Asia Times Online 9 August 2005
By Rui Xia
KUNMING - Singapore-based Asia Pulp and Paper (APP), part of Indonesia's Sinar Mas Group, has been accused of illegal logging of natural forest in southwest China's Yunnan province. The alleged deforestation was done as part of a vast wood-for-paper project, in which APP and the Yunnan government are cooperating. The project area covers almost two million hectares in Yunnan, most of which is currently primary tropical forest, Huang Xu of the environmental group Greenpeace told Asia Times Online. Despite the announcement by China's State Forestry Administration (SFA) this March that it had stopped illegal logging by APP, sources in Yunnan this month confirmed that the logging goes on uninterrupted. In protest, a coalition of environmental organizations and student groups has initiated a boycott of APP's products.
The scandal, exposed by Newsweek magazine, was picked up by Greenpeace at the end of 2004. Greenpeace China's investigation referred to a contract, signed in 2002 between APP and Yunnan's provincial government, to plant fast-growing eucalyptus plantations over a vast area in the southern part of the province. Contrary to APP and local government assertions that the project would be set in a barren wasteland, several environmental groups claimed, after investigations, that most of the area is in fact primary forest. Since 1998, China has banned all logging in its natural forests, and is trying to push forward reforestation programs as part of its "Great Green Wall" policy, which acknowledges the importance of forests to China's economy and environment. Provincial governments, however, often ignore or bend these regulations, seeking fast development and tax revenues, and encourage foreign investments at whatever cost.
Following the reports by Greenpeace, the World Wildlife Federation (WWF) and media reports, the State Forest Administration opened an investigation and announced its findings at the end of March. According to official news agency Xinhua, Wang Zhuxiong, deputy director of the administration's Forest Resources Management Department, confirmed that APP was suspected of illegal logging in the Simao region of Yunnan. "We believe both APP and the local government are responsible for the violation," Wang said, and added that any violation will be punishable according to law. "No violator will escape punishment when this investigation is finished," Wang said. But at the same time that the Xinhua report appeared, along with a similar report in China Daily, the two main publications in Yunnan - the Yunnan Daily and the Kunming City Daily - published their own reports, which cleared APP and the local government of any wrongdoing. If APP is found guilty of the charges against it, the company could become the first multinational corporation to be convicted of environmental violations in China. The penalty for such violations for an individual can be up to seven years in prison.
Chinese environmentalists take action
Enraged by the SFA's findings, a coalition of environmental organizations and student groups initiated a boycott of APP products. Protests took place in six major Chinese cities, including Beijing and Guangzhou, during May and June 2005, with students demonstrating in front of big shopping centers, calling on customers to avoid purchase of the company's products. Such boycotts are new to China, and mark a new stage of consumer awareness in this fast-emerging market economy. But despite their clear interest, student groups within Yunnan were not called to take part in the demonstrations for fear of pressure from the local government, a Greenpeace campaigner told Asia Times Online.
In a visit to Simao County in late July, where the logging is allegedly taking place, local residents confirmed that the felling of natural forest in the area continued even after the SFA announcement this March. The Simao Forest Protection Bureau has denied this, declaring that "all plantation projects are done according to state regulations and take place in wasteland". One Mr Zhang of the bureau described some isolated cases of illegal logging by local farmers, promising that the local authorities would immediately stop any violation. Greenpeace and WWF researchers, however, maintain their claim that APP is the logger, and report logging in an area of at least 10,000 mu (660 hectares) of natural tropical forest this year. The full scale of the project is much larger than this: it covers 27,500,000 mu in southern Yunnan that will be turned into eucalyptus plantations, according to a 2002 agreement between APP China and the Yunnan provincial government. Most of this area is now natural forest, Huang Xu said.
Commercial forest logging was evident in late July around Simao and Lancang, though no official authority in the region was willing to discuss the existence of such activity. Trucks loaded with timber - sometimes large logs of old evergreens and pines, but more often eucalyptus logs - could be seen on the narrow roads between Simao and Lancang. The hilly landscape of Simao is changing, as endless lines of pale green Australian eucalyptus emerge where there used to be thick pine forest, and an abundance of tropical undergrowth. On my visit to Lancang, local farmers were reluctant to talk, but some villagers did confirm that large-scale logging is taking place, claiming that the project poses a threat to the livelihood of many in the area, who depend on the forest for mushroom picking or resin extraction from pine trees. Lancang, a lively market town not far from the Myanmar border, is a regional center visited daily by the Aini people, one of the many minority tribes in Yunnan. Fresh mushrooms are offered for sale everywhere by Aini women, but the sellers say it's getting harder and harder to find places to pick these mushrooms. "The forest is shrinking," one old lady said as she handed me a plastic bag with brown, fragrant mushrooms.
