Indonesian giant, Asia Pulp and Paper Co. Ltd. (APP), has withdrawn a reputation infringement lawsuit against the Zhejiang Hotels Association, which urged members to boycott the company's products after Greenpeace China alleged that APP is logging illegally in Yunnan Province.

Greenpeace hailed APP's withdrawal of the damages claim, the day before the case was due to open before a Zhejiang court, as a historic victory for public environmental action in China.　Chinese environmentalists had rallied behind the Zhejiang Hotels Association and many were preparing to travel to Zhejiang to lend moral support during the hearing.

The case received extensive media coverage in China following the release, in November 2004, of a Greenpeace report claiming that a deal between APP and the Yunnan provincial government in 2002 had led to land-grabs and illegal logging in Wenshan, Lincang and Simao prefectures. The report alleged that APP had logged primary forest in the process of enclosing a total of 27.5 million mu (183,000 hectares) for eucalyptus plantations. In a complementary videotape made by Greenpeace, local farmers claimed that their land had been requisitioned for the project at peppercorn yearly rents of 0.8 yuan per mu (USD 1.45 per hectare). The report also criticised APP's activities in Indonesia and Cambodia.

Within days of the report's release, the Zhejiang Hotels Association asked its 417 members to boycott APP products, which range from office stationery to toilet paper. In a letter to its members the Association circulated both the Greenpeace report and a list of APP products to be shunned. The letter stated that member hotels would need to uphold the boycott in order to qualify for 'Green Hotel' status as conferred by the Association and the Zhejiang Tourist Bureau.

APP filed a lawsuit against the Association on November 30, withdrawing it on February 22 2005, on the eve of the hearing.

According to a China Daily report (25/2/05), State Forestry Administration researchers had also expressed concerns about APP's activities in Yunnan, and on January 7 the Administration issued a circular affirming that APP had felled 24,709 cubic metres without a licence. The Yunnan government's own investigation, by contrast, admits that forest contracted to APP has been damaged, but blames individual farmers for this and stands by the APP project.

Report by Nick Young, March 20 2005