Economic growth, regional disparities and core steel demand in China

Two of the processes underpinning China’s economic growth and development during the three decades between 1978 and 2008 have been industrialization and urbanization. As one of the key inputs into these two processes, Chinese crude steel demand has been strong throughout this period, outstripping domestic production and making China a net importer through to 2006. Domestic consumption is the key determinant of domestic production and, with China being the largest steel producer in the world at the time of writing, this makes understanding future trends in Chinese steel demand a matter of both national and global importance. Although we have the benefit of hindsight with regard to the relationship between economic growth and steel demand for a number of advanced economies, such as the United States, Japan and South Korea, it is unclear which of these relationships, if any, is likely to be most relevant to understanding that relationship for China. Indeed, it is most likely that China’s path will be unique because of a range of specific characteristics that are simply not replicated elsewhere.