The level of urbanization is an important benchmark for an economy in transit from poverty to middle income. During the process of urbanization in developed countries, the agriculture-based economy was gradually transformed to an industry-dominated structure and per capita energy consumption and energy intensity rose in tandem. After urbanization was completed and the tertiary industry became the main economic pillar, energy intensity declined correspondingly and per capita energy demand entered a stable stage with relatively low growth.

In 2007, China's GDP accounted for 6 percent of the global total while its steel consumption reached 30 percent and cement about 55 percent. From 2003 to 2008, China's energy consumption experienced near double-digit growth given the rapid development of energy-intensive industries and the acceleration of urbanization. The key to energy sustainability is dealing with the growth of energy demand brought about by urbanization.

According to research by the Center of China Energy Economic Research at Xiamen University, China - given there are no major catastrophes - will enter the stage of urbanization of middle-income countries by 2020. A good understanding of energy consumption growth and rigid demand at this stage is imperative for formulating an effective energy policy and strategy.