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Chinese financial firms ask Hong Kong employees to return part of their bonuses
Some of China’s largest state-backed financial firms are urging Hong Kong officials to return part of your salaryextending President Xi Jinping’s “common prosperity” campaign to the offshore business hub. Some Hong Kong executives and even former employees of China Everbright Group and China Huarong International Holdings have been invited to return part of the previous bonus in recent months, according to people familiar with the matter who asked not to be identified discussing private information.
The recovery amounts to less than 10 percent of the bonuses of China Everbright, the main Hong Kong-listed arm of Everbright Group, one of the people said, after the central government inspected its local operations. It’s unclear how many employees will be affected by the policy and how far below the executive ranks it will extend.
The development marks an escalation of austerity efforts at state-owned financial conglomerates, which have so far mainly limited pay for mainland-based employees. Chinese bankers have come under increasing pressure in recent years as the Communist Party has tightened its control over the $66 trillion financial sector, where high salaries have also drawn public criticism during an economic slowdown.
Xi’s landmark initiative has sent shockwaves through China’s financial sector since it was implemented in 2021. Companies across China have cut salaries and asked employees to return some of their previous wages, which were now deemed too high.
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What does it mean for the world when Chinese consumers tighten their belts?
What does it mean for the world when Chinese consumers tighten their belts?
It’s unclear how many financial entities will be subject to the latest guidance. But the change could raise questions about how long Hong Kong can maintain its status as a financial hub, which has been hurt by pandemic-era travel restrictions and political unrest. It could also delay a recovery in the city’s sluggish retail sector and property market.
China Everbright and China Citic Financial Asset Management, the parent company of Huarong International, did not immediately respond to Bloomberg’s requests for comment.
China Merchants Group is also among state-owned entities that have asked some senior employees in mainland China to forgo deferred bonuses and, in some cases, return pay from previous years to comply with a pretax salary cap of 2.9 million yuan ($400,000). Several Chinese mutual fund managers have proposed capping salaries at about 3 million yuan. Some brokerages and banks have also announced pay cuts and reduced travel perks.
Vilified by Beijing as “hedonists” for their lavish lifestyles, top-earning finance workers are among those hardest hit by Xi’s push for a more equal distribution of wealth. The changes mark a dramatic shift from an era when companies handed out big salaries to attract top talent.
The move to reduce salaries comes on top of an anti-corruption effort that has involved more than 100 top bankers and regulators in the past year alone. Authorities are trying to stabilize the world’s second-largest economy and head off systemic financial risks.