A pattern of forest area loss followed by a period of reforestation is representative of the forest transition process. Forest transition has been observed in many countries and is a feature of the development process. China reached its inflection point earlier and faster than most other countries that have gone through the transition. The report describes the success of reforms to forest resource tenure in collective forest areas. These reforms, which collectively amount to the largest transfer of forest assets in history, have effectively extended forest ownership to a million, mostly poor, rural households. These reforms have increased forest-based incomes, have increased timber harvests, and have done so sustainably by virtue of increasing planting and forest management and resource protection effort. The World Bank work in China's forestry sector has been successful. However, the developments discussed in this report raise new opportunities and challenges. It is no longer clear, for example, that World Bank loans are especially important in relation to the financing of commercial plantations. While the Bank has begun to move its plantation financing to public goods, or ecological plantings, these are other opportunities. This report brings together findings from Bank-supported studies with experience gleaned from Bank support of over $1 billion in forestry projects. Chapter one introduces the contents and approach of the report. Chapter two summarizes key data and information of China's forest sector and resources. Chapter three presents findings on collective forest tenure reform and chapter four, potential forest supply. Chapter five concludes with findings to clarify choices and options available to the World Bank and China for moving ahead in forestry.