By Xie Yu, Ziyi Tang and Julie Zhu
HONG KONG (Reuters) – Whether it’s cutting salaries and bonuses, asking staff not to wear expensive clothes and watches to work or limiting travel and entertainment spending, financial firms Chinese have launched an austerity drive as Beijing strives to close the wealth gap.
The moves come as authorities pledge to tackle corruption in the country’s $57 trillion financial sector and as growth in the world’s second-largest economy weakens, youth unemployment reaching a record level.
Finance professionals are among the highest paid workers in communist China and their wealth and flashy lifestyle have often come under fire from the public on social media as the economy slows, sparking also the anger of Beijing.
Earlier this year, China’s top anti-graft watchdog pledged to weed out the ideas of a Western-style “financial elite” and rectify the hedonism of excessive pursuit of “high-end taste”. “.
This has prompted many financial firms, both public and private, to take proactive steps to ensure they do not fall prey to the authorities, even as official rhetoric about the “common prosperity” campaign of President Xi Jinping has declined. .
Among these measures, the staff of a large Chinese state-owned mutual fund and a mid-sized bank ordered staff not to show high-end lifestyles, employees of the companies said. , declining to be named due to the sensitivity of the issue.
The mutual fund has also asked staff to refrain from posting photos of expensive meals, clothes or bags on social media, an employee said, to avoid attracting regulatory stares or public criticism. .
Employees of the medium-sized bank have been asked not to wear luxury brands or carry luxury bags to their workplace, a person from the lender said, adding that staff had also been told that they couldn’t stay in five star hotels when traveling for work.
Senior executives at a public insurance company have also been told not to wear expensive clothes to work, said another person with knowledge of the matter, also declining to be named because the instructions are confidential.
The Industrial and Commercial Bank of China (ICBC) and the China Construction Bank Corp (CCB) plan to reduce some allowances for bank headquarters employees from this year, two sources familiar with the matter said.
The allowances that will be impacted include one-time summer allowances of around 1,500 yuan ($210) to 2,000 yuan per month, which will be phased out starting this month, said the sources, who also declined to be named.
ICBC and CCB did not respond to Reuters’ request for comment.
SALARY REDUCTIONS, BONUSES
CITIC Securities is cutting pay in its investment banking division, lowering base salaries by up to 15%, Reuters reported earlier this month, in a rare move as Beijing strives to close the disparity in income.
Domestic rival China International Capital Corp (CICC) last month slashed this year’s bonuses for investment bankers by 30% to 50% from a year earlier, Reuters reported, citing people familiar with the matter. the question.
Apart from the anti-corruption crackdown and the “common prosperity” campaign, financial firms are also limiting the glitzy lifestyle of their staff to ensure they do not violate Communist Party ideology, officials said. industry.
To bolster the party’s ideological and political role in China’s overall financial system, Beijing is setting up a new financial watchdog as part of a sweeping reorganization of government bodies during Xi’s third term as president.
China’s securities regulator and central bank cut the budget allocation for employee wages in 2023, following orderly reforms as part of a broader campaign to reduce income disparity, Reuters reported. last month.
Analysts said central bank and securities regulator staff faced possible pay cuts following reforms to financial regulators announced in March that called for the salary of their staff is equal to that of civil servants.
“At a time when economic growth momentum has been slow and the government’s overall budget is not growing as fast as before, how to distribute resources and benefits within the regime is a key political priority for the Party. and the most important driver behind the current austerity push,” said Xin Sun, who teaches Chinese and East Asian affairs at King’s College London.
“Inequality in China has been at a high level for a long time,” Sun said, adding that what the Party is doing now by reducing the benefits of “financial elites” is aimed at suppressing inequality within the regime for political stability.
(Reporting by Xie Yu, Julie Zhu and Selena Li in Hong Kong, Ziyi Tang, Binbin Huang and Rong Ma in Beijing, Shanghai Newsroom; Writing by Sumeet Chatterjee; Editing by Lincoln Feast.)