The ongoing trend of salary cuts in the Chinese financial industry has now been deteriorating for three years and is showing no signs of improvement. Salary reductions, layoffs, anti-corruption efforts, and political reforms continue to plague this once-prosperous sector, highlighting a bleak outlook amid China’s economic transformation.
According to a report from Chinese media outlet “Nanfeng Window,” Allen started working in the financial industry in 2018 but left last year due to “low income.”
Traditionally, after working for two to three years, a securities analyst in the financial industry could earn up to 400,000 yuan annually, while a seasoned analyst could strive for a million yuan after five years.
However, with the five-year mark approaching, Allen’s monthly income has dropped to four digits. After deducting social security and housing provident fund, he takes home only slightly over 6,000 yuan. The high cost of living in Shanghai has made it increasingly difficult for him to sustain.
Allen mentioned that he was among the few remaining in his department, as nearly half had already departed. While their paths diverged after leaving, uncertainty loomed over the next steps.
The situation in investment banking is equally pessimistic. Lin Hua, working at a securities firm’s investment banking department in Shenzhen, told Yancainjing, “There is basically no year-end bonus anymore.”
Lin Hua mainly handles IPO business and expressed regrets for missing the best times.
The “best times” refer to the years when the registration system was first implemented, but by the second half of 2023, the situation took a sharp turn for the worse.
In August 2023, the A-share market experienced a significant drop, with the Shanghai Composite Index falling below 3200 points. The number of A-share IPOs decreased from 428 in the previous year to 313 in 2023, and by 2024, the number had plummeted to only 100, with a total fundraising amount dropping by 81.11% year-on-year.
As investment banking projects dwindled, Lin Hua’s income also shrank. However, more nerve-wracking than salary cuts is the wave of layoffs.
Lin Hua noted that while individual securities firms used to maintain around a 5% “optimization rate” annually, in recent years, this figure has spiked, with some departments seeing rates as high as 15%.
Ding Mao, who entered the financial industry after graduating from a university in 2009, shared his experience witnessing unprecedented fluctuations since 2019, particularly in fundraising becoming more challenging.
Ding’s monthly salary initially dropped from 30,000 to 16,000 yuan, and he eventually found himself unemployed.
During his days of unemployment, he observed many peers attempting to transition, with a notable increase in those venturing into self-media, and some even resorting to selling tennis gear. Among these individuals were elite graduates from prestigious universities who, under mounting real-world pressures, had to make unconventional career shifts.
In fact, since 2008, the Chinese A-share market has experienced several drastic declines in trading volumes, leading major securities firms to resort to salary cuts and layoffs.
Zhang Shengli, a former financial analyst at Haitong Securities from 2012 to 2017, mentioned that his income dramatically declined as the market deteriorated, with monthly earnings dropping from tens of thousands to only a few thousand yuan. Even bonuses dwindled significantly, reaching around ten to twenty thousand yuan, with subordinates receiving as little as five thousand.
Explaining further, Zhang highlighted the scarcity of IPO primary market projects, increased competition within the industry, and the overall struggle to generate profits.
He emphasized that during bullish market conditions, securities firms’ employees could afford to buy homes outright without loans due to the surging stock market in the early 2000s. However, the decline in market performance gradually eroded their financial stability.
Zhang elaborated on the dynamics within securities firms, where companies heavily influenced by the market’s trends aligned their moves with prominent players. However, as the stock market began to falter, this coordinated effort became less effective.
He noted that the allure of the U.S. stock market lies in its relatively fair legal system, where information and market feedback correlate closely, allowing robust companies to thrive while weeding out the weak. In contrast, he remarked that the Chinese stock market lacked appeal, with very few around him engaging in A-share trading.
Taiwanese financial expert Huang Shicong highlighted the pivotal role banks play in any country, expressing that a struggling financial industry often reflects broader economic challenges within the nation.
