BEIJING (Reuters) – The Chinese government has made it easier for businesses to sell their forestry equipment, and it’s a good sign that the country is on the road to rebuilding its forestry industry, the chairman of the world’s biggest forestry company said on Thursday.
China is set to build a $13.3 billion factory to produce forestry equipment in the country, and the plan is for about 20,000 workers to work there, Zhongshan Forestry Group chairman Yang Honglin said.
The plan is to begin producing the equipment in 2020, with the first batch to be shipped in 2021, according to the company.
China has one of the largest forestry markets in the world and has invested heavily in the sector in recent years to diversify its economy.
China’s Ministry of Forestry has been trying to encourage domestic demand in forestry, with a number of government-backed investment programs aimed at making the sector more competitive.
But some industry observers worry that the government’s commitment to the sector will be undercut by the rising costs of forest equipment.
The Chinese government said last month it would cut a key investment program, known as the “Forest Forest Program” to $3 billion from $7.5 billion.
The decision to cut the Forest Forest Program, which covers about 70 percent of the value of the Forest Investment Fund, came after the government said it would be more generous to companies that purchase timber.
The cut has already forced several forestry companies to cut jobs, while other companies have been unable to find suitable replacements.
Yang said he expected the cut to be permanent.
He also said that the Forest Industry Investment Fund will be renewed this year, with its capital coming from the China Development Bank.
The fund has been used to finance projects to develop forestry and natural resources, including in parts of the country where forest cover is declining.