Her annual bonus was slashed by 60 percent and her salary was frozen. Family expenses are on the rise with two kids in school. After a rough last year, it did not take long for Gracie, who works at an investment bank in Shenzhen, to come up with her resolution for the Year of the Dragon: landing a job just across the border in higher-paying Hong Kong.
“I feel lost and I don’t see many ways out,” she said, asking to be identified only by her first name due to the sensitivity of the matter. Her biggest worry is losing her job as companies across China downsize, she said.
Vilified by Beijing as “hedonists” over their lavish lifestyles, finance workers like Gracie are rethinking their careers. Chinese President Xi Jinping’s (習近平) call for “common prosperity” has hit salaries hard and triggered belt-tightening. On top of that, a dragnet on alleged corruption has ensnared more than 100 financial and executives officials last year alone, unnerving the entire industry.
Illustration: Yusha
More broadly, indications are growing that Xi is shifting away from four decades of market-oriented reforms and financial innovation. The most powerful Chinese leader since Mao Zedong (毛澤東) has emphasized the Chinese Communist Party’s (CCP) “centralized and unified leadership” of the sector and pledged to build “a modern financial system with Chinese characteristics” that is completely different from the West.
“I see a new Chinese economy coming into shape soon in which the financial sector will have only two types of players: government-run banks and government-run insurance companies,” University of Hong Kong professor in finance Chen Zhiwu (陳志武) said, adding that “while it will not totally go back to its pre-1978 planned-economy mode, it will be close. Thus, China’s financial sector will not need so many professionals and many will have to find jobs elsewhere, whether there are other options or not.”
China’s economy is struggling to regain momentum as confidence has cratered among domestic consumers and international investors. Banks have been urged to step up lending, but demand is weak for new credit. The real estate market is still in a deep slump and investors have fled the stock market, wiping more than US$5 trillion off China’s markets as calls have mounted for authorities to do more to stoke the economy.
Mike, a department head with a brokerage in Beijing, is feeling stuck as China’s sputtering economy and a broader crackdown on tech and education companies have hurt businesses across the board. Career progression within the finance sector might now hinge more on siding with the right political camp or excelling in ideology studies, rather than at one’s job, he said.
Another former bond trader at a major brokerage in China, who asked not to have his name used, said his colleagues and friends likened the message of “centralized and unified leadership” as asking the financial industry to “spit out” the money that it has made.
Top banks and brokerages have been slashing bonuses and travel perks. China International Capital Corp cut some compensation for senior bankers by more than 40 percent last year, while Citic Securities Co lowered basic salaries by 15 percent for some staff.
At the same time, bankers and traders are being caught in an ideology push to study the top leader’s musings as Beijing elevates politics above everything else. Xi’s economic slogan for pursuing “high-quality development” signaled a desire to avoid another bout of unsustainable debt-fueled growth, potentially squeezing profits at the financial sector.
The authorities have not held back in their critique. Last year, a 3,500-word commentary from the country’s top anti-graft watchdog called on bankers to abandon the pretense of being “financial elites” and to clean up their “hedonistic” lifestyles.
“The slogans and crackdowns are about control,” Natixis SA chief Asia-Pacific economist Alicia Garcia Herrero said. “Chinese leaders think control is needed to avoid financial instability and make sure lending is going into the sectors deemed important by the state such as manufacturing.”
The heated rhetoric has gone hand-in-hand with anti-graft probes that have shocked the industry. Bao Fan (包凡), one of the nation’s most well-known dealmakers, was detained last year without any official explanation and some top bank and financial executives have even been sentenced to death over the past few years.
While China has every reason to keep a tight lid on the sector to avoid systemic risks, the crackdown risks paralyzing an industry badly in need of innovation. Some financial institutions, including Gracie’s brokerage, are now “lying flat” and refraining from setting long-term strategy or making big-ticket investments for fear of potential setbacks.
“You never know when authorities might come up with another campaign to regulate the finance industry, there’s no certainty,” Gracie said. “It’s better to sit tight and do nothing, than doing something that could potentially be deemed wrong.”
About 80 percent of firms in China’s banking and financial services sector have lost talent in the past six months, a recent survey by Morgan McKinley Ltd showed. The overall figure for all sectors is 78 percent.
“Graduates may still try their hand at banking and enter internships or traineeships,” Robert Walters China associate director Lei Sihui said, adding that “the bigger problem is that not many stay after their programs end.”
Hao, who used to work for a boutique investment fund, has become an influencer on China’s Instagram-like Xiaohongshu offering financial consulting services after quitting her job in 2022 partly due to low pay and an unstable career. She is now earning a six-figure monthly income.
Leaving China for Hong Kong or elsewhere is also difficult. Global banks have been cutting China-focused jobs for more than a year and pay for most senior investment bankers at Wall Street firms in Asia has dropped to the lowest level in almost two decades.
That means fresh graduates are now looking elsewhere for work. Emma, who majored in finance and interned at a top brokerage to start a career as an investment banker, decided instead to pursue a master’s degree in computer science at University of Oxford.
“I don’t think I can get as well paid as before in the finance industry,” she said, also asking that her full name not be disclosed. The vow to beef up the CCP’s leadership also signaled a policy stance to discourage financial innovations, steering her away from becoming an investment banker.
However, Beijing-based Mike said that while finance is losing its allure, he still advises graduates to join.
While the average salaries for new hires across all sectors suffered a record drop in the fourth quarter, finance still offers some of the highest paying jobs, data compiled by online recruitment platform Zhaopin Ltd showed.
“I’d like to think the finance industry is still of relevance and importance,” he said. “A lean camel is still larger than a horse.”
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