How will China's steel demand develop under the investment-driven patterns? Integrating extended input-output model with dynamic steel flow analysis

Abstract

China constitutes over half of global steel demand and exhibits distinct investment-driven patterns, differing significantly from developed countries. Understanding the investment-driven steel demand is crucial for formulating effective decarbonization policies in China's iron and steel sector. To address this issue, this study integrates the extended input-output model and dynamic steel flow analysis to investigate the role of investment in driving China's steel demand and assess future trajectories of steel demand. The findings highlight the surge of China's steel demand is primarily driven by the substantial expansion of investment scale, with a particular focus on housing building and infrastructure construction. The scenario analysis reveal that, with appropriate management of investment scale and a shift towards a low-carbon structure, China's steel demand is projected to experience a period of gradual growth followed by a subsequent decline, thereby creating more window opportunities for decarbonization efforts. The peak value of China's per-capita steel demand is closely tied to the investment-to-GDP ratio. Furthermore, China's per-capita stocks are expected to exhibit prolonged sluggish growth, potentially exceeding the saturation level observed in developed countries.