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Iron&Steel is key industry in China, which plays an important role interms of GDP, tax revenue, and employment. Furthermore, because of it’scharacteristic of grouping, steel industry’s contribution, at the provincelevel, is more significant. China’s steel industry had kept it’s quantitativeexpansion since the foundation of China in 1949, and became world’slargest crude steel producing country in 1996. In 2012, China’s crude steelproduction stands at 708 million metric tons, accounting for 47% ofworld’s crude steel production. According to China’s 12th Five-Year Planof Iron&Steel, which is backbone for steel industry policy of China,restructuring, rationalization of steel mill’s distribution, procurement of rawmaterials, and enhancement of globalization will be emphasized forsustainable growth of steel industry. In order for proving steel industry’s importance in China, this study,through input-output model, conducted empirical analysis on Chinese steelindustry’s economic effect such as production induced effect, importinduced effect, added value induced effect, forward linkage effect, andbackward linkage effect etc.. And on the basis of literature survey, thisstudy looked into Chinese steel industry’s historical development path andit’s outlook. Research results shows that steel industry ranked first amongChina’s 42 industry in terms of production induced effect. And China’ssteel industry, with the help of government’s policy support, is expected tosee both quantitative expansion and also qualitative improvement, withChina maintaining it’s hegemony in global steel industry.