On Monday, July 1st, according to reports from two informed sources cited by Reuters, China’s second-largest commercial bank, China Construction Bank, has requested a minimum of 10% salary reduction for its headquarters staff.
One of the sources mentioned that the salary reduction for senior executives will be even greater. Due to the confidential nature of this information, the two sources declined to disclose their names.
The sources indicated that most branch offices of China Construction Bank will experience a larger salary reduction compared to the headquarters. However, some well-performing business units will have their salary reductions limited to single digits.
China Construction Bank has not immediately responded to Reuters’ request for comment.
The salary-cutting policy of China Construction Bank highlights the challenges that Chinese financial companies are facing amidst an economic slowdown. Commercial banks in China are under increasing profit pressure as they are compelled to provide cheaper loans to stimulate the sluggish economy, while loan demand remains weak.
Furthermore, the Chinese authorities are advancing the so-called “common prosperity” campaign, with the highest anti-corruption supervisory institution in the Chinese Communist Party vowing to eliminate the Western concept of “financial elitism”.
This has led to many financial companies (both state-owned and private enterprises) announcing pay cuts and reduced bonuses, and instructing employees not to wear expensive clothes or watches to work.
According to a report by Reuters in August 2023, the Bank of China launched a nationwide initiative to narrow the salary gap between employees and senior management.