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China’s Paper Industry Dealing with Sluggish Economy

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The Chinese papermaking industry in 2014 is expected to remain slow in terms of growth due to the lack of stimulus policies for related industries, according to Zhao Wei, secretary general of China Paper Association. In a China Daily Newspaper article this past week, Wei said that the expected recovery in the first six months of 2014 did not happen and the situation will remain stagnant in the second half of the year.

Zhao noted that papermaking relies on many other industries as customers, giving an example of the packaging of a refrigerator requiring various paper products. But the slowdown in many industries this year has affected papermaking companies. The slowdown in growth is natural after a decade of change and high growth, with some firms having to adjust to changes in the demand for paper products. The association is giving guidance on the phasing out of outdated facilities and adjusting production capacities, in some cases eliminating products that are no longer in great demand to avoid overcapacity.

Last year, 3,400 paper and paperboard makers in the country produced 101.1 million metric tons of paper products, a drop of 1.37% year-on-year. The consumption of paper and cardboard products nationwide also experienced a decline of 2.65%.

Production of newsprint dropped 5.26% in terms of production volumes to 3.6 million metric tons and consumption fell to 3.62 million tons. Uncoated printing paper decreased 1.71% to 17.2 million metric tons, while consumption fell 3.38% to 16.27 tons. Coated printing paper production fell to 7.7 million tons, and its consumption dropped to 6.23 million metric tons.

Household paper products showed a slight growth of 1.92% to 7.95 million tons, and demand rose 0.41% to 7.34 million tons. Packaging paper fell slightly, with production down 0.78% to 6.35 million metric tons, and consumption fell 0.76% to 6.5 million metric tons.

Nearly 3,000 large-scale papermaking companies saw their revenues rise 5.91% to $757.5 billion yuan ($122.99 billion) and profits grew 6.95% to 37.4 billion yuan, but 400 companies, 13.67% of those surveyed, recorded losses. 

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