Xi Jinping’s push for “common prosperity” now has bankers’ paychecks in its sights. China’s largest financial institutions are now having to comply with an annual salary cap of 2.9 million renminbi, equivalent to around $400,000, and some senior staff must even return earnings from previous years, according to a recent Bloomberg report.
It’s a stark signal for Chinese professionals that a banking career may no longer be the path to affluence that it is in the West, even for those who rise to the very top of the industry. Even so, as the graphic below shows, the type of compensation those who run China’s major banks can expect to earn is already dwarfed by the pay for those who run Wall Street titans like JP Morgan Chase.
The picture at Chinese banks contains nuances: employees below the CEO level have in the past been able to earn far more than their seniors.
“The chairman, chief executive and other senior executives of a bank would have their pay at around 600,000 renminbi ($85,000) and then their subordinates would be paid much more — in some cases, 10 times that high, or more than 10 times that high,” says Chen Zhiwu, finance professor at the University of Hong Kong (HKU), describing the situation at China’s banks before the “common prosperity” drive.
…the party leadership has made it more clear… that management teams at state-owned banks and state-owned financial institutions cannot make too much money, because real businesses, like manufacturing businesses, have been losing money.
Chen Zhiwu, finance professor at the University of Hong Kong
The highest paid employee at the Bank of Communications (BOCOM), for example, earned around 23 million renminbi ($3.25 million) in 2023, compared to only $133,000 for the bank’s president, according to its latest annual report, which does not identify the employee or their role.
The graphic below shows that while pay for the best-paid employee at China’s top banks has stagnated or fallen in the past year, it is still multiples higher than the pay for their supposed top boss.
“In the last year or so, the party leadership has made it more clear that, for the Chinese economy, that management teams at state-owned banks and state-owned financial institutions cannot make too much money, because real businesses, like manufacturing businesses, have been losing money,” adds Chen.
In July, a commencement speech given by Li Feng, a professor at the Shanghai Advanced Institute of Finance (SAIF), went viral. In it, he noted that finance professionals had begun to feel a sense of shame because some people in China were comparing the finance industry unfavorably to advancing technology in terms of national value.
“Of course it [pay cuts] is related to the common prosperity initiative, but the more directly relevant background is that the party leadership has no appreciation for the social value of finance,” says Chen from HKU. “In fact, starting this year, parents of high school graduates are really not wanting their children to select finance as a major.”
Aaron Mc Nicholas is a staff writer at The Wire based in Washington DC. He was previously based in Hong Kong, where he worked at Bloomberg and at Storyful, a news agency dedicated to verifying newsworthy social media content. He earned a Master of Arts in Asian Studies at Georgetown University and a Bachelor of Arts in Journalism from Dublin City University in Ireland.
