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Top executives at China's largest brokerage firms have taken pay cuts over the past two years amid difficult financial markets and Beijing's efforts to reduce inequality, according to revelations.
The top three executives of some of China's leading state-backed brokerages, including CSC Financial, Citic, China International Capital Corporation (CICC), Huatai Securities and Guotai Junan Securities, took salary cuts in 2022 and 2023, according to provider Wind official disclosures.
Overall, nine of the top 10 brokerage firms by revenue saw a decline in compensation for their highest-paid employees last year.
At CICC, the top three executives earned a combined Rmb7.3 million ($1 million) last year, compared to Rmb10.9 million in 2022 and Rmb25 million in 2021. At Citic, the total was Rmb16.8 million, compared to Rmb18.3 million and Rmb33. Rmb 9 million in the previous two years, while Guotai Junan saw a decrease in wages to Rmb 8 million in 2023, from Rmb 9.9 million in 2022 and Rmb 12.1 million in 2021.
State-backed brokerage firms dominate China's vast financial markets, where Western investment banks have made limited progress in recent years and returns have been disappointing at a time of weak economic momentum and low deal activity. The CSI 300 index of stocks listed in Shanghai and Shenzhen has fallen nearly 40 percent since its peak in February 2021.
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The pay data, consistent with widespread anecdotal reports of severe cuts for senior executives in mainland financial circles, dovetails with Xi Jinping's push for “common prosperity” and less inequality. The president has also repeatedly emphasized the importance of the “real economy,” as opposed to finance and technology, as part of a campaign for “quality development.”
“Generally speaking, the older you are, the bigger the pay cut,” said Jason Bedford, a Singapore-based analyst, who pointed to a broader wage deflation phenomenon in China driven by “violent cuts” by the government and “market forces.” is caused. .
He added that the declines in finance were “most extreme.” “It appears to be a flattening of the wage curve,” he said. “The salaries of bank employees will not be reduced.”
The average salary of all employees at three of the brokerage firms, CICC, Shenwan Hongyuan and Huatai, increased slightly in 2023. But in all eight for which last year's data is available, wages fell by at least 9 percent compared to 2021.
At Citic, the highest-paying company, the average employee earned RMB797,000 ($110,000).
A Beijing-based banker at CICC said the pay cuts had been particularly harsh on mid-level executives compared to new graduates that major brokerages are competing for, as well as more established and senior managers.
He added that continued wage cuts were in line with the general mood at China's central financial work conference in October, chaired by Xi. “You have to listen to the calls of the party,” he said.
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Citic, CSC Financial, CICC, Huatai and Guotai Junan did not respond to requests for comment.
Company financial disclosures provide little context for the salary cuts, although Guotai Junan Securities cited a 2015 Shanghai government statement on “deepening reform of the compensation system for heads of state-owned enterprises” that said bonuses would be deferred.
The Securities Association of China issued its “Guidelines for Securities Companies on Establishing a Robust Remuneration System” in 2022. The directive does not specifically mention the need for wage cuts, but does refer to the need to “balance employee salary levels.” various contributions”.
Additional reporting by Cheng Leng in Hong Kong
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