VANCOUVER (Reuters) - If an astute investor asked a Canadian forest industry executive just five years ago about lumber sales to China, the answer would probably have been: "China? China doesn't buy our lumber."

How times have changed.

China has become a bright spot on the balance sheets of companies still waiting for a recovery of the US housing sector, its mainstay market for decades.

It's so bright, a trade mission that set off to China on Thursday included the chief executives of West Fraser Timber Co., Canfor Corp., Tolko Industries, International Forest Products, Conifex Timber along with other top industry and union officials.

"The (Chinese) economy is moving ahead, and they're getting more comfortable buying from us," Hank Ketcham, CEO of West Fraser, North America's largest softwood lumber producer, told analysts this week.

A report this month by British Columbia, Canada's largest lumber exporting province, estimated its producers had sold C$342 million ($335.3 million) in lumber to China in the first eight months of the year, up 71 percent from a year ago.

Canada has benefited both from China's surging demand for lumber and Russia's 2007 decision to sharply raise duties on logs exported to Chinese sawmills, said Gerry Van Leeuwen, a vice-president of International Wood Markets Group.

The research firm forecasts Canada will overtake Russia this year as the largest lumber exporter to China.

The US remains Canada's largest lumber export customer, but US demand soured with the collapse of its housing market. Few Canadian industry executives predict it will make a significant recovery soon.

"Luckily for us, they came in just as the US market was falling," Mr. Van Leeuwen said.

A stark example of China's new role can be seen in Canfor's decision in May to restart its Quesnel, British Columbia, sawmill.

The mill had been idled because of slack US demand, and its production now goes exclusively to China.

Nearly all the lumber exports to China come from sawmills in Western Canada. But analysts say that still benefits eastern sawmills by diverting wood that might otherwise be shipped to the US.

Because much of the China-bound lumber is used for purposes such as concrete forms and pallets, it has also become a ready market for lower-grade lumber cut from trees killed off in Western Canada's mountain pine beetle infestation.

"This is wood that is used three or four times and then thrown away," Mr. Van Leeuwen said.

Industry officials say, however, they are now getting more Chinese purchases of higher grade lumber, such as that used for wood-frame construction.

"It will be a market that will consume both the lower and upper grades, but over time I would expect the (higher grades) to continue to increase," said Canfor chief financial officer Thomas Sitar.