VICTORIA, B.C. - Premier Gordon Campbell told more than 200 truck-logging convention delegates Wednesday that a potentially bright future awaits British Columbia's forest industry in China - on the same day his government was announcing layoffs in the Forests Ministry.

Campbell told the mostly independent logging contractors that B.C. is one of the first international wood suppliers trying to break into the Chinese wood market and it's an opportunity that shouldn't be missed.

"There's enormous opportunities there," he said. "Every year if the Chinese economy just used wood for the top floor of their homes and their roofs it would generate a demand of 25 billion board feet a year - and we are one of the first players in dealing with that."

Campbell told the contractors, many who have endured bankruptcies and sharp economic declines in the past year, that the potential Chinese market could offset the massive drop in the U.S. marketplace, the traditional customer of B.C. lumber products.

He said the Chinese city of Shanghai, with its population of 18 million people, signed an agreement with B.C. last year to use wood from the province to build 330,000 housing units by 2012.

But Campbell also acknowledged the current struggles facing the forest industry, the economy and his government.

A second round of provincial government job cuts was announced Wednesday since the Liberal government tabled a record budget deficit of $2.8 billion last September.

The Liberals are laying off 233 people in the Forests and Range and Citizen's Services ministries, citing budget challenges in the coming year.

Last September, 106 government jobs were cut through attrition, employee transfers and a hiring freeze.

Campbell said the government is trying to keep layoffs to a minimum.

"We're facing some significantly challenging times and we want to keep as many people at work in the public sector as we can and get as many people back to work in the private sector and we can so this economy starts to move forward."

Campbell said B.C. politicians are prepared to do their part to ease the budget crunch by accepting a two-year freeze on annual cost-of-living adjustments.

British Columbia MLAs currently earn a base salary of $101,000 annually, and the cost-of-living adjustments are estimated to be worth at least $1,000.

Campbell currently earns about $193,000 a year.

Opposition New Democrat leader Carole James said the government layoffs will hit rural communities where people depend on government jobs and services.

"That means once again rural British Columbia, resource-based communities that are already hurting, are going to be impacted because jobs will come from that area," she said. "It's going to have a huge negative impact on those communities - people who can least afford it."

She said the layoffs are also a sign the government continues to mishandle its finances.

Allan Seckel, Campbell's deputy minister, said in an email to public employees Wednesday that further workforce adjustments may be required as the government prepares to manage another challenging fiscal year.

"As we all prepare to manage into another challenging fiscal year, further workforce adjustment may be required," the email said. "But we are continuing our commitment to keep the overall impact on staff to less than five per cent of our workforce over three years."

The layoffs come at a particularly difficult time for the B.C. forest industry as the signs of economic recovery are showing little impact in the hard-hit forest sector.

The pine beetle epidemic, the economic downturn in the United States and low pulp prices have crippled what was once B.C.'s economic engine, generating $4 billion in government revenue annually.

Finance Minister Colin Hansen said the B.C. economy is showing signs of recovery but it will take several years for the government to recover from massive revenue losses in the last year.

The government forecast a record budget deficit budget of $2.8 billion for the current fiscal year after projected revenues dropped by $2 billion last summer.

The deficit forecast for the budget due in March is $1.7 billion.

Dave Durante, who helps finance heavy-equipment deals for contractors, said he supported Campbell's message of looking to new markets.

"You certainly have to look outside of traditional market places if you are going to succeed in this business," he said.