In response to the “common prosperity” campaign promoted by the Chinese Communist authorities, several of China’s largest state-owned financial companies have begun implementing strict salary caps, with some individuals even being required to return part of their earnings.
According to sources familiar with the matter, multiple major financial groups in China have asked top executives to relinquish deferred bonuses, and some mutual fund managers have even been asked to repay salaries from previous years to comply with a pre-tax annual salary cap of 2.9 million yuan (about $400,000).
Insiders revealed that in recent weeks, state-owned enterprises such as China Merchants Group, Everbright Group, and CITIC Group have communicated these directives to employees within their subsidiaries.
High-income financial professionals, including investment bankers and fund managers, have been criticized by the CCP for their luxurious lifestyles and labeled as “hedonists.” They are among the groups most affected by the “common prosperity” campaign. The CCP is tightening control over the $66 trillion financial industry, with banks and securities firms cutting salaries and other benefits.
Previously, reports indicated that several mutual funds in China were considering capping employee salaries at around 3 million yuan in line with policy requirements. Sources told Bloomberg that it remains unclear how many financial entities will be affected by the current directives.
According to the annual report of CITIC Securities under the CITIC Group, all senior executives of the board received incomes well above 3 million yuan last year, with Chairman Zhang Youjun earning 5 million yuan. Most of their compensation comes from deferred bonuses.
Spokespersons for CITIC Group, China Merchants Group, and Everbright Group did not immediately respond to Bloomberg’s requests for comment.
This move comes as the CCP begins a new round of anti-corruption inspections on some of the largest state-owned banks, central banks, and major regulatory institutions. This marks the first widespread investigation since the anti-corruption inspections of 2021.
According to Bloomberg’s calculations based on official announcements, at least 130 financial officials and executives were investigated or penalized in 2023.
Setting annual salary caps signifies a significant transformation in the Chinese financial industry, moving away from the era of substantial remuneration and talent attraction.
Over the past two years leading up to 2023, China’s mutual funds collectively lost 1.9 trillion yuan, a figure that is attracting increasing attention.
With the real estate market still deeply depressed and the Chinese economy continuing to slow down, consumer confidence is decreasing. Currently, both domestic and foreign investors are avoiding the Chinese stock market.
(Essay referenced Bloomberg’s relevant reports)