Chinese financial institutions have jumped on an austerity drive as Beijing seeks to close the wealth gap, slashing pay and bonuses, telling employees not to wear fancy clothes and watches to work, and reining in travel and entertainment costs.
The measures are being taken as government officials pledge to crack down on corruption in the nation's $57 trillion financial industry and as the growth of the second-largest economy in the world slows, with youth unemployment reaching record levels.
Being among the best paid employees in communist China, financial professionals frequently face criticism for their wealth and opulent lifestyles on social media as the economy falters, angering Beijing as well.
Earlier this year, China's top anti-graft agency vowed to do away with notions of a Western-style "financial elite" and to make amends for the excessive pursuit of "high-end taste"'s hedonism.
Even as official rhetoric on President Xi Jinping's "common prosperity" campaign has waned, this has encouraged a bevy of financial firms, both state-owned and private-sector, to take proactive measures to ensure they do not fall foul of the authorities.
A prominent Chinese state-owned mutual fund and a mid-sized bank, according to employees who declined to be named owing to the sensitivity of the subject, have urged personnel not to flaunt their high-end lifestyles.
According to an employee, the mutual fund has also requested that staff not share photos of pricey meals, outfits, or bags on social media in order to prevent regulatory scrutiny or backlash from the general public.
Employees of the mid-sized bank have been warned they cannot travel for business in five-star hotels and are not permitted to wear expensive clothing or carry fancy bags, according to a representative at the institution.
Another individual with knowledge of the situation, who also declined to be named because the instructions are confidential, claimed that senior executives at a state-owned insurance company had also been ordered not to come to work dressed expensively.
According to two sources with knowledge of the situation, China Construction Bank Corp. (CCB) and Industrial and Commercial Bank of China (ICBC) want to reduce some employee allowances starting this year.
One-time summer allowances that range from 1,500 yuan ($210) to 2,000 yuan per month will be affected, according to the sources, who also declined to be identified.
Reuters reported earlier this month that CITIC Securities is making an uncommon step to close the income gap by reducing base compensation by up to 15% throughout its investment banking division.
According to Reuters, which cited sources with knowledge of the situation, domestic rival China International Capital Corp (CICC) reduced this year's bonuses for investment bankers by 30% to 50% from a year earlier last month.
Financial firms are controlling their employees' showy lifestyles in addition to the anti-corruption campaign and "common prosperity" drive, according to industry insiders, to ensure that they are not going against the Communist Party's doctrine.
As part of a comprehensive reform of government agencies during Xi's third term as president, Beijing is creating a new financial watchdog to increase the ideological and political role of the party in China's broader financial system.
According to a report by Reuters last month, the central bank and China's securities regulator both reduced the budgetary allotment for employee pay in 2023 as a result of reforms that were mandated as part of a larger effort to lessen income inequality.
The central bank and securities regulator's workers may have had their salary reduced as a result of the financial regulatory body reforms announced in March, which called for their employees' pay to be on level with that of public employees.
"At a time when economic growth momentum has been sluggish and the overall budget of the government is not growing as fast as before, how to distribute resources and benefits within the regime is a key political priority of the Party and most important driver behind the current austerity push," said Xin Sun, who teaches Chinese and East Asian business at King's College London.
"Inequality in China has reached a high level for a long time," Sun said, adding what the Party now does by cutting the benefits of "financial elites" is aimed to quell inequality within the regime for political stability.
(Source:www.reuters.com)
The measures are being taken as government officials pledge to crack down on corruption in the nation's $57 trillion financial industry and as the growth of the second-largest economy in the world slows, with youth unemployment reaching record levels.
Being among the best paid employees in communist China, financial professionals frequently face criticism for their wealth and opulent lifestyles on social media as the economy falters, angering Beijing as well.
Earlier this year, China's top anti-graft agency vowed to do away with notions of a Western-style "financial elite" and to make amends for the excessive pursuit of "high-end taste"'s hedonism.
Even as official rhetoric on President Xi Jinping's "common prosperity" campaign has waned, this has encouraged a bevy of financial firms, both state-owned and private-sector, to take proactive measures to ensure they do not fall foul of the authorities.
A prominent Chinese state-owned mutual fund and a mid-sized bank, according to employees who declined to be named owing to the sensitivity of the subject, have urged personnel not to flaunt their high-end lifestyles.
According to an employee, the mutual fund has also requested that staff not share photos of pricey meals, outfits, or bags on social media in order to prevent regulatory scrutiny or backlash from the general public.
Employees of the mid-sized bank have been warned they cannot travel for business in five-star hotels and are not permitted to wear expensive clothing or carry fancy bags, according to a representative at the institution.
Another individual with knowledge of the situation, who also declined to be named because the instructions are confidential, claimed that senior executives at a state-owned insurance company had also been ordered not to come to work dressed expensively.
According to two sources with knowledge of the situation, China Construction Bank Corp. (CCB) and Industrial and Commercial Bank of China (ICBC) want to reduce some employee allowances starting this year.
One-time summer allowances that range from 1,500 yuan ($210) to 2,000 yuan per month will be affected, according to the sources, who also declined to be identified.
Reuters reported earlier this month that CITIC Securities is making an uncommon step to close the income gap by reducing base compensation by up to 15% throughout its investment banking division.
According to Reuters, which cited sources with knowledge of the situation, domestic rival China International Capital Corp (CICC) reduced this year's bonuses for investment bankers by 30% to 50% from a year earlier last month.
Financial firms are controlling their employees' showy lifestyles in addition to the anti-corruption campaign and "common prosperity" drive, according to industry insiders, to ensure that they are not going against the Communist Party's doctrine.
As part of a comprehensive reform of government agencies during Xi's third term as president, Beijing is creating a new financial watchdog to increase the ideological and political role of the party in China's broader financial system.
According to a report by Reuters last month, the central bank and China's securities regulator both reduced the budgetary allotment for employee pay in 2023 as a result of reforms that were mandated as part of a larger effort to lessen income inequality.
The central bank and securities regulator's workers may have had their salary reduced as a result of the financial regulatory body reforms announced in March, which called for their employees' pay to be on level with that of public employees.
"At a time when economic growth momentum has been sluggish and the overall budget of the government is not growing as fast as before, how to distribute resources and benefits within the regime is a key political priority of the Party and most important driver behind the current austerity push," said Xin Sun, who teaches Chinese and East Asian business at King's College London.
"Inequality in China has reached a high level for a long time," Sun said, adding what the Party now does by cutting the benefits of "financial elites" is aimed to quell inequality within the regime for political stability.
(Source:www.reuters.com)
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