Cover Story: China Forestry’s Fall Under Corruption Cloud Reveals Weakness in State-Owned System

Rapid expansion concealed fake trades, flawed business strategy and ballooning debt

China Forestry Group Corp., the central government-owned lumber giant that is teetering under the weight of its debt, faces investigations into corruption and mismanagement by top executives, including bribery allegations against former Chairman Song Quanli.

The company’s deepening financial struggles were revealed in a July response to a regulatory inquiry by timber trader Jiangsu Wanlin Modern Logistics Co. Ltd. that revealed 35.26 million yuan ($4.98 million) in overdue payments from two China Forestry subsidiaries.

Wanlin disclosed that it sold timber to the two units and the Beijing-based parent company was refusing to honor the financial obligations of its subsidiaries. According to Wanlin, China Forestry was only receiving payments, not settling debts, following its 2023 takeover by state-owned China Three Gorges Group Co. Ltd. in a rare government intervention.