Asymmetric Price Transmission of Hardwood Lumber Imported by China after Imposition of the Comprehensive Commercial Logging Ban in All Natural Forests

摘要

The Comprehensive Commercial Logging Ban in All Natural Forests (CCLB) policy, introduced in April 2015, aims to protect all natural forests in China. It has impacted both China’s domestic timber supply and imports. We investigated price transmission in China’s hardwood lumber imports resulting from the implementation of this policy. We selected three hardwood lumber species, i.e., Sapelli (Entandrophragma), Mandshurica (Fraxinus), and Laurel (Terminalia), and used their daily prices from 30 April 2015 to 30 November 2017. Threshold co-integration and threshold error correction models are employed for this analysis. We identified a structural breakpoint on 30 November 2016, and consequently partitioned the data series into two parts for the two subperiods separated by the breakpoint. The empirical results indicated that there was asymmetric price transmission (APT) for both subperiods. Adjustment of positive price deviations to the long-term equilibrium levels was slower than that of negative price deviations. In the short term, the price of high-quality lumber evolved independently, whereas the price of lower-quality lumber tended to return to the equilibrium. The APT reflects a redistribution of welfare, benefiting the exporters more than the importers. We find that positive discrepancies in each price pair were inclined to be more persistent in the first subperiod than in the second subperiod. This could attribute to the fact that the degree of CCLB intervention in the former one was higher than in the latter one.