China's Macroeconomic Evaluation System

Economic agents must pay more attentions to the situation of national economy and the policies taken by government before making economic decisions. So it is important to evaluate the situation of national economy and forecast its development.Based on the theory of business cycle and refer to the macroeconomic early-warning approaches, we adopt the fuzzy comprehensive evaluation to build a Chinese macroeconomic evaluation system that can both evaluate the present situation and give early warning about future.This article includes five parts. Part 1 presents a brief review of the business cycle theory and summaries the approaches to evaluate the national economy. Business cycle theory explains the causes of business cycle and the propagate mechanisms which are the basis to make policy and evaluate the national economy. Since 19th century, a great development has made in the approaches to evaluate the national economy in which the business cycle analysis and econometrics model analysis were usually applied. In Part 2, fuzzy comprehensive evaluation (FCE) is introduced including the way of evaluation and the definitions of membership function and weight. Based on Part 1 and Part 2, a Chinese macroeconomic evaluation system is built in Part 3. In this system, the fuzzy comprehensive evaluation is applied. First, according to some rules and ways, we choose the evaluation indexes to represent China economy. Second, we create the membership function of every evaluation index according to qualitative analysis and quantitative analysis. And weight is defined by one-by-one comparison. An examination is made according to the related datum between 1978 and 2004 in Part 4. The degree of membership cycle of economy growth and price stable is concordant to the business cycle in my country. The degree of membership of economy growth is between 0.55 and 0.75. But the degree of membership has been low since 1990s. Unemployment is an important question faced by China. Since reform and opening-up, the degree of membership of finance shows the incremental increase in trend.Especially from 1998 to now, the high degree of membership represents the high financial deficit and burden of national debt. Part 5 is a simple analysis about the function and limitation of this system.