IMAGINE A PRODUCT for which there is seemingly insatiable demand on the mainland, no domestic competition and no import tariffs. Sound too good to be true? Such a product in fact exists - trees. After devastating floods in 1998, the Chinese Government banned logging along the upper and middle reaches of the Yangtze and Yellow rivers, and also curtailed the harvesting of forests in northeast China. Deforestation had played a major role in the floods. Sediment from denuded hillsides washed into the Yangtze, raising its bed and - consequently - water levels. Better still, to make up for the reduction in domestic supply stemming from the logging bans, the government dramatically lowered tariffs on imported timber. 'They cut tariffs to zero after the floods. It was unilateral disarmament,' said Betsy Ward, executive director of the American Forest and Paper Association (AFPA), an industry lobby group. Ms Ward was speaking last week in Guangzhou, where the American Hardwood Export Council (AHEC) held its sixth annual Southeast Asia and Greater China convention. United States timber exports to China have grown from just under US$10 million in 1995 to more than US$73 million last year. But anyone satisfied with this dramatic increase would be guilty of not seeing the forest for the trees. According to AHEC executive director Michael Snow, American hardwood exports to China are but a fraction of what they should be. For even as American hardwood exporters watched their post-flood shipments to China almost double last year from US$40 million in 1999 their share of the mainland's imported timber market fell by half. Moreover, most American hardwood is bought by export-focused furniture factories, more than half of which are in the Pearl River Delta. China's furniture industry is enormous. There are more than 50,000 furniture factories employing three million people on the mainland. According to statistics cited by Ran Chunxiang, vice-president of China Timber Import and Export, they use about 24 million cubic metres of wood a year - a number expected to reach 44 million by 2010. China's furniture exports grew 30 per cent to US$3.6 billion last year. The US market accounted for 53 per cent of these exports, meaning that a large percentage of American hardwood exports to China simply rebound back across the Pacific in the form of furniture. AHEC's first task, then, is to increase its members' sales to Chinese furniture factories targeting the domestic market. Many of these are in the southwest and source lumber from Southeast Asian neighbours, especially Burma. Russia is another big supplier, bartering its vast timber reserves for Chinese-made consumer goods. AHEC's second task is to do what it can to increase the things wood is used for in China. To this end, the theme of this year's conference was 'using hardwoods to humanise interior space'. Unfortunately for wood exporters and aesthetes alike, concrete and tile are the building materials of choice on the mainland. But AHEC reckons that if China's ever-more prosperous urban denizens can be convinced to decorate their concrete boxes with hardwood fittings and floors, demand will soar. The real prize would be the emergence of a sizeable market for wood-frame houses in China. There are more wood-frame houses being built every year on the mainland, usually in luxury residential developments, but the overall numbers remain paltry. About 5,000 wood-frame homes were started in China last year, compared to more than 1.4 million wood-frame housing starts in the US. Here, ironically, the logging ban has hurt. The use of wood in general has been so demonised by the government that builders and consumers forget that it is only Chinese timber that they are not supposed to use. 'It's a tough sell because there's been a crisis mentality here,' Mr Snow said. The trick is to remind potential buyers that the US has plenty of trees, and that it is fine to exploit them. This crisis mentality is reflected in Chinese building codes, which typically do not list wood as an approved building material. Regulations have even been issued banning the use of domestic wood for doors, windows, flooring and kitchen cabinets. American hardwood exporters would like to see China's 'prescriptive' building codes, which prescribe what materials can be used, scrapped in favour of 'performance-based standards', which would permit the use of any material that met them. A similar battle was fought and won by the AFPA in Japan. China's entry to the World Trade Organisation will also do wonders for US manufacturers of higher value-added wood products, such as ornamental wood moldings, which are now taxed at rates as high as 30 per cent. Tariffs on all forest products will fall to 5 to 7 per cent three years after China's accession. One of the best businesses to be in on the mainland, it seems, is about to get even better.