As China's market economic system continues to take shape, private investment has increasingly become a driving force in the development of the country's forestry development, which used to be monopolized by the state.

The forested area created by private investment amounted to 5.31 million hectares last year, accounting for 58 percent of the total forested area created in China, according to the First China International Forestry Industrial Expo going on now in Shanghai.

Private investment accounted for 87 percent of China's total investment in the forestry sector over the past five years, and the ratio of private forestry industrial output value rose to 49 percent last year compared with 40 percent in 2002, said Lei Jiafu, deputy head of the State Forestry Administration (SFA).

Currently, China has more than 170,000 private forestry companies, 270 times the number of state-owned ones, and their output value (excluding the output value of paper-making) makes up 94 percent of the national total.

The introduction of private funds into the forestry sector can create job opportunities for more than 45 million farmers, or 37.5 percent of surplus rural labor force, each year, Lei said.

China's mountainous areas account for 69 percent of its total land space, and the population in mountainous areas account for more than half of China's total population of 1.3 billion. The income from growing fruits, edible fungus, flowers, traditional Chinese herbs, forest food and forest tourism have accounted for more than 50 percent of local economic returns in some major forested regions, Lei said.

China has 13.3 million hectares of forested area suitable for growing chestnut, Chinese date and persimmon as well as other kinds of woody grain, thus development of forestry also plays an immeasurable role in readjusting and optimizing industrial structure in rural areas, he said.

The SFA is drafting a series of policies aiming to provide a good environment for the development of private-funded forestry, said Wang Xuan, director of the policy-making department of SFA. These policies will embody equal treatment of private enterprises in terms of use of resources, funds and loans, and taxation, Wang said.

Farmers, as the key market player, will be guaranteed the right to harvest income from forest products, Wang said. Reform of forestry ownership system will be further deepened with the purpose of mobilizing the whole society to participate in forestry development, he said.

(Xinhua News Agency November 15, 2004)