SINGAPORE Among all the figures in the
World Steel Association's latest yearbook, one in particular
stood out 405 kilograms. That's China's per-capita steel
usage-around 890 pounds-and it's interesting because it
illustrates both the extent of the country's economic growth
and how much further that process has to run.
Unsurprisingly, China was the only major steel-consuming
nation to see an increase (24 percent) in steel consumption in
2009 vs. the previous year. U.S. finished steel usage slumped
42.1 percent to 187 kg (412 pounds) from 323 kg (712 pounds),
and similar declines were seen in most other nations that
reported figures to Brussels-based WorldSteel.
The reasons for those big drops, and China's big rise,
aren't hard to fathom as factories, construction sites and
automakers turned off the lights throughout the developed
world, those industries were ramping up capacity in China,
thanks in part to a half-trillion-dollar stimulus package
focused on infrastructure spending.
So far, no surprises. But look at the WorldSteel figure
another way, and it shows not how much China has done but how
much it still has the potential to do.
The best comparison for China's steel usage figure is not
the United States, which long ago moved beyond the
infrastructure-intensive phase of economic development (even if
many believe there's an urgent need for that infrastructure to
be modernized and rebuilt). Far more relevant are three of
China's near-neighbors-Japan, South Korea and Taiwan-all of
which rose to become (or, in the case of Japan, reemerged as)
major industrial economies in the last half century. That's the
path China's trying to follow, and on the basis of the
WorldSteel figures it still has a long way to go.
The financial slump hit steel consumption in the three East
Asian economies last year, but even so per-capita demand in all
of the countries was higher than in China. But look back to
2008 to gauge how steel-intensive the economies are Japan used
612 kg (1,349 pounds) of steel per capita in 2008; Taiwan, 738
kg (1,627 pounds); and Korea a whopping 1,211 kg (2,670
China has explicitly modeled its recent development on the
rapid, export-oriented industrialization of these countries.
That doesn't mean China will ever reach a similar level of
per-capita steel demand. Its neighbors' smaller populations
(Japan, the largest of the three, has a population of 127
million, less than one-tenth that of China) and the leading
role of manufacturing and/or automaking in their economies has
boosted per-capita steel use to a level that a continental
economy like China will never reach.
But that doesn't preclude further growth. According to Judy
Zhu, commodities analyst at Standard Chartered Bank in
Shanghai, steel usage in China's so-called Tier 1 cities is
already comparable to, if not greater than, that in countries
like Japan. The rapid growth of cities in China's developed
eastern region like Beijing, Shanghai and Tianjin has sent
steel usage there to as much as 1,000 kg (2,205 pounds) per
capita, according to Standard Chartered Bank's estimates.
Meanwhile, China's poorer provinces-largely in the west-consume
less than 200 kg (441 pounds) of steel per capita, extremely
low for a country at the infrastructure-intensive stage of
There's sometimes a tendency to see China's growth as a
manufacturing or export story. But it's really about
urbanization. In the past 25 years anywhere from 200 million to
300 million Chinese have emerged from poverty into relative
middle-class, a process driven by and mirrored in the
development and modernization of the country's cities.
Even so, just 46.6 percent of Chinese live in cities,
according to figures from the Chinese Academy of Social
Sciences, although it estimated that could rise to 52 percent
by 2015 and 65 percent by 2030. Or to put a human face on the
figures, that means another 10 million people moving from the
countryside every year for the next two decades, with all the
associated demand for apartments, appliances, malls, subways
and automobiles that comes with city life.
That's why the 405 kg of steel that each of China's 1.3
billion citizens used last year in some ways hides the true
extent of the country's growth. Much attention has been paid
lately to the Chinese government's fading stimulus, the
country's overheated property market and faltering demand for
its exports. But with such a huge pool of new domestic
consumers waiting to enter the market for steel-intensive basic
goods and services, it's hard to question the potential for
further demand growth in the years ahead. KEVIN