US trade friction, the costs for China's timber industry have significantly increased, and its products' market share in the US has decreased, with some furniture enterprises in Shandong heavily reliant on the US market being more severely affected. The stringent non-tariff barriers set by the US further hinder Shandong Province's timber industry products from entering the US market. From a national perspective, China's forest product export trade dependence on the US was 17.97% in 2024, falling into the medium dependence range. Among these, wooden furniture export dependence reached 29.89%, indicating a high level of impact; wood product export dependence was 17.94%, indicating a moderately high level of impact; while wood-based panel export dependence was relatively lower, but still affected to some extent अनुभ。

Third, restricted industrial development. In the broader context of China's forest product trade being affected by China-US trade friction, Shandong Province's timber industry faces similar difficulties. Enterprises are increasingly uncertain about the future market, finding it difficult to accurately predict future market demand and raw material price trends. They are reluctant to easily invest capital in technology R&D, equipment upgrades, and capacity expansion, leading to insufficient investment in industrial upgrading and innovation अनुभ。

III. The Way Out for Shandong Province's Timber Industry

(I) Strengthening Policy Support to Solidify the Foundation for Response अनुभ。

Establish a policy and resource synergy mechanism. The government will lead the establishment of a forestry policy and resource information sharing platform, comprehensively integrating information on policy releases, raw material supply, market demand, technological innovation, etc., utilizing big data and cloud computing technologies to achieve real-time information updates and precise推送. At the same time, establish a normalized government-enterprise interaction mechanism, regularly publish policy interpretations and industry dynamics, and allow enterprises to provide feedback on issues and suggestions online. Based on enterprise needs and resource distribution, organize precise matchmaking between raw material suppliers, research institutions, financial institutions, and timber industry enterprises. Regularly hold raw material supply and demand negotiation meetings to help enterprises establish long-term cooperation with timber suppliers from Russia, Canada, and other countries. Organize industry-academia-research cooperation matchmaking meetings to accelerate the transformation of scientific research achievements. Build a financial matchmaking platform to broaden enterprise financing channels अनुभ。

Optimize government-enterprise communication and policy implementation mechanisms. Forestry departments, in conjunction with the Shandong Provincial Department of Commerce, Customs, and other departments, will strengthen early warning mechanisms, broaden information collection channels, and monitor policy changes in the United States and other major trading countries in real time. Industry associations will promptly organize experts to interpret policies, formulate response plans, and conduct online and offline training. Establish an international trade friction response training tracking mechanism, regularly revisiting enterprises within 1 to 3 months after training to collect application status, problems, and feedback on effects, thereby optimizing training content and response plans, and enhancing enterprises' proactive awareness in dealing with international trade friction. Jointly with financial institutions, establish special loans for the timber industry, clarifying that funds are to be used for key aspects of enterprises' response to trade friction, such as new product R&D and emerging market development. Simplify loan approval processes, set up fast approval channels, and utilize big data and credit evaluation systems to complete approval and disbursement for eligible enterprises within 1 to 2 weeks, and establish a loan usage tracking mechanism to ensure reasonable and compliant use of funds अनुभ。

(II) Promoting Value Chain Upgrading and Enhancing Product Competitiveness अनुभ。

Increase R&D investment and cooperation. The government utilizes policy guidance and financial support to encourage enterprises to increase R&D investment in alternative materials such as bamboo-based composites and straw-oriented strand boards. Forestry departments, in conjunction with science and technology departments, establish special R&D funds for the wood industry, providing subsidies to relevant R&D enterprises, with a single project subsidy ranging from 500,000 to 2 million yuan. Support enterprises in establishing long-term cooperative relationships with universities and research institutions to jointly establish R&D centers and accelerate the transformation of scientific research achievements.

Children's outdoor furniture

Achieve upgrades through digital technology. Promote the application of industrial internet platforms, with the government providing tax incentives and technology subsidies to enterprises that achieve customized production using advanced technologies such as digital twins. Forestry departments, in conjunction with industry and information technology departments, organize expert teams to provide technical guidance to enterprises, helping them solve problems encountered during technology application, improve production efficiency, reduce energy consumption, enhance product quality, and increase customer satisfaction. Industry associations collaborate with international business associations to organize enterprises to participate in international R&D cooperation, introduce advanced foreign technologies and concepts, and enhance enterprises' capabilities in new material research and digital production.

(III) Enhance supply chain resilience and ensure raw material supply.

