Closer trade ties could be formed between the US and China following the signing of a forestry agreement by Weyerhaeuser and the Chinese Academy of Forestry.

The parties have agreed to team up on forestry research and environmental restoration following a visit to Beijing and Shanghai by Washington state governor Gary Locke.

The aim is to help China reforest the countryside and improve the environment and Mr Locke said it could develop into a lucrative trade relationship

Both parties will collaborate on forest management, wood technology and silviculture; research opportunities for growing eucalyptus forests in southern China, including uses for the timber; and co-operate on product development and market assessment.

Weyerhaeuser already has container plants in Shanghai.