China's timber imports have increased dramatically over the past 10 years after the government banned logging following the devastating flooding of the Yangtze river in 1998, leading to a significant drop in domestic wood production.
"China's efforts so far in forest restoration and forest sustainable management are a good start towards preserving valuable and threatened forests," said Claude Martin, director general of WWF International.
"But logging bans in China should not lead to forest loss in other parts of the world. Decisive action is needed to ensure that supply chains leading to or through China begin with well-managed forests," he said.
China's forests and plantations will provide less than half of the country's expected total industrial wood demand by 2010, according to a new WWF report titled China's Wood Market, Trade and the Environment, that was released on Tuesday.
While China has worked to protect what is left of its own forests, its efforts have resulted in an increase in imports from countries where illegal logging is rife, the WWF said.
China is now one of the major destinations for illegally harvested wood, with more than half of the country's timber imports coming from countries such as Russia, Malaysia and Indonesia, where illegal logging is a major problem.
China is the second-largest market for industrial timber, pulp and paper in the world, behind the United States.
Americans consume 17 times more wood per capita than the Chinese, but China is soon tipped to become the world's largest wood market.
Per Rosenberg, director of the Global Forest & Trade Network run by the WWF, of which the China initiative is a part, said countries where much of the illegal logging takes place were finally waking up to the scale of the problem.
"I don't know if you can say things are getting better, but the awareness today compared to five years ago is much, much higher," said Rosenberg.
"Today I think everyone recognises that this is a huge problem ... that this is something you really have to do something about, not least because it's causing huge, not only environmental problems but also financial," he said.
Rosenberg said Indonesia alone was losing billions of dollars in tax revenue because of illegal logging.