Stora aims to increase its pulp-wood forest to 160,000 hectares by 2010, said Kari Tuomela, president of the Helsinki-based company's forestry unit in China. That's twice the size of New York City. Pulp, a mixture of wood and chemicals, is the raw material for paper used in offices, catalogues, books and glossy magazines.

China is the world's fastest-growing paper market, leading Stora and rivals such as Oji Paper Co to invest about US$3 billion in high-speed papermaking machines there in the past year. The government began encouraging overseas investment in forestry five years ago to reduce reliance on world markets. Pulp prices have risen 21 percent over the past year, Bloomberg News reported.

"It makes a great deal of sense to be involved in domestic fiber," said Linus Larsson, Stockholm-based analyst at ABN Amro Holding NV. "China is a large net importer."

The price of northern bleached softwood kraft pulp, a benchmark grade, has risen US$123.65 a metric ton in the past year to US$708.37 a ton according to Forest Web.

China overtook the United States as the biggest buyer of pulp in 2004 and has long been the biggest importer of wastepaper, which is used as a pulp substitute and to make cardboard boxes. Stora is one of the biggest foreign holders of forests in China.

"China's demand for pulp is on an upward trend, and won't slow down till at least the first quarter of 2007," Alf Henrik Gistren, the general manager of Brazilian pulp maker Aracruz Celulose SA's Asian unit, said.

Aracruz, Latin America's largest pulp producer, exported 400,000 tons to China last year, the largest amount after Indonesia's Asia Pacific Resources International.

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