The Environmental Investigation Agency said its investigation showed Mozambican politicians and Chinese traders were systematically involved in timber smuggling and illegal logging that was causing Mozambique, one of the world's poorest countries, to lose tens of millions of dollars a year in tax revenues.
The EIA said many foreign companies are taking advantage of Mozambique's natural resources as the country's economy grows rapidly following the end of a civil war in 1992, the BBC reported.
Most poor residents of Mozambique are not benefiting from the surge in business, the EIA said.
The organization said its investigation showed China's demand for raw timber was having a devastating impact on Mozambique, with a clear pattern of illegal logging, timber smuggling and breaches of Mozambique's export and forest laws in the last six years.
An estimated 48 percent of timber exported to China last year was believed to be the product of illegal logging, the group said.