He stressed the inherent connection between financial sectors and domestic demand, noting the unfavorable prospects for sectors like real estate, domestic industries, and export industries, leading to banks trimming salaries as a preemptive measure in anticipation of a challenging economic future.
Nevertheless, the worsening financial landscape over the past three years in China transcends mere economic struggles; it signifies a more profound political underpinning.
Speaking to Yancainjing, Zhang Bijun, a former legal representative and executive director of a notable asset management company in Beijing, remarked on the comprehensive decline pervading the domestic financial sector and beyond.
He described the situation worsening akin to an avalanche between 2021 and 2023, manifesting visibly through rapidly declining remuneration for middle and lower-level managers. Noting the government’s financial constraints, he observed significant portions of major securities firms beginning to slash annual salaries and bonuses since last year, with some individuals opting for a career change into the insurance or foreign service sectors.
Regarding asset management dispositions, Zhang noted a rapid deterioration in post-2021, with a notable increase in potential pitfalls. By the end of 2022 and the beginning of 2023, discerning between genuine opportunities and substantial risks became increasingly challenging, setting the stage for major upheavals should contracts be irrevocably committed.
Echoing sentiments of widespread skepticism, Zhang underscored a prevailing sense of pessimism due to the government’s financial pressures, leading to substantial erosion of remuneration across the industry, enforced diligently through salary reductions and weakened bonuses stemming from the central authorities.
Zhang’s observations indicated that the internationalization that once defined institutions like China International Capital Corporation (CICC) has been supplanted by central party control, underscoring a pivotal shift in the sector.
In a Reuters report from January this year, Chinese authorities announced a significant reduction in salary levels across three major financial regulatory agencies, slashing pay by approximately 50% to align with civil servant remuneration levels post-salary cuts.
In recent years, under the guise of anti-corruption initiatives, the Chinese authorities have initiated a sweeping clean-up within the financial sector. The number of cadre personnel scrutinized within the Chinese financial system surged from around 77 individuals in 2022 to at least 104 in 2023 and 97 in 2024.
The ongoing purge has instilled fear within the industry, resulting in a wave of resignations among executives at listed A-share companies in mainland China.
What was once considered one of the most sought-after professions in China, focusing on finance and economics, is no longer the top choice for the country’s brightest students. The admission scores for economic and financial programs at Peking University have significantly decreased compared to a decade ago.
As a response to these shifts, many recent graduates planning to enter the financial sector are now turning to civil service examinations. Likewise, employees from renowned securities firms like Huaxin Securities and CITIC Securities have begun appearing on the roster of prospective civil servants for 2025, signaling a pervasive trend among industry professionals shifting their career trajectories.
This fundamental transformation underscores Beijing’s deliberate departure from Western financial practices, emphasizing a shift towards aligning financial services with political directives. Financial practitioners have transitioned from enjoying privileged status in the sector to becoming an integral part of administrative governance.
Considering the international perspective, a deeper level of regulation makes it increasingly challenging for the financial sector to rebound from the trough.
According to observations by financial expert Huang Shicong, overcoming the ominous downturn necessitates substantial economic restructuring in China, focusing on reviving industries like real estate, boosting domestic consumption, and addressing trade tensions, which are crucial for revitalizing the financial sector’s prospects.
With political directives overshadowing economic considerations, discontent pervades various sectors in China, indicative of a growing disillusionment among industry professionals.
Amid the prevailing socio-economic upheaval, Zhang Bijun expressed a sense of optimism, citing a noticeable rise in public awakening over the past two years and advocating for a collective stance against the oppressive regime. He stressed the need for societal transformation by replacing the ruling party and carving out a new path forward to leverage the nation’s collective potential.
In an era marked by escalating discontent and mounting dissent, the resolve of the Chinese populace, encompassing over a billion diligent, compassionate, and intelligent individuals, presents a potent force for ushering in transformative change. As disenchantment grows and voices of dissent amplify, the winds of change appear inevitable, heralding a recalibration of societal norms and fostering a brighter future beyond the shadows of the current regime.