Background

China and Russia are key partners for Europe. Russia has a large economy, but it is increasingly dependent on imports. The EU has become the largest trading partner for Russia. China, on the other hand, is already the world’s largest economy in purchasing power. While less dependent on imports, the Chinese market is massive and strategically extremely important to the EU.

Both countries’ economic models can be characterised as “fossil economies” as they are based on using non-renewable fossil raw materials. Russia, "energy superpower", has the world's largest proven natural gas reserves and is the largest exporter of natural gas. It is also the second-largest exporter of petroleum. Then again, China is the world's largest exporter of steel. Its chemical industry is focused on increasing the production volumes of fertilizers, synthetic fiber and plastics.

There is a lot of potential transforming these fossil-based economies into a new bio-based, resource efficient and low carbon ones. That opportunity is called bioeconomy.

China and Russia are two rapidly developing economies on the Euro-Asian continent, where forest, wood and timber products play significant and increasing role. They are the countries that attract the most attention in terms of its potential in the European and global bioeconomy.

Concurrently, global forest sector is becoming more complex, interlinked and cross-sectorial. It is increasingly affected by climate change impacts, energy policies, and advances in new technologies and the role provided by forests services is also increasing. The concept of “forest-based bioeconomy” is beginning to replace the conventional concept of the “forest sector”.

Currently, bioeconomy concept is not well known in either China or Russia and opportunities are not clear for business and authorities. In this regard, international cooperation and capacity building can help to build sustainable and coherent way to bioeconomy by exchanging experience and learning from the best practices.

Facts and figures

In the rapidly developing European bioeconomy, forests and the forest-based sector are considered as the cornerstone. All three key aspects of the developed by the EC Bioeconomy Strategy and action plan are relevant to the forest-based bioeconomy:

• developing new technologies and processes for the bioeconomy;
• developing markets and competitiveness in bioeconomy sectors;
• pushing policymakers and stakeholders to work more closely together.

The future of the bioeconomy raises also questions related to its development potential and its economic, social and environmental sustainability. The challenges between different industries and service sectors related to the use of wood and forests, and potential trade-offs between environmental values and material use are heightened. Additional questions are related to the international cooperation regarding the dynamics of global biomass demand and supply, the European and international policy frameworks, globalization processes, the digital economy and interlinkage with other sectors: construction, chemicals, textiles and energy, etc.

Russia has the world’s largest forest area, making it a key country in global forest sector in many ways. It provides crucial ecosystem services and renewable resources essential for human well-being at global scale. The Russian forests:

• Represent more than 20 percent of the planet’s forest estate
• Serve as unique refuge area for terrestrial biodiversity
• Provided the average carbon sink during the past 10 years at the range of 500-700 million tonnes per year
• Provide the largest exports of industrial roundwood in the world (16 % world total in 2016)
• Provide more than 10% of the value of timber and timber products imported into the EU (in 2017).

Despite these facts, the Russian forest sector has not been able to unlock its socio-economic potential. Russia’s share in the world forest products trade is below 4 %, and the share of the forest sector in the gross domestic product is only 1.3 %; in industrial production 3.7 %; in employment 1 %; and in export revenue 2.4 %. Clearly, the Russian forest sector resource base and economic potential is very much underutilized, including its prospective in bioeconomy. In 2012, FAO published the Russian forest sector outlook study[1] and its key conclusion was that, if Russia is to pursue the positive and innovative future scenario for its forest sector, “it needs the realization of reforms related to its restructuring and improved governance. Broad international cooperation will be an essential factor in achieving this....”.  The analysis of FAO (2012) also concluded that the Russian forest sector is facing a unique historic opportunity for the major reconstruction and creation of a fundamentally new forest sector for the twenty first century.

Russia has everything necessary for bioeconomic development. Additionally, to mentioned forest resources, Russia has unique natural capital: nearly unlimited resources of renewable biomass, freshwater (Lake Baikal contains over 20% of the world’s freshwater resources), fertile arable land (about 10% of the world’s arable land). Russia has highly qualified personnel and internationally recognized scientific schools. Thus, in a post-petroleum world, Russia can be expected to remain a leading exporter of renewable raw materials and products manufactured from these sources.

Russia has introduced “A complex program of biotechnology development in the Russian Federation for the period till 2020”[2] as well as developed initiatives like Technological Platform «Bioindustry and Bioresources» (BioTech 2030)[3]. The main purpose of BioTech2030 is creation modern bioindustry, which will provide contribution to GDP comparable to the world’s leading economies (up 3%). Forest biotechnology is one of the basic technological spheres in this technological platform. Russia considers bioeconomy as a new opportunity, having a great potential for implementation not only within the country borders, but also positively influencing the world.

China is ranked as world’s largest forest product producer, trade and consumer country since 2016. Meanwhile positioned as global wood processing hub with largest log, sawn timber import and largest wood furniture, wood flooring and plywood export in the world, China played crucial role in global forestry value chain. China’s forest resources provide safeguard to 2,070 animal species and 24,600 plant species and ecological services for 1.3 billion population.  In addition, forest sector also provides millions of jobs and contribute to poverty alleviation. National development benefited economically, environmentally and socially from forest sector. 

The Chinese forests:

• represent 5.2 % of the planet’s forest with 21.1% forest coverage rate and 208.3 million ha forest in 20151
• provide 600-million-ton carbon sink annually[4]
• consist of largest planation forest in the world with area of 69.3 million hectare in 2015[5]

The forest sector in China:

• Represents around one third of the global forest product trade value with totalled USD 150 billion in 2017
• Serves as largest forest product processing hub globally with import USD 62.4 billion and export USD 72.6 billion of forest products in 2016
• Ranked as world’s largest log importer (with 22.9% log import from Russia in 2016), pulp importer with volume of 48.72 million cubic meter and 21.01 million ton in 2016
• Remains unrivalled in the exports of wood furniture (USD 22.2billion), plywood (USD 5.27 billion) and flooring in 2016
• Ensures forest product trade with EU valued USD 1 billion a year and account for over 60% EU wood flooring import
• Domestic forest industry output value reached 1000 billion in 2017, kept 20 % annual increase rate since 2007
• Provided 52 million forest related jobs in 2016.

As an essential part of national “ecological civilization” strategy, forest sector pledged ambitious goals to contribute to achieve national sustainable development goals and national climate change commitment. Forest resource increase will meet surged domestic demand on wood products and forest ecological functions in coming decades.

Moreover, China by far is the largest producing and consuming country on concrete and steel, coal, paper and paper board and fossil fuel-based products like polyester fibre and plastic (PVC). To achieve green, circular, low carbon development goals set by 13th Five-Year plan (2016-2020), mid- and long-term economic development outline by 2030 and 2050, China urgently needs technologies, products, and polices to decarbonize economy and achieving climate resilient, circular bioeconomy. It left enormous market potential on forest bioeconomy development in the areas of green construction, bioenergy/biofuel, biotextile and biochemical. China will contribute and benefit from global forest bioeconomy development as both important market and investor in the coming decades.