Scientists in Yunnan agree with her, and view the continued logging with anxiety. They say the environmental impact of such large-scale deforestation and commercial plantations can be severe, including erosion, floods and loss of biodiversity. Many endangered species will suffer from the loss of natural habitat, including the rare Asian elephant, which is almost extinct in the wild inside China's borders.
Provincial government supports the project
On June 16, the vice secretary of the Yunnan communist party, the second-highest ranking official in the provincial administrative hierarchy, held an unscheduled meeting in Lancang town, in the heart of the APP project area. The vice secretary declared that the provincial government will continue to support the "forest-paper circulation economy", reported the Yunnan Daily. The specific project was not mentioned in this report, and neither was the name of any paper production company. The vice secretary emphasized the government's commitment to ecological values and the protection of Yunnan forests, as well as the rights of indigenous people. The provincial government sees the planting of trees for the paper industry as a way to develop the impoverished rural areas of Yunnan without having to rely on heavy industry, as well as a means to protect the forest and prevent flooding by planting more trees.
Forest scientists argue, however, that monoculture plantations will not contribute to the ecosystem but harm biodiversity, and might cause significant damage to water resources and farmland. The eucalyptus, a fast-growing and easily processed tree, has become especially popular with the paper industry. But research has shown serious negative side effects from its large-scale use, which led the UN Food and Agriculture Organization (FAO) to advice against large-scale eucalyptus plantations. "[Establishing] eucalyptus [plantations] in any deforested water catchment area substantially reduces water production," the organization's report notes. Drying up water sources and associated chemical proccesses in the soil can also affect the ability of farmers to grow subsistence crops in the area. China is now the world's second largest eucalyptus grower, after Brazil.
Until recently one of the poorest and most rural provinces in China, Yunnan now has perhaps the fastest-growing economy. This mountainous southern province is also the most geographically diverse of all Chinese provinces, with climates ranging from the tropical to the alpine. The upper reaches of the Yangtze, the Mekong and the Salween Rivers all run through Yunnan, winding their way through high mountains, narrow canyons and remote valleys, creating many microclimates and an unmatchable abundance of wildlife. This unique location means that any changes in Yunnan's ecosystem will be of immense significance, and will be felt elsewhere in China and peninsular southeast Asia, far beyond the borders of the province itself.
Part of the APP project area is located close to the upper Mekong River (known as the Lanchang Jiang in China). Forestry experts believe that large-scale eucalyptus plantations in this area might pose a threat to the river's ecosystem, and reduce the water level to such an extent as to affect countries downstream - Laos, Vietnam, Myanmar, Cambodia and Thailand - all of whom strongly rely on the Mekong. Whereas the Yunnan government is seeking large tax revenues through investments by multinational corporations, some grassroots-level officials argue that there are other sources of income on which the province could rely for its development. Yunnan tea, coffee and mushrooms are well sought after worldwide. Together with the emerging tourism industry, they can contribute more to the long-term sustainable development and well-being of Yunnan's people, sources within the province state. One forest scientist, who preferred not to be named, said he was "very concerned" with the plantation project. Chen Yongsong of the Yunnan Eco Network Institution says part of the problem is a lack of access to information and lack of access to the legal system by local residents. "There is still a long way to go regarding forest protection in Yunnan," Chen said.
APP's Hainan mill
APP, a Singapore-based company controlled by the Sino-Indonesian Sinar-Mas group, is one of the world's largest paper producers. It began doing business in China in 1996 and operates in the country through a chain of Chinese subsidiaries. Many complaints have been filed in recent years regarding APP's business conduct; investigations have been opened in several countries; and billions of dollars in debt eventually led to the company's delisting from the New York Stock Exchange. Bizarrely, though facing bankruptcy, APP continued to expand in China, and in 2004 began operating the Gold Hai mill on Hainan Island, which is now the biggest paper mill in China.
Environmentalists and the Chinese media have warned that the mill's size exceeds the production capacity of Hainan's plantations, and will therefore necessarily lead to the cutting of natural forest to fill production needs. Greenpeace campaigner Huang Xu has said that there is evidence of the mill creating severe pollution and harming sea life in the South China Sea. As plantations in Hainan fall short of the mill's requirements, the company will begin turning its eye to other parts of China and Asia. APP was accused in the past of large-scale illegal logging in Indonesia, and this June, Asia Times reported an investigation into the company's alleged illegal activities in Cambodian forests. APP is now planning similar projects in Malaysia and Russia.
As boycotts continue and local residents express their frustration, the SFA investigation drags on. It remains to be seen whether Beijing will succeed in enforcing its progressive environmental regulations against multinational companies and fast-buck driven local governments in China's remote provinces.
APP did not respond to requests for comment on this story.
Rui Xia is a Western teacher and freelance writer living in China. Rui Xia is her unofficial Chinese name.