In recent years, the number of employees in Chinese financial and real estate companies has significantly decreased, reflecting the collapse of the real estate market and losses caused by the regulatory crackdown by the Chinese Communist Party.
On Thursday, December 26th, the National Bureau of Statistics of the CCP released economic census data showing that by the end of 2023, there were 107,000 corporate entities in the financial industry with 12.355 million employees, representing a decrease of 21.9% and 32.0% respectively compared to the end of 2018. Over the five years, the number of employees in the financial industry decreased by over 5.8 million. In 2023, the number of employees in the development sector decreased by 27% to 2.7 million.
In recent years, the Chinese financial sector, with a size of 67 trillion US dollars, has been impacted by various CCP policy measures. The “common prosperity” movement launched in 2021 triggered tightening in the financial sector, leading to cuts in compensation and bonuses at investment banks and fund companies. Many financial industry players have come to realize that the so-called “common prosperity” may actually mean the gradual erosion of their wealth by the CCP.
According to a report by Bloomberg on September 12th, the CCP has detained investment bankers in anti-corruption operations, confiscated their passports, and required permission for travel plans and even resignation. The pressure on the 8,700-strong army of investment bankers is increasing. Employees have also been informed that regulatory bodies are scrutinizing initial public offerings (IPOs) and other fundraising activities, with investment bankers at risk of being summoned at any time.
Data compiled by Shanghai’s First Financial Summary shows that in the first quarter of 2024, the overall compensation level for securities industry employees in China continued the downward trend seen in 2023. In the first quarter, a total of 57 listed securities companies had a combined employee compensation of 120.3 billion yuan, a decrease of approximately 13% from the same period last year, which was 138.8 billion yuan.
In the first three months of 2024, major securities companies in China experienced a wave of resignations among top management and widespread salary reductions and layoffs. Securities industry leader CITIC Securities saw the largest decrease in compensation, while executives at companies like GF Securities resigned in droves.
Statistics from 42 listed banks in China show that in the first half of the year, the total number of employees decreased by about 38,000 compared to the beginning of the year. Among the 42 listed banks, 30 saw a negative growth in average monthly salary in the first half of the year, with pay cuts and staff reductions becoming the norm. Incomplete statistics show that during the 27 working days from August to early September, over 1,100 resignation announcements were issued by A-share listed companies, averaging 40 per day, with many senior executives in financial institutions resigning.
A report by BBC News in October this year highlighted the sentiments of Xiao Chen (alias), who works at a private equity firm in the financial center of Shanghai, China. Xiao Chen expressed regret, saying, “I definitely chose the wrong industry.” He mentioned that the “glory” of this industry has faded and now he and his peers are mocked online as “finance rats.”
In October, Tracy, a worker at a Beijing securities company, told Bloomberg, “We feel like rats on the street, being hit by everyone.” She added, “This country doesn’t seem to value its financial talent.”
Christopher Marquis, a professor of Chinese management studies at the University of Cambridge, commented, “This signifies a dangerous undercurrent in China’s workforce. These individuals used to be the main drivers of the Chinese economy, but their shattered dreams could lead to a broader social crisis.”
On the other hand, the actions taken by the CCP to control the heavily indebted real estate industry are also having serious consequences. Since the second half of 2021, real estate prices and sales in China have rapidly declined. Many developers are facing liquidity shortages and deteriorating balance sheets, including Evergrande Group.
In April this year, data from private think tank “Keyan” focusing on the Chinese real estate sector indicated that around 500,000 people lost their jobs as a result of the debt-laden real estate industry in China. Over 50 Chinese developers have defaulted on international debt, with more than a million homes left unfinished. Financial challenges continue for the Chinese property market, with economists predicting a decline in property prices and sales next year.
The real estate market in mainland China has been in a prolonged downturn, with a lack of confidence among potential buyers, sharp declines in house prices, and millions of unfinished properties. Economists believe that both housing prices and sales figures in China will decrease next year.