The invention discloses an indent method of dot-matrix characters in a two-dimensional graphic engine, as well as a Chinese processing method finished with the algorithm. The invention comprises following steps: reading character data; opening a dot character library file for standby; processing the encrypted characters of the character data; using the indent method of dot-matrix characters to calculate the real length of each character, and obtaining the total length of all the read-in characters after accumulation; processing the heights and the row distances of characters; compared the total length of characters with a screen width, carrying on ellipsis processing or line shifting processing to the characters which overpass the screen, and recording the total length of the characters which can be displayed; setting the various channel attributes of the two-dimensional graphic engine and a buffer; processing and calculating the positions of middle, left alignment, and right alignment in a Chinese display; using the indent method of indention for dot-matrix characters to reduce characters; and sending the characters after reduction to the two-dimensional graphic channel for display output.