A forecast by mining giants Rio Tinto and BHP Billiton that China's annual steel production will peak at 1 billion tonnes in the middle of next decade has been branded "lazy" and "convenient" by a former senior executive.

Clinton Dines, who ran BHP's China business for 21 years until 2009, has added his voice to those doubting the forecast, which has become central to the growth aspirations of the big iron ore miners.

"It's a number which has taken on a life of its own," Mr Dines told the AFR Weekend.

"Anyone with any nous would query it as a very nice round, convenient number. How could you ever forecast that?"

The 1 billion tonne projection from BHP and Rio has become one of the most contentious ever made and is increasingly being disputed as China's crude steel production falls and the iron ore price remains around a decade low of $US54 ($69.71) a tonne.

AFR Weekend has been told consulting firm McKinsey helped Rio and BHP formulate their Chinasteel forecasts, which are similar.

BHP confirmed this, while Rio and McKinsey refused to comment.

The McKinsey research has been cited since by the Reserve Bank of Australia in discussion papers and used to frame the outlook for the federal budget.

INFLUENTIAL

Prominent economist Ross Garnaut believes the forecast has been even more influential and used as the basis for delivering tax cuts and spending increases by successive federal governments, which have ultimately proven unsustainable.

He describes it as the "circularity of elite communication" in Australia, where business leaders, politicians and bureaucrats move in the same circles and often form similar views.

For the miners the 1 billion tonne forecast was used as the basis for $US120 billion of capital investment in iron ore mines and infrastructure from Western Australia to Brazil over recent years.

The forecast stood largely unchallenged until late last year, but has come under increasing scrutiny since.

The World Steel Association was the latest to question the number, saying on Monday China's consumption of steel had peaked.

"We are at the beginning of a very long and flat peak," the association's director general Edwin Bason said.

If its assumptions are correct China's steel production will remain at about 800 million tonnes until the middle of the next decade, before declining.

DIFFERENT VIEW

This is a very different view to that of BHP and Rio, which believe Chinese production will rise to an annual 1 billion tonnes between 2025 and 2030, before flattening off.

As an increasing number of doubters have emerged, BHP and Rio have stood firm on the forecast, but AFR Weekend can reveal internal scepticism about the number.

A senior figure in one of the miners said the forecast had become a "sacred cow", which should have been scrapped long ago.

"It was external propaganda, which became internal policy," the source said.

"Four to five years ago would have been a good time to graciously withdraw it."

China was at or near its construction peak and therefore steel production would be flat from here, the source said.

This is emerging as a middle line view as others, including a research arm of the Chinese government, are forecasting a steep decline in the country's steel consumption.

Westpac's Huw McKay, who contributes to the federal government's quarterly resources outlook, said the metal intensity of China's development was "much reduced" from a decade ago.

"China may still get to 1 billion tonnes in total output, but that would represent the absolute best-case scenario from an iron ore production perspective, and would probably require China to increase its net export position in steel products considerably," he said.