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China’s financial elite face $400,000 salary cap before taxes and bonus clawbacks | World News
Several Chinese mutual fund managers have proposed capping employee salaries at about 3 million yuan, people familiar with the matter said in April.
At least 130 financial officers and executives have been investigated or punished in 2023 alone, according to Bloomberg calculations based on official announcements. Image: ShutterstockBloomberg
By Bloomberg News
The era of big paychecks for Chinese financiers is fast coming to an end as some of the sector’s biggest companies impose strict new limits to comply with President Xi Jinping’s “common prosperity” campaign.
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The country’s biggest financial conglomerates have asked senior employees to forgo deferred bonuses and in some cases return payments from previous years to meet a pre-tax threshold of 2.9 million yuan ($400,000), according to people familiar with the matter.
China Merchants Group, China Everbright Group and Citic Group Corp. are among the state entities that have conveyed the guidance to employees at some of their units in recent weeks, the people said, asking not to be identified discussing a private matter. Some mutual fund managers are also being pressured to return non-compliant salaries received in previous years, the people said.
Vilified by Beijing as “hedonists” for their lavish lifestyles, the highest-paid financial workers, including investment bankers and fund managers, have been among the hardest hit by Xi’s push for a more equal distribution of wealth. The $66 trillion financial industry has come under tighter Communist Party control, with banks and brokerages slashing salaries and other perks.
Several Chinese mutual fund managers have proposed capping employee salaries at about 3 million yuan, people familiar with the matter said in April. It’s not clear how many financial entities will be subject to the current guidance, the people added.
At Citic Securities Co., a unit of Citic Group, all senior executives on its management committee earned well over 3 million yuan last year, with chairman Zhang Youjun earning 5 million yuan, according to its annual report . Most of their salaries were deferred bonuses.
Representatives for Citic Group, Merchants Group and Everbright Group did not respond to requests for comment.
The move comes as China recently began a new round of anti-corruption inspections of some of its biggest state-owned lenders, the central bank and key regulators, the first broad investigation since the 2021 one that has impacted the sector.
At least 130 financial officials and executives were investigated or punished in 2023 alone, according to Bloomberg calculations based on official announcements.
Authorities have been placing increasing focus on corruption among corporate executives as they try to stabilize the world’s second-largest economy and prevent systemic financial risks. The proposed limits mark a sharp shift from the era when companies handed out big paychecks to attract top talent.
President Xi will convene senior officials from July 15 to 18 for a delayed conclave that is expected to set long-term policy on a wide range of economic and political issues, the official Xinhua news agency reported after the Politburo wrapped up a meeting on Thursday. fair. The meeting emphasized that the party leadership must be at the center of any reform and called for proper handling of relations between economy and society, government and market, development and security.
China’s economy is struggling to regain momentum as confidence crumbles among domestic consumers and international investors. Banks have been urged to step up lending, but demand for new credit is weak. The property market is still in a deep recession and foreign investors have shunned the stock market.