Mr. Fan Jianping analyzed China’s micro-economy situation in the first half of 2006 and the economic policy tendency in 2007. In the first half this year, there were a series of problems in China’s economy, such as rapidly increasing investment of fixed assets, excessive credit loans placement, too much energy consumption, intensifying unbalanced international payment as well as the increasing environmental pressure. Director Fan said that primary goal to adjust the macro-economy has been achieved after taking sets of regulating measures by the government. However, He held the view that above problems are far from being resolved fundamentally, and he also predicted that China’s economy will remain its high growth in second half, and the GDP growth rate for the whole year would stand at 10.5%. On top of this, China will hold on the steady financial and moderately tight monetary policy in 2007. Meanwhile, China will persist in restraining investment from growing too fast, and adjust international income and pay in order to control the capital availability which may lead to overheated economy, strengthen the policy coordination, well implement the existing policies as well as further improve the effectiveness of macro-control policies.

Mr. Kou Wenzheng shared his opinion with CFPEC members on the current situation of China’s forestry and the problems during the implementation of forest-pulp-paper integration. He emphasized that there must be a proper coalition between forestry and paper industry, and enterprises in paper industry should seriously implement the construction of forest base as raw material.

As a senior adviser to China Printing Technology Association, Mr. Shen Zhongkang introduced the present situation of printing industry and the 11th Five-year Plan for the industry to all the participants. He also outlined the quality demand about paper grades from the point of view of printing industry, and hoped further cooperation and communication to be done between the two industries in the future.

When answering the supply/demand questions raised by many member mills, Mr. Xu Weidong, secretary-general of the club, outlined the whole picture of supply/demand for all the major paper grades for the time being and in next 5 years. He emphasized that production and consumption will continue its high growth trend. However, industry gross margin had down to a low side. At the same time, import of wood pulp and recovered paper shall increase sharply due to constant expansion of domestic paper capacities, which is hard to be ameliorated in a short term. On one hand, intensifying competition resulted from capacity surplus may put obstacles to new investment, on the other hand, China’s paper industry still enjoy strong demand globally. Moreover, its relatively low consolidation is driving producers to carry out expansion strategy in order to be the leaders in each market segment, which caused over-capacity to be a normal phenomenon for the industry in long-term perspective. In the mean time, many small mills will have to be shut down due to poor competitiveness. At the end of his presentation, Mr. Xu reminded all the members to be cautious and analyze the market carefully before implementing new investment in the future.

During the internal discussion section of the meeting, CFPEC members had a spirited discussions and communications on supply/demand issues, appealing for controlling too fast capacity expansions. Mr. Wu Shengfang, CEO of APP Gold East Paper, the global largest CWF producer, made an exhaustive analysis on the current situation and future of coated paper, saying that paper industry would grow in high speed when GDP per capita achieved $500-1500, and as GDP per capita increased 1%, the consumption of paper and paperboard would add 1.5%-2%. At present, China’s GDP per capita had achieved over $900, and GDP would add 7% annually before 2010. Thus, paper industry is among the center area of rapid growing demand. He anticipated that the demand of coated paper, which is closely related to the GDP increase, would keep on fast growing in the next few years. Bearing in mind the Beijing Olympic Games in 2008 and Shanghai World Expo in 2010, domestic coated paper market would keep the pace of 6-8% annual growth before 2010.

CFPEC is a non-governmental organization initiated by C.F.I. Consulting Ltd. Based in Shanghai. It has now 45 members including 34 Chinese entrepreneurs from paper-making enterprises and 7 overseas paper giants. The general meeting held each half a year has become an excellent platform for both international and domestic paper enterprises to communicate and better understand each other.

More information can be achieved by sending an e-mail to cfi@chinaforestpaper.com or calling 021-61049456.