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China’s financial elite faces $400,000 salary cap, bonus recovery
(Bloomberg) — The era of big paychecks for Chinese financiers is quickly coming to an end as some of the industry’s biggest companies impose strict new limits to fulfill 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 facilities 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 noncompliant payments 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 those hardest hit by Xi’s push for a more equal distribution of wealth. wealth. The $66 billion financial industry has fallen under tighter Communist Party control, with banks and brokerages cutting 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 was unclear how many financial entities would 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 his pay came from 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 top regulators, the first wide-ranging probe since the 2021 one that sent shockwaves through the industry. .
At least 130 officials and financial executives have been investigated or punished in 2023 alone, according to Bloomberg calculations based on official announcements.
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Authorities have placed an increasing focus on corruption among corporate executives and executives as they try to stabilize the world’s second-largest economy and prevent systemic financial risks. The proposed caps mark a drastic shift from the era when companies handed out big paychecks to attract top talent.
China’s economy is struggling to regain dynamism as confidence disintegrates between 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 avoided the stock market.
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