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This article considers the medium- and long-term prospects for residential construction in China and their implications for steel consumption.

Posted by Kate Mackenzie on Aug 30 14:09. In our first post in this series, we examined the widely-held belief that China's steel demand will continue to rise at a rapid rate. FT Alphaville, along with others, contend that such forecasts are on shaky ground. This is, in part, because of the dubiousness of one of the underlying assumptions: that China will rapidly urbanise more of its population. (Here's a very recent example of this argument, from Stephen Roach.) The proportion Chinese living in urban areas just passed the 50 per cent mark in the past year but, the story goes, there is more to come. This will in turn mean more industrialisation, more modernisation, a bigger and consuming middle class and of course more GDP growth. In other words: [...] farmers who once led simple, subsistence-level lives now become factory and service workers in the city, reside in apartments furnished with appliances, occasionally eat out, and perhaps even send their kids to college. In the process, self-sufficient rural households are transformed into workers receiving higher wages and participating in the commodity economy of consumption. As such, urbanization is as much an economic and social transformation as it is a spatial and demographic process. Sounds great doesn't it? The above quote however comes from a paper by Kam Wing Chan in Eurasian Geography and Economics early this year. Chan is a professor of geography at the University of Washington, and he doesn't agree that this is how things will continue to play out for China.