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Salaries of bank executives, commodity exchanges and asset managers are among Beijing’s latest crackdowns
China’s financial sector is reeling from a series of new corruption investigations and a sudden rise in audits of investment funds, as Chinese President Xi Jinping sharpens his focus on an industry he sees as failing to serve the broader economy.
And with Beijing’s Central Commission for Discipline Inspection (CCDI) warning against “lives of pleasure” and “high lifestyles”, banks have also made significant cuts to executive salaries and bonuses while former high-ranking officials are under investigation, according to the company. Financial Times, and Al Arabiya.net reviewed it.
Since February, more than 10 of the executives have been investigated or punished. In the most high-profile case, Liu Liang, former chairman of the Bank of China, one of the country’s largest banks, came under investigation at the end of March.
Financiers involved in financial leasing deals, equipment loans and logistics services in industrial sectors are also subject to CCDI investigations. Among them is Kong Lin, who previously headed the leasing department of the Industrial and Commercial Bank of China ICBC, the world’s largest bank.
Kong joined the “China Renaissance” company in 2020, and the founder of the investment company, Bao Fan, has been missing since February and is believed to be in state custody.
Previously at ICBC, Kong intertwined with Li Xiaopeng, former chairman of the state-owned financial group China Everbright Group. CCDI announced this month that Lee was under investigation for “serious breaches of discipline and law.”
Also this month, Li Lei, the former head of the Export-Import Bank of China in Shanghai, in the southwestern province of Yunnan, was charged with taking bribes equivalent to about $14 million after signing finance lease loans for businesses. The Central Anti-Corruption Commission said on Sunday it had also launched a new round of inspections of more than 30 state-owned groups in sectors including finance, defense and energy.
CCDI’s inspections have extended to other institutions such as the Shanghai Gold Exchange, while investors in Beijing say they have come under additional tax scrutiny as pressure spreads on the sector.
According to a Financial Times analysis of more than 20 mainland brokerage firms, some 75% cut management salaries last year. Two bankers told the newspaper, “CICC – one of the largest investment banks – will cut salaries by more than 10% in 2022, while bonuses are likely to drop by up to 40%.
Xi, who has warned for years that the financial sector should better serve the “real economy”, vowed in October that the party would deepen structural reform and “put all kinds of financial activities under regulation”.
An expert on Chinese corruption at the University of Hong Kong, Zhou Jiangnan, said the leadership honestly saw a “serious problem” in the risks of corruption in the financial sector harming stability.
