China's Finance Industry Crackdown: How High-Flyers Became ‘Finance Rats’

The glamour and allure of China’s finance industry, once a symbol of prosperity and success, is fading fast. As the country’s economic policies shift towards curbing inequality and promoting collective prosperity, finance professionals are finding themselves at a crossroads. Once high-flyers, many have become known as “finance rats,” a term that captures both the diminishing prestige and the growing disillusionment in the sector.

The Decline of Prosperity

Xiao Chen, a private equity professional working in Shanghai, is a prime example of this shift. When he first entered the finance sector, he was making close to 750,000 yuan annually, with hopes of reaching the million-yuan mark soon. But just three years later, his income has dropped by 50%, and bonuses, which once significantly boosted his earnings, have all but disappeared.

“The glow of the industry has worn off,” Xiao reflects. “I definitely chose the wrong industry.” This sentiment is increasingly common among finance workers, who once reveled in the prestige of their jobs but now find themselves struggling to maintain their previous lifestyles.

The downturn is not an isolated issue; it reflects broader economic challenges in China. The government, under President Xi Jinping, has implemented stricter controls on wealth accumulation in response to growing inequality. Crackdowns on billionaires and businesses across key industries, including finance, technology, and real estate, have become part of the administration’s broader push for “common prosperity.”

Changing Lifestyles and Growing Scrutiny

For Xiao, this policy shift has had tangible effects on his day-to-day life. Once a frequent traveler to Europe, he now opts for more affordable trips to Southeast Asia. Luxury brands such as Burberry and Louis Vuitton, once his go-to choices, are no longer part of his shopping list. His peers are also cutting back, as pay cuts become more common across the finance industry.

However, finance workers like Xiao can consider themselves lucky compared to others in the sector. The Chinese government’s crackdown has not only affected wages but also led to the detention of high-ranking finance officials. Dozens of executives, including the former chairman of the Bank of China, have been detained as part of the country’s ongoing anti-corruption efforts.

This heightened scrutiny has sent a clear message: the days of unchecked wealth accumulation in China’s finance industry are over. The crackdowns have also sparked widespread unease among finance professionals, with discussions about pay cuts and layoffs spreading rapidly across social media platforms.

Social Media Buzz and Public Sentiment

Social media, particularly the platform Xiaohongshu, has become a hotbed of discussion regarding the downturn in China’s finance industry. Hashtags such as “changing career from finance” and “quitting finance” have garnered millions of views as finance professionals express frustration over their shrinking salaries. A viral post in July 2022 from a Xiaohongshu user, boasting about her husband’s monthly salary of 82,500 yuan, further inflamed public sentiment.

This post highlighted the stark income disparity between finance workers and average citizens, reigniting debates about pay equity. In Shanghai, China’s wealthiest city, the average monthly wage is just over 12,000 yuan, a far cry from the earnings of top finance professionals. These discussions have come to symbolize the disconnect between China’s elite finance workers and the broader population, particularly as Xi’s administration pushes the “common prosperity” agenda.

Regulatory Changes and the Future of Finance

The discontent within the finance sector has not gone unnoticed by China’s government. In August 2022, the Ministry of Finance introduced new regulations aimed at curbing excessive salaries and promoting more equitable income distribution within firms. These rules, however, were part of a broader, more discreet crackdown on the finance industry.

Alex, a manager at a state-controlled bank in Beijing, explains that while official documents outlining salary caps are rarely distributed, employees understand that these restrictions are in place. “You won’t see an order in writing, but everyone knows there is a cap on salaries now,” Alex says. The lack of transparency surrounding these caps only adds to the uncertainty that finance workers face.

For many in the industry, the future is bleak. New projects and foreign investments have dwindled, and domestic businesses are becoming increasingly cautious. As a result, professionals like Xiao spend much of their time on administrative tasks rather than revenue-generating activities. “The morale of the team has been very low,” Xiao admits. “People are mostly talking about what to do in three to five years.”

While some workers have been laid off, leaving the industry entirely is not an easy decision. Jobs are scarce in China’s current economic climate, making even a lower-paying finance job worth keeping for many.

Shifting Cultural and Societal Attitudes

Beyond the economic impact, the crackdown has also affected the societal status of finance professionals. Once admired for their success, finance workers are now less desirable even in personal spheres. Xiao jokes that they are no longer sought after on blind dates—a far cry from the industry’s previous prestige.

The broader shift in societal attitudes mirrors the Chinese government’s emphasis on collective prosperity. The individual wealth and ambition that once defined China’s finance professionals have been replaced by a renewed focus on loyalty to the Communist Party and the country.

As China’s finance industry continues to grapple with these changes, the future remains uncertain. For now, the sector’s once-bright prospects have dimmed, leaving professionals like Xiao wondering whether they made the right career choice. Whether the current policies will pave the way