China is expected to consume about 427 million tons of steel products in 2009, KPMG China said in a report. Hit by the financial crisis, China consumed 20 million tons less steel last year. Among the four trillion yuan stimulus package, the projects will account for about 90 percent that are directly bound up with the consumption of construction steel, which represents 54 to 55 percent of the country’s total steel consumption. China has a steel capacity of over 500 million tons, thus having entered an episode of overcapacity in the context of dwindling demand. The unprecedented difficulties facing China’s steel industry, according to the report, include the low degree of the industry’s centralization, improper employment and the lack of control over resources, in addition to external factors.