Abstract: This paper simulates the impacts of the global financial crisis on China’s economy and employment by using an input-output method. Compared with the trend of export growth, the decline of export has indeed caused tremendous shocks on China’s economy and employment. Under the shrinking of external demand, boosting domestic demand is the only choice to maintain growth and promote employment, but the policy priority of employment should be fully taken into account in the stimulus package. Our simulated results illustrate that the investment scenario of employment priority can achieve the objective of employment promotion without significantly reducing output. Government funds should be more invested in the fields of employment, education, health, housing and social security so as to promote a sustained and stable economic growth in China.
 
Keywords: Global Financial Crisis, Employment Shock, Input-Output Method, and Economic Stimulus Package

(in China and World Economy, Vol. 18 (Jan.-Feb.) No.1  pp. 33-46 )