Build a diversified raw material supply system. Formulate a development plan for fast-growing forests in Shandong Province, providing policy support to enterprises and farmers planting fast-growing forests, such as seedling subsidies and planting technical guidance, to enhance domestic raw material self-sufficiency. Simultaneously, actively organize enterprises to conduct online and offline negotiations with suppliers from timber-rich countries such as Russia, Canada, and New Zealand, helping enterprises establish long-term cooperative relationships and sign stable supply contracts.

Wicker crafts

Straw crafts

Develop cross-border production capacity collaboration. Encourage leading forestry enterprises to establish processing bases in Belt and Road countries, with the government providing policy and financial support. Forestry departments, in conjunction with commerce departments, provide enterprises with overseas investment policy consultation, green channels for project approval, and other services. Establish a special fund for cross-border production capacity collaboration, providing interest subsidies on loans and investment subsidies to enterprises establishing processing bases overseas.

(IV) Strengthen enterprise self-construction and expand market share.

Enhance enterprises' international trade capabilities. Government agencies, in conjunction with industry associations, organize experts to conduct training activities on responding to international trade frictions, cultivating professional talents for enterprises. Regularly organize enterprise managers to attend training courses on international trade rules and international marketing strategies to improve enterprises' ability to deal with international trade friction risks. Encourage enterprises to introduce high-end talents with international trade experience to provide intellectual support for enterprise development.

Develop differentiated products and markets. Support enterprises in developing differentiated and personalized products based on different market consumer preferences and usage habits. The government establishes special market research funds, providing subsidies to enterprises conducting emerging market research to help them deeply understand market demand and formulate adaptive marketing strategies. Guide enterprises to leverage the tariff reduction policies of the Regional Comprehensive Economic Partnership (RCEP) to actively explore emerging markets such as ASEAN, Belt and Road countries, Africa, and South America.

(V) Promote industrial ecosystem restructuring and foster synergistic development.

Strengthen industry alliances and cooperation. Forestry departments promote the establishment of the Yellow River Basin Wood Industry Innovation Alliance, integrating resources from all parties, fully leveraging the role of the supply chain leader, and strengthening collaborative innovation and resource sharing among upstream and downstream enterprises in the supply chain. Organize alliance enterprises to conduct joint R&D to jointly tackle key technical problems in the industry. For example, joint research on environmental protection technologies and intelligent manufacturing technologies in wood processing, with R&D results shared within alliance enterprises. Industry associations, in conjunction with international business associations such as the Central and Eastern Europe-China Cooperation Development Association, jointly establish effective mechanisms for going global, build an international cooperation and exchange platform within the Shandong Provincial Forestry Industry Association, and formulate personalized overseas market expansion plans for enterprises, customizing exclusive market entry strategies and development plans.

Establish multinational training centers and industrial parks. Plan to establish the "Zijiang International Academy" multinational training center, with the government providing financial support and policy guarantees. Forestry departments, in conjunction with education and human resources departments, formulate training plans and curriculum systems to cultivate woodworking talents for Belt and Road countries and export Chinese standards. Simultaneously, referring to the "Two Countries, Two Parks" model between China and Malaysia, promote the establishment of industrial cooperation parks between Shandong Province's wood industry and timber-rich countries. The government provides preferential policies in terms of land, taxation, and infrastructure construction to attract enterprises to settle in the parks, create a complete industrial chain, and enhance industrial synergy.

IV. Conclusion

At different stages of industrial development, clear and targeted strategic goals should be formulated to achieve long-term development. The first stage involves product export, accurately positioning international market demand, strengthening brand building and marketing promotion, and opening up international markets. The second stage promotes production capacity export, conducting scientific and reasonable global production capacity layout planning, and optimizing industrial layout. The third stage achieves value chain export, enhancing its position in the global industrial division of labor. The fourth stage promotes comprehensive enterprise globalization, achieving sustainable development worldwide.

In the process of responding to Sino-US trade frictions and achieving long-term development, Shandong Province's timber industry can build a system of safeguard measures from multiple dimensions to ensure the effective implementation of various response strategies. Policy guarantees: closely monitor national trade policies, strive for special subsidies and tax incentives, and promote the implementation of local supporting policies. Financial guarantees: strengthen bank-enterprise connections, innovate financial products, and broaden financing channels. Talent guarantees: deepen industry-university-research cooperation, cultivate and introduce professional talents, and improve personnel quality. Market guarantees: conduct international market research, explore emerging markets, and strengthen brand cultivation and protection. Industrial synergy guarantees: foster industry-university-research cooperation, promote upstream and downstream synergy of the industrial chain, cultivate industrial parks, leverage the role of industry associations, jointly respond to trade frictions, and promote sustainable industrial development.

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