Social-Demographic Environment

The socio-demographic factors that affect the demand for wood products include household income, population growth, demographic trends, age, urbanization and income disparity between urban and rural areas.

Household income

As the economy continues to develop, per capita income of the Chinese will increase.

According to the Development and Research Centre of the State Council of China, it is predicted that China's GDP will double between 2010 and 2020, at an annual growth rate of

nearly 7.2%, to reach US$ 6.6 trillion in 2020. With this assumption, per capita GDP will reach USD 4490, which is similar to that of upper-middle-income countries (Zhang et al., 2007a). This will promote the rapid development of China's furniture, interior decoration, flooring and wood-based panel (WBP) industries.

Population growth

Because of China's population control policy (one-child policy) is enforced more strictly in urban, so when rural areas take on certain traits of the more urbanized regions, families there are also shrinking, slowing China's population growth. Currently, China's total fertility rate is 1.77, while the necessary total fertility rate for a stable population is 2.1 (Rosenberg, 2008). The sharp decline in Chinese fertility and slow population growth may have a positive effect on the environment, but because fertility has fallen just when economic growth is rising, this downward trend will affect the consumption of wood products in the long term.

Demographic trends

Demographic trends and consumer preference will influence the housing sector. As family planning is implemented, the recent population is partly owing to longer life expectancy in the country, which indicates that society is ageing. As the population grows older, savings in the banking sector will decrease because more people will consume without producing.

This may affect the amount of savings in the banking sector that can be invested in the construction and housing sectors. In addition, the younger generation tends to consume more than its parents' generation, and it will also encourage a shift from saving to consumption.

Age

As the most populous country in the world, China's demographic profile is ideally suited to economic expansion. Seven out of ten Chinese are aged between 16 and 64, and the average age is 34. Chinese labour force of more than 800 million is over double that of the US and

the EU combined (Tulloch, 2008). It is forecast that China will overtake the US to become the world's largest manufacturer in 2009 (Simpkins, 2008). The supply of labour drives China's economic ascent. Hundreds of millions of people have been lifted out of poverty, and a burgeoning middle class of between 100 and 150 million people has made China one of the most attractive markets worldwide (Tulloch, 2008).

Urbanization

Progressing urbanization is another important factor that affects the demand for wood products. China's economic reforms strengthened regional differences by propelling a traditional agrarian economy towards mechanization and industrialization. This has prompted large rural-to-urban migration. Along with economic growth, urbanization has been progressing at a rapid rate: the urban population rose from 26% in 1990 to 43% in 2005, and this trend is expected to reach 58% to 60% of the total in 2020. Government policies to relax regulations on migration will encourage urbanization. The progress of urbanization will continue to affect new housing construction in urban areas, maintaining the strong demand for wood products in urban areas. On the other hand, the demand for wood products in rural areas as the population in those areas will decrease. Investment in infrastructure development by the public sector will shift to the areas left behind. While, the government has started to promote infrastructure and market development at sub-country levels in recent years. Growing sub-country areas will provide further opportunities for construction development and thus enhance the pace of urbanization in what are at present rural areas. (Zhang et al., 2007a).

Income Disparity between urban and rural areas

Although people's living standards have improved a lot, per capita GDP in China remains very low because of large population and income disparity. Social development is plagued by problems of inadequate social spending, inflation and urban bias. Moreover, the economic reforms have brought enormous challenges, including growing social and economic inequality, environmental damage and labour migration. The income disparity in

China is between different segments of the population, particularly between the rich in the eastern and southern coasts and in large inland cities and the poor in interior western provinces. The growing disparity between urban and rural incomes, income gaps between the wealthy coastal regions and the poor interior, a large floating population of itinerant workers, mounting unemployment created as state-owned enterprises (SOEs) restructure and downsize, and official corruption will lead to political instability, and will thus affect economic growth adversely (Executive Report on Strategies in China, 2007). So, tackling the expanding disparity between rural and urban areas has become one of the priority policy targets for achieving sustainable and balanced development of the country. The government has taken measures to raise rural income. For example, in order to help the poor in the western region to improve their economic conditions, the Chinese government has adopted a Western Development Strategy to develop the eleven provinces in the Western region.

These policy changes will lead to the increased demand for wood products in rural markets.