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Top executives at China’s biggest brokerages have seen their pay slashed in the past two years against a backdrop of struggling financial markets and Beijing’s efforts to reduce inequality, according to disclosures.
The top three executives at some of China’s leading state-backed brokerages, including CSC Financial, Citic, China International Capital Corporation (CICC), Huatai Securities and Guotai Junan Securities, suffered pay cuts in 2022 and 2023, according to data released by provider Wind and based on official disclosures.
Overall, nine of the top 10 brokerages by revenue recorded a fall in remuneration last year for their best-paid employees.
At CICC, the top three executives earned Rmb7.3mn ($1mn) between them last year, compared with Rmb10.9mn in 2022 and Rmb25mn in 2021. At Citic, the total was Rmb16.8mn, compared with Rmb18.3mn and Rmb33.9mn in the previous two years, respectively, while Guotai Junan saw pay go down to Rmb8mn in 2023, from Rmb9.9mn in 2022 and Rmb12.1mn in 2021.
State-backed brokerages dominate China’s vast financial markets, where western investment banks have made limited inroads in recent years and returns have disappointed at a time of weak economic momentum and low deal activity. The CSI 300 index of Shanghai- and Shenzhen-listed stocks is down nearly 40 per cent from a peak in February 2021.
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The pay data, which aligns with widespread anecdotal reports of severe cuts for senior figures in mainland financial circles, has come alongside Xi Jinping’s push for “common prosperity” and less inequality. The president has also repeatedly emphasised the importance of the “real economy” in contrast to finance and tech, as part of a campaign for “high-quality development”.
“Generally the more senior you are, the bigger the pay cut,” said Jason Bedford, a Singapore-based analyst, who pointed to a wider phenomenon of wage deflation in China driven by “forceful cuts” from the government and “market forces”.
He added that the declines were “most extreme” in finance. “It seems like a flattening of the wage curve,” he said. “Bank tellers are not having their pay cut.”
Average pay for all employees at three of the brokerages, CICC, Shenwan Hongyuan and Huatai, edged higher in 2023. But across all eight for which last year’s data is available, pay was down by at least 9 per cent compared with 2021.
At Citic, the highest-paying company, the average employee earned Rmb797,000 ($110,000).
One Beijing-based banker at CICC said pay cuts had been especially harsh on mid-level executives compared with new graduates, over whom the main brokerages compete, and more established and senior managers.
He added that continued pay cuts were in line with the general tone at China’s Central Financial Work Conference in October chaired by Xi. “You have to listen to the calling from the party,” he said.
Citic, CSC Financial, CICC, Huatai and Guotai Junan did not respond to requests for comment.
Financial disclosures from the companies provide little context for the pay cuts, though Guotai Junan Securities cited a Shanghai government opinion dating back to 2015 on “Deepening the Reform of the Remuneration System for Leaders of State-owned Enterprises”, which said bonuses would be deferred.
The Securities Association of China launched its “Guidelines for Securities Companies to Establish a Robust Remuneration System” in 2022. The policy did not explicitly mention any imperative to cut wages, but it does refer to a need to “balance the salary level of employees in different posts”.
Additional reporting by Cheng Leng in Hong Kong