Dried pine chips are great for chinchillas. I've uses them for over 20 years without a problem ... oops, there was one time, a long time ago ... I chose an 'off brand' made for horse stalls (to save money - I had over 200 chinchillas at that time) and ended up with some little tiny black bugs ... the bugs could not get to the chins (because of their thick fur), but they could get to me ... ouch! That was no fun.
You live and learn ... sometimes the hard way ... but, those are the lessons you remember best.
But even with pine chips, the cage needs to be cleaned weekly. You can also 'spot' clean it if you can find the area they like to tinkle in most often. Just remove the moist chips and replace it with fresh ones daily, or every day or two. Also, if you have a male chin, (it is rare, but ...) they will sometimes decide spraying outside the cage (onto the wall or rug) suites them well. If this is happening, I suggest the use of a shower curtain or painter's drop cloth and wipe it down often. Be very careful not to get the plastic within 4 to 6 inches of the cage .... these little ones will surprise you at their ability to reach things outside their cage, but still within a 4 inch distance of the outer bars.
Newspaper that has not been printed on is a favorite of those people allergic to pine. When paper is used, I suggest changing the paper daily ... every other day as a minimum guideline to follow, in my opinion. This can often be purchased for a minimal cost at a newspaper distributor/printer ... just ask if the have any 'end of the roll' paper left that you could purchase ... some are even nice enough to just give it to you freely. Once the paper has been printed on, you are exposing your little ones and you, to the smell, the chemicals and the mess of printing ink.
If, after all this, IF there is still an odor from your chin, it's time for a vet check! Chinchillas can get infections in their bladder that can cause an odor. Any 'bad' odor from a chinchilla usually is there to alert you there is a health problem that needs attending to! Also, if a chinchilla is exposed to giardia (a parasite), it gives off a horrible odor and giardia can kill your chin. If you have a female chinchilla, some people will notice a slight odor when she goes into season ... but as a general rule, chinchillas constantly clean themselves (especially the females at this time), and it is rarely smelled by the normal human nose.
There are lots of reason to be able to smell something ... but with a chinchilla that is kept clean, this is rare, unless you have a super sensitive nose. Hope this helps.
Jo Ann
P.S. Are your chins directly on the paper/chips or is the paper/wood chips in a tray that is separated with cage wire? If there is a wire separating the chin and the bedding, remember ... their urine and poop touches and leaves some residue on the cage wire and/or shelves of the cage. These should be cleaned at a minimum on a weekly basis. A hand held steam cleaning machine works wonders and non-commercial ones can be purchased at a reasonable price! And the best thing ... your chins are not exposed to cleaning chemicals, yet the steam sterilizes the cage wires/shelves!