But the report from Forest Trends - a group which proclaims its dedication to "sustainable forestry" - also warns that despite the trees spared though the use of wastepaper, China's growing demand for wood increasingly fuels the destruction of virgin forests in parts of Asia and Africa.
About 60 percent of the fiber used to manufacture paper and paper board products in China is derived from wastepaper, the report found. In the last decade, China's wastepaper imports increased by more than 500 percent - from 3.1 million metric tons in 1996 to 19.6 million metric tons in 2006 - with most of that growth occurring between 2002 and 2006.
The industry includes one of the country's richest people, Zhang Yin, the founder of the Nine Dragons Paper Co. Her fortune was made from turning recycled paper from America into packaging products.
"China is by far the world's biggest consumer of wastepaper and that's a good thing because in the last four years alone, China has prevented 65 million metric tons of wastepaper from heading to landfills in the U.S., Japan, and Europe," Brian Stafford, the lead author of the report and an industry consultant, said in a statement. "
Just last year, China's use of wastepaper instead of trees to make paper products probably saved 54 million metric tons of wood from being harvested for pulp."
But Stafford said that China continues to depend on virgin forests for its higher-quality papers, sourcing "substantial amounts of wood and wood pulp from countries where good forest management cannot be assured."
"The biggest environmental challenge related to China's paper industry is to prevent its growing demand for fiber from driving ever more forest destruction in places like Indonesia and Eastern Russia," he said. "Wastepaper can only provide so much fiber and with huge new pulp mills coming on line in China, there is a legitimate concern that future growth in China's paper industry is going to happen at the expense of already stressed natural forests in the tropics."
A spokesman for the Chinese government could not be immediately reached for comment.
The report comes amid growing concern from environmental groups who accuse China of importing illegal timber to supply its flooring and furniture industry. Greenpeace in April accused the country of importing thousands of cubic meters of illegal tropical hardwood from Papua New Guinea and Indonesia last year to supply its booming furniture industry and produce luxury goods for overseas markets.
The Greenpeace said it found that Chinese importers were evading an Indonesian ban on the hardwood known as merbau by labeling it as sawn timber. Importers also used forged documents which claimed the logs came from Malaysia, despite the fact that much of the merbau has already been logged out of the Southeast Asian country.
A member of Greenpeace is on Forest Trends' board, and Greenpeace China's Forests Campaign Coordinator, Tamara Stark, agreed with the Forest Trend report's findings.
By Michael Casey