This paper analyzes the development of China′s wood processing industry since the start of the economic reform in 1979. The paper examines self-sufficiency rates and trade specialization coefficients of wood products and undertakes a correlation analysis for the period from 1979 to 2004, and specifies production functions of wood products from 1990 to 2004. The paper finds that self-sufficiency rates for wood products have a similar course of development as they decreased first and then increased later with increases in production, imports and exports. Within the wood processing industry, plywood holds the highest self-sufficiency rate, but sawnwood holds the lowest. The industry has a low international competitiveness, except for plywood which has a comparative advantage in international trade, as shown by trade specialization coefficients. The correlation analysis shows that there is a high correlation between the production of plywood, fibreboard, and particle board panels. The production functions show that in decreasing order, sawnwood, plywood, fibreboard, and particle board have proportional increases in production with each unit of roundwood supply at the shares of the domestic supply of roundwood, 34, 33, 19, and 14%, respectively. Furthermore, in this analysis imported roundwood helps the production of wood panels grow faster than the domestic roundwood supply does.