THE IMPACTS OF FISCAL POLICY AND UNEMPLOYMENT RATE ON ECONOMIC GROWTH IN CHINA FROM 1991 TO 2023
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Universiti Malaysia Sarawak (UNIMAS)
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This study investigates the dynamic relationship between fiscal policy, unemployment rate, and economic growth in China from 1991 to 2023. Despite China’s rapid economic transformation during this period, challenges such as fluctuating unemployment and fiscal adjustments have posed significant concerns for sustainable development. The main problem addressed in this study is the extent to which fiscal instruments, particularly government expenditure and inflation rate, influence economic growth and how unemployment interacts within this framework. Using time series data and economic techniques including Cointegration test and Vector Error Correction Model, the study reveals strong long-run relationships between fiscal variables and economic performance. Findings indicate that government expenditure significantly drives economic growth, while inflation and unemployment exhibit both short and long term effects on macroeconomic stability. The results further emphasize that targeted fiscal measures and stable labor market conditions are essential to sustaining growth. Overall, this study enhances understanding of China’s macroeconomic challenges amid demographic transitions and global uncertainties.