Establishing a healthy forest base is critical for ensuring sustainable development of the wood industry. It is also equally as important to have an industrial material forest base designed around a system engineering plan requiring overall planning and rational distribution. These two principles were evaluated by the author by reviewing the status of the forest resource reserves and wood industry development in the Huaihua District of Hunan Province. He concluded that the forest base should be cultivated with a view to supplying the regional dominant forest industry, that largescale production apply intensive management and commercialized administration and that the wood industry should depend on advanced techniques to develop the forest base. The author further emphaziged that traditional forestry department restraint should be broken and favorable policies should be implemented. 