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The purpose of this paper is to examine the effects of international efforts aimed at reducing illegal logging on bilateral trade of forest products between China and its partner countries.

The analysis is conducted using an extended gravity model, where the regulations enforced in different countries, as well as bilateral agreements between China and its trade partners on combating illegal logging are included as explanatory variables. The impacts of the efforts against illegal logging on bilateral trade of forest products are examined based on the estimated coefficients of these policy variables.

The results show that the regulations have significant and positive effects on the bilateral trade of total forest products between China and its partner countries. The bilateral agreement on combating illegal logging between showed a negative effect on the bilateral trade of forest products. A further study of three types of forest products shows that the regulations have a negative effect for roundwood, but a positive effect for furniture and wood-based panels. The bilateral agreement, on the other hand, affects negatively the trade of all the three forest products.

Since the export of roundwood from China is negligible, the results from this study imply that international efforts to reduce illegal logging have caused reduction of the import of roundwood into China. China’s wood processing industry is to a high degree dependent on imported roundwood. To secure timber supply is therefore an important strategy for sustainable development of the wood processing industry in China.

To the knowledge, this is the first comprehensive assessment of the impacts of international efforts to reduce illegal logging on forest products trade flow between China and its partner countries. The results provide important scientific bases for decisions on reducing international trade of illegally sourced wood products and on promoting sustainable development of the wood processing industry in China.