ABSTRACT
In 1998, China’s economic development faced serious challenges both domestically and externally. First, the Southeast Asian financial crisis spread throughout most of East Asia, and thence to Latin America and finally Russia. Second, the midstream and downstream portions of the Yangtze River and the Northeast were hit by heavy floods, which also inflicted serious damage on the economy. Furthermore, China faced two urgent and ongoing tasks: reform and development. The employment index is easier to judge than the rate of economic growth. The rise in unemployment rates indicates that economic growth may be lower than the potential growth rate, and vice versa. In terms of execution of the macroeconomic policies, we should attend to matching fiscal and monetary policies. The current expansionary fiscal policy should go hand in hand with a cautious monetary policy.
