Keywords for China’s economy in 2023

Increasing consumption and managing debt were the top priorities in the year almost over.

Photo by Fan Jianlei

Photo by Fan Jianlei

By WANG Yu, WANG Zhen, XIN Yuan



In the aftermath of the pandemic, all industries and sectors find themselves racing to catch up for lost years.

There has been a significant rise in travel, especially during the Spring Festival holiday. Tourism is at a four-year high, particularly long-distance travel. Consumption in the service industry has rebounded well, and people are returning to the cinema. 

Implicit debt

Implicit debt is incurred by local governments when they borrow beyond the legally prescribed limit, use financial funds for repayment, provide illegal guarantees, etc. 

China’s implicit debt is off the official record, but some estimates put it as high as 50 trillion yuan (US$7 trillion). In 2018, the central government set out to resolve implicit debt within 10 years. 


Economic development was the top priority in 2023. The National Development and Reform Commission took action to stabilize bulk consumption and increase consumption in rural areas, among other measures.

In August, the Ministry of Finance announced multiple tax cuts and the BOC told banks to lower interest rates to stimulate consumer demand.


In Q3, commercial banks were instructed to lower the interest rates on existing first-home mortgages. Two months later, over 22 trillion yuan of existing home loans had been lowered, benefiting over 150 million people, reducing annual payments by 3,200 yuan per household.


Throughout this year, the overall unemployment has fallen, but not among the young. The youth unemployment rate hit record highs for three consecutive months, reaching 21.3 percent.

In response to difficulties faced by graduates, a series of policy measures seeks to stabilize employment with measures including temporary public welfare jobs and job-seeking subsidies for eligible graduates.


The central bank lowered the reserve requirement ratio and reduced policy interest rates twice this year.

Specifically, the reverse repo rate is now down by 20 basis points, and the Medium-Term Lending Facility by 25 basis points.

Additionally, the central bank continued to adjust deposit rates through market mechanisms, lowering deposit rates for terms of one year or more by 20-50 basis points.

National Bonds

In October, 1 trillion yuan in national bonds were added to the central budget, the first increase in the annual budget since 2001. The bonds will be allocated to local governments specifically to support post-disaster recovery and reconstruction and enhance disaster prevention and reduction.

After the budget adjustment, the fiscal deficit ratio increased from 3 percent to around 3.8 percent, significantly raising market expectations for increased leverage at the central level.

Belt and Road

This year saw the 19th anniversary of the Belt and Road Initiative. Now with over 200 cooperation agreements with more than 180 countries and 30 international organizations, the initiative has facilitated landmark projects such as the China-Europe Railway Express, the New Western Land-Sea Corridor, and the China-Laos Railway.

From 2013 to 2022, trade in goods with countries along the Belt and Road grew each year by an average of 8.6 percent, investment by 5.8 percent. The cumulative two-way investment has passed US$270 billion.  

Private Sector

The State Council issued guidance for the private sectors, outlining measures to optimize the business environment and strengthen support for the private companies. 


The BOC raised the macro-prudential adjustment parameter for cross-border financing by enterprises and financial institutions from 1.25 to 1.5 in July.

Then on September 8, the RMB hit 7.3510 to the US dollar, the most unfavorable rate since December 2007.

On September 15, the BOC reduced the foreign exchange reserve requirement ratio for financial institutions from 6 percent to 4 percent.

The yuan has fallen by 2.6 percent this year.