China's forestry has been changing drastically since the country was affected by devastating floods in 1998. The government has launched a series of key national programmes and forest policy reforms. The scale and investment of these forestry programmes are already producing some tangible benefits to forest cover, the wood industry and rural livelihoods. Large areas are protected from logging, huge afforestation programmes are underway, and ongoing privatization offers hope of more efficient and effective operations that can create jobs and stimulate economic growth. However, the changes have been associated with many problems, particularly for rural communities that can no longer harvest wood and have now been displaced. This paper examines current patterns in forest development and the impact of this on the environment and economic and rural development.