Wood chips contain very little nitrogen of their own, so the micro-organisms that break it down have to 'borrow' it from the surrounding soil, although it does get returned when they in turn are broken down (when used as a mulch there isn't much decomposition taking place, especially in dry weather, and they can't 'suck' nitrogen out of the soil even when it's wet.)
When broken down, the soil structure, including its ability to retain nutrients, will be improved, so overall it has to be more beneficial than neutral (talking of pH (
) most organic matter goes through a stage when it becomes fairly acidic during breakdown, but returns to near neutral when the process is complete.)
