China’s securities watchdog has slashed its budget for staff compensation this year, in a sign of further pay cuts at the nation’s financial regulators after the biggest bureaucracy overhaul in decades.
The China Securities Regulatory Commission earmarked 170.3 million yuan ($24.5 million) for total staff salaries and benefits for 2023, down 17% from a year earlier, according to Bloomberg calculations based on its budget reports.
While base salaries for employees increased from a year earlier, their work subsidies, which account for more than half of total compensation, dropped 10% from 2022 to 112.4 million yuan. Overall budget for the regulator also slid 3.6% year-on-year.
The tightening came after China in March overhauled the regulatory regime of its $61 trillion financial sector, with changes including staff at the new financial authority and the securities watchdog to be paid on par with public servants. That means some officials could face pay cuts of more than 50%, people familiar with the matter had said.
The CSRC and the banking regulator had been categorized differently from government organizations in the past, giving them more leeway in paying higher salaries to employees.
Chinese authorities are on high alert to guard against major economic and financial risks this year as Beijing struggles to bring the world’s second-largest economy back on its feet. A yearlong drive to root out corruption in the financial system is showing little sign of abating, with the nation’s top anti-graft watchdog warning bankers to abandon their “hedonistic” lifestyles and pretensions of being the “financial elite.”
Still, any significant slash of compensation could run the risk of backfiring by demovitating officials and bankers on the front-line to control financial risks. Being placed in the civil service sector will also make it harder for regulators to switch jobs, since China has rules that prevent public servants from immediately joining companies under their direct supervision.
--With assistance from Kevin Ding.