Eastern China – covering 11 provinces and municipalities - stays in the driving position in the nation’s paper and board production. Reports from China Paper Association (CPA) showed 74.3% of the country’s 107.65 million metric tons output in 2019 came from area, with the top-3 provinces (Guangdong, Shandong and Zhejiang) contributing more than 14 million metric tons each during the year. In the past decade, output in Eastern China grew 20.5%, or an annual average rise by 2.2%!

All the top-30 Chinese paper and board companies have their flag-ship mills in the area, leading the progress in production, technology and grades of the industry. Such leadership by Eastern China peaked in 2017 when national output reached its historical height at 111.30 million metric tons. Thereafter, however, production in the Eastern provinces fell as a result of massive clean-up of environmentally unfriendly mills. In Fuyang, Zhejiang Province, for example, hundreds of small recycled board mills who failed to comply with enhanced environmental requirements were closed from 2017. By end-2020, close to a total of 8 million metric tons of annual capacity will be eliminated in Fuyang. At the same time, launching of large and greenfield projects began to slow down in East China under harder environmental and resources scrutiny. With machine relocation and/or investment diversification to other parts of China or foreign lands by large producers under their strategic reposition plans, it is expected that, though maintaining its leadership, Eastern China’s production growth will be less and its contribution by percentage to the national output will relatively fall in the next decade.

Central China is fast emerging as a new hub of China’s paper industry, completing the transition from small operation to large production. Benefiting from rich rivers and highways and most significant by a new multi-direction network of high-speed railways that have boosted the local economy, the area, which includes 8 provinces, began to attract growing amount of investment from 2015. In Hubei Province alone, Shanying Paper is spending RMB12 billion to build a 2.2 million/mtpy containerboard production complex. By now, two of the five machines on plan are in operation, with the third scheduled to come on stream in the 3rd Quarter 2020. Nearby, Nine Dragons is set to build a 550,000/mtpy BCTMP pulp mill and a 750,000/mtpy packaging board mill in two years at the investment cost of RMB4.6 billion. It is inevitable that annual output in Central China will increase significantly from 2020.

West China will remain as a minor contributor to China’s paper industry, even though it embraces 12 provinces and municipalities. Same as the local economy, paper industry in the area needs a longer period of development. This is especially true in the northwest where weather condition is tough and natural resources are generally poor. Southwest China appears much better and offers a niche opportunity for tissue industry, thanks to the rich bamboo resources in the area and improving transportation. Already, Lee&man, the 2nd largest paper company in China, has huge investment in tissue paper production in the area, followed by a few other large operators. While recognizing its unique position with great potentials in growth of tissue and some specialty grades, most analysts see the area continuing to be supplemental in the next decade of China’s paper industry.