The IMF estimates that China’s financial deficit will equate to 9% GDP at the end of this year, and the estimates of the Central Economic Work Conference of China conclude that the fiscal hole will continue without major changes during 2023.

The Chinese economy shows clear signs of slowdown and even stagnation in real activity. The manufacturing industry registered the lowest growth in the last 30 years in the country.

The International Monetary Fund estimates that China’s consolidated financial deficit will end 2022 at 8.9% of GDP, after having reached 6.1% in 2021 and up to 9.7% in 2020. The fiscal imbalances of the country have deepened since the pandemic, but even before its arrival there were concerns regarding its rapidly rising pensioner numbers.

The most recent Communist Party Conference confirmed that the Xi Jinping administration will undertake an aggressive policy of fiscal and monetary stimulus in 2023. For the regime, the increase in public spending and the fiscal deficit will be the main “growth engine”.

Further cuts are projected for the People’s Bank of China’s national interest rate, which has already stood at a nominal 3.65% per annum since mid-August. A GDP growth rate of only 2.1% is expected in 2022 and 4.3% in 2023.