Abstract: Lumber processing is an ancient industry, and is still important in modern forestry industry with a great development space. At present, the development of lumber processing in China is facing many bottlenecks in the administrative licensing system, such as expanding the geographical space of control, compressing market spaces of enterprises, and randomly setting the valid period and annual inspection of the license, etc. In order to develop lumber processing industry, the optimal choice is to abolish the administrative licensing system for lumber processing, and the second optimal choice is to fully standardize the administrative licensing system for lumber processing, including strict control of geographical space range, simplifying the application materials for lumber processing license, and abolishing the annual inspection, etc.