Timber giants, squeezed by the twin tongs of a U.S. housing slump and a global recession, are starting to stir again in Canada's north woods thanks to insatiable demand from China.

Here in the Lodgepole pine forest 500 miles north of the U.S.-Canada border, workers at one mill move 40,000 logs a day through an assembly line, producing 13-foot-long studs for the Chinese construction industry. Most of the wood will be used to build scaffolding or the forms that concrete is poured into. But the mill's owner, Canfor Forest Products Inc., hopes to be able to export other products, too.

In the meantime, the loggers are grateful for the Chinese demand. The Lodgepole stands were infested with the mountain pine beetle over the past decade, and the voracious bugs killed off trees across millions of acres, leaving the timber prone to splintering. The combination of the bugs' raging appetites and Chinese builders' prodigious output means that producers here will export every log they can process.

Canfor's Quesnel operation is one of several recently shuttered mills around the province that have sprung back to life. The company eliminated 180 high-paying jobs when it closed the mill in January. But most of those workers were called back to their jobs in June when the mill was refitted to service the China trade.

Another company, Western Forest Products Inc., took one of its Vancouver Island mills out of mothballs last month. The mill in Ladysmith called back about three dozen sawmill workers to slice hemlock exclusively for Chinese customers. Another WFP mill, which is about to start production nearby, will send about half its output to China. Altogether, the company expects to export more than 130 million board feet of lumber to China from British Columbia in 2010.

Country-wide, Canada exported 1.6 billion board feet of lumber to China last year. That was an 800% increase from 2006, when just 210 million board feet were sent there, and about 95% of the exports were from British Columbia.

"With China, we're 70% ahead of last year's output," says Forests and Range Minister Pat Bell, British Columbia's top forestry official. He estimates lumber sales to China this year will reach 2.5 billion board feet.

U.S. timber giant Weyerhaeuser Co. is also benefiting from increased exports. Sales to China from operations in Princeton, British Columbia, have doubled, says Wayne Roznowsky, a Weyerhaeuser spokesman, accounting for about 20% of the Canada unit's exports. Weyerhaeuser isn't increasing capacity or adding shifts in the province, Mr. Roznowsky says, but "It would be fair to say that offshore markets, including China, have helped avoid downtime and layoffs."

The fragility of Western Canada's timber industry is a big change of fortune. For more than a decade, lumber companies were flooded with demand from U.S. home builders. In 2005, the year U.S. housing starts peaked at 2.5 million, Canada's western-most province supplied 17 billion board feet of lumber to its southern neighbor.

"The U.S. was so reliable, it was reliable to a fault," says Roger Perry, the general manager of Western Forest's Cowichan Bay sawmill on Vancouver Island. Today, instead of simply filling limitless orders for the U.S., he has to be more creative. To sort hemlock logs as they float down from coastal logging operations, his crews run trunks past a computer scanner that identifies the various grades of fiber within the wood. Laser beams then guide saw blades to each cut, peeling off lengths of lumber marked for disparate buyers world-wide.

Besides China, the mill has lately tapped such other export markets as Dubai and Saudi Arabia, which were attracted to Canada this year in the wake of Chile's March earthquake, which closed ports in that country.

British Columbia's Chinese lumber boom isn't solely a result of the slowdown in U.S. demand. In part, Canada has stepped in to fill a gap left when Russia imposed a 25% export tariff on logs heading to China. The Russians were trying to encourage more direct investment in Siberian sawmills, and they got it, mainly from Chinese companies. Until that production comes on line, Canada has leapt to fill the breach.

But more importantly, British Columbia has spent the better part of a decade lobbying Chinese officials to adopt a "Wood First" program to mitigate the effects of global warming. Touting timber as an alternative to steel, glass, and especially concrete, Canadians have sent teams of engineers and lumber experts to persuade officials in cities like Shanghai and Chengdu to adapt municipal building codes to allow for more wood construction in multistory structures.

In some cities, Canadians are building demonstration models of six-story apartment houses and other public buildings to show what wood can do. They've also argued that wood is a safer alternative for use in earthquake-prone areas.

Canfor even launched "Canfor College," working with U.S. companies like toolmaker Stanley Black & Decker Inc., to teach developers how to use more Canadian wood in millwork like cabinets and molding, as well as for floors and walls. That helps to get the Chinese to buy more of the quality hardwoods that Canada specializes in rather than just clearing Lodgepole forest of the "waste wood" left by beetles.

"What's really growing now is the higher grades," says Don Kayne, Canfor's vice president for sales and marketing.