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China has cracked down on businesses including real estate, technology and finance.
“Now I think about it, I definitely picked the wrong sector.”
Xiao Chen*, who works at a private equity firm in Shanghai, China's financial hub, says it has been a difficult year.
For his first year on the job, he says he received nearly 750,000 yuan ($106,200; £81,200). He was sure that he would soon reach the million yuan mark.
Three years later, he earns half of what he did then. His salary was frozen last year and an annual bonus, which represented a large part of his income, disappeared.
The “glow” of the industry has worn off, he says. In the past, it had given him “a feeling of fantasy.” Today, he is nothing more than a “financial rat,” as he and his peers are mockingly called online.
China's once-thriving economy, which encouraged aspiration, is now slowing down. The country's leader, Xi Jinping, is now wary of personal wealth and the challenges of widening inequality.
The crackdown on billionaires and businesses, from real estate to technology to finance, has been accompanied by socialist-style messages about the need to endure hardship and fight for China's prosperity. Even celebrities have been asked to show off less online.
Loyalty to the Communist Party and the country, it is said, now trumps the personal ambition that has transformed Chinese society in recent decades.
Mr. Chen's posh lifestyle has certainly felt the consequences of this change of heart. He swapped his vacation in Europe for a cheaper option: Southeast Asia. And he says he “wouldn’t even think about” buying from luxury brands like “Burberry or Louis Vuitton” again.
But at least ordinary workers like him are less likely to get into trouble with the law. Dozens of financial executives and banking sector bosses have been arrested, including the former president of the Bank of China.
The industry is under pressure. Although few companies have publicly admitted it, salary cuts at banks and investment firms are a hot topic on Chinese social media.
Articles on falling wages have generated millions of views in recent months. And hashtags such as “change career in finance” and “leave finance” have been viewed more than two million times on popular social media platform Xiaohongshu.
Some financial professionals have seen their income decline since the start of the pandemic, but many see a viral social media post as a turning point.
In July 2022, a Xiaohongshu user sparked outrage after bragging about her 29-year-old husband's monthly salary of 82,500 yuan at the largest financial services company, China International Capital Corporation.
People were stunned by the huge gap between a finance employee's salary and their own salary. The average monthly salary in the country's richest city, Shanghai, was just over 12,000 yuan.
This reignited a debate about income in the industry that had been started by another online user posting his salary earlier that year.
The messages came just months after Xi called for “common prosperity” – a policy aimed at narrowing the growing wealth gap.
In August 2022, China's Ministry of Finance issued new rules requiring companies to “optimize internal income distribution and scientifically design the salary system.”
The following year, the country's top corruption watchdog criticized the ideas of “financial elites” and the “only money matters” approach, making finance a clearer target of the anti-corruption campaign. ongoing corruption in the country.
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Shanghai is a financial center and the richest city in China
The changes have happened radically but quietly, according to Alex*, a director at a state-controlled bank in Beijing, China's capital.
“You wouldn't see the written order – even if there is an (official) document, it's certainly not accessible to people at our level. But everyone knows that there is now a ceiling (wages). We just don't know how high the cap is.
Alex says employers are also struggling to cope with the pace of the crackdown: “In many banks, orders could change with unexpected speed. »
“They would release the annual guidelines in February, and in June or July they would realize that the payment of salaries has exceeded the requirements. They would then find ways to set performance goals to deduct people's pay from.
Mr. Chen says his workload has decreased significantly as the number of companies listing shares has declined. Foreign investment has declined in China and domestic businesses have also become cautious – due to the crackdown and weak consumption.
In the past, his work often involved new projects that brought in money for his company. Now his days are mostly filled with tasks like organizing data from his previous projects.
“Team morale is very low, discussions behind the bosses' backs are mostly negative. People are wondering what to do in three to five years.
It is difficult to estimate whether people are leaving the sector in large numbers, although there have been some layoffs. Jobs are also scarce in China right now, so even a lower-paying finance job is still worth keeping.
But the frustration is obvious. One Xiaohongshu user compared changing jobs to changing seats – except, he wrote, “if you stand up, you might find that your seat is no longer there.”
Mr. Chen says it's not just the authorities who have become enamored of finance workers, but also Chinese society in general.
“We are no longer wanted, even for a blind date. You'll be told not to go there once they hear you work in finance.
*The names of financial agents have been changed to protect their identities.
