A joint forest industry-provincial government marketing campaign launched in 2002 to promote wood as a building material in China is achieving results that have exceeded expectations. The latest monthly statistics tell the tale: For the first time, China supplanted the United States in May as British Columbia's biggest customer for lumber.

China bought $122 million worth of lumber, compared with $119 million for the U.S. Truth be told, the volume of lumber delivered to the U.S. was slightly greater but at a lower average price, $142 per cubic metre, compared with China's $163. And for the year to date, the U.S. still comes out on top, having taken $661 million worth of B.C. lumber, while China has received $446 million. But the growth of lumber exports to China over that period was an astounding increase of 178 per cent from a year earlier.

Few expect this torrid pace will be maintained, since the summer months tend to be slower. Nevertheless, there is optimism that the second half of the year will be strong.

The Canadian industry is looking forward to a second solid year after some tough times recently, posting $1.6 billion in losses between 2007 and 2009 before returning to profitability in 2010.

Past hardship makes the successful diversification of B.C.'s export markets for lumber that much sweeter. The U.S. and China each now represent about 40 per cent of total production, compared with 70 per cent and about five per cent respectively four years ago.

A report by the Conference Board of Canada released earlier this year saw Chinese lumber imports doubling over the next five years to 12 billion board feet, a rich potential market for Canadian producers to pursue. The B.C. government claims mills are operating and 10,000 people are working because of lumber exports to China. It's hard to imagine the sorry state the B.C. forest industry would be in without the surge in lumber demand from China.

But the euphoria over the rise of China as B.C.'s No. 1 customer for lumber should be kept in perspective. China still shares the stage with the U.S., which remains an important market, albeit one that has been relatively flat since 2006. The best guess is that it will take three or four years before the U.S. housing market, which drives lumber demand, bounces back. There is also a risk that China's construction boom will eventually go bust. That's what happened in Japan, Canada's previous great Asian market, where in 1991 a housing bubble burst, plunging the economy into a 10-year tailspin, which drove B.C. producers back to the U.S. market.

While there are certain risks in diversification, the dangers of dependence on a single market are far greater. A less obvious advantage in serving multiple export markets for Canada is the additional clout it will have in negotiating a new softwood lumber agreement with the U.S. when the existing one expires in 2013. In the last round, the U.S. viewed Canada as a captive supplier and was able to dictate terms that saddled producers with punitive duties and encouraged frequent litigation by U.S. producers over so-called subsidies. Now, Canada has other options while B.C. can capitalize on the Asia-Pacific Gateway strategy.

When the U.S. market does come back, the challenge for the B.C. industry will be how to meet the burgeoning demand from its diverse customers. The answer may well be more mills, more investment, more jobs, more innovation and more productivity. And that would be cause for celebration.