China is currently experiencing rapid urbanization. The building sector plays an important role in China's energy conservation and emission reduction. An increasing amount of energy will be steadily consumed in the building sector as the urbanization process accelerates. China's government attaches great importance to building energy efficiency (BEE). How does the urbanization process affect building energy consumption (BEC)? How much energy can be saved in the building sector through implementation of energy polices? These questions are critical for government development strategies and planning. Thus, in this paper, an econometric model (co-integration technique) is developed to analyze how China's BEC is affected by macroeconomic variables in the context of urbanization, and also forecast the BEC and BEE potential until 2020 under different scenarios. The research result shows that occupants' lifestyles, residents' living standards, and energy price have significant influences on BEC. The building sector is likely to contribute approximately 20% to China's energy conservation through electricity pricing reform. (C) 2014 Elsevier B.V. All rights reserved.