Demand in China fuels paper crunch

ASSOCIATED PRESS

BEIJING - For Chinese fans, the latest Harry Potter book is not so affordable. Neither are the latest Dan Brown novels and classic Chinese fiction.

Voracious demand for books and a crackdown on small, polluting paper mills have caused a paper crunch in China, pushing up the price of paper by 10 percent this year and forcing printers to delay books and publishers to raise prices.

So far, the problems have been largely confined to China, but experts say that, if the trend is unchecked, publishers worldwide could face higher costs - and consumers could face higher book prices.

The Chinese paperback translation of

Harry Potter and the Deathly Hallows

, the seventh in the series, sells for $9, more than twice the price of its predecessors and a big slice of disposable income that in cities still averages less than $165 a month.

"This one is too expensive if you want to buy the whole series," university student Li Jie, 21, sniffed as she browsed at a Beijing bookstore, "especially for a student."

China is the United States' biggest offshore supplier of print products, chiefly books. Exports of paper products from China rose 76 percent between 2005 and 2006, according to government statistics, and are projected to rise a similar amount by the end of the decade.

Like many manufacturers, publishers in the United States and Europe are turning to Chinese printers to churn out books, reducing their costs by up to 30 percent, according to Pira International, a research and consultancy firm specializing in the print and paper industries.

As international and domestic demand for Chinese paper grows, the government is shutting down small paper mills to clean up the environment and force consolidation in a fragmented industry.

"The closures in China will tighten the demand" in China and lift the price of paper worldwide, said Sandy Lu, an economist for the forest-products industry group RISI in Shanghai.

China is credited with the invention of paper, believed to have taken place around the second century, before it spread to the Arab world along the ancient Silk Road and then to Europe centuries later.

But the industry has relied on straw and other waste from crops to make paper, not the wood pulp used in the West. Crop and straw waste are highly polluting and not as easily recycled as wood pulp.

Paper mills, most of them small and inefficient, accounted for 17 percent of all industrial water pollution in 2005, according to the Chinese Paper Association, an industry group.

In a bid to clean up China's rivers and spur the paper-making industry to consolidate and modernize by using wood pulp, the government has closed hundreds of mills and targeted hundreds more for shutdown between last year and 2010.

The restructuring is spurring heavy demand for wood pulp, nearly all of which China must import. As it does, worldwide prices for pulp could also rise, creating cost pressures for publishers worldwide, Lu, the RISI economist, said.

With material costs rising and paper shortages disrupting publishing schedules, Chinese publishers said book prices had to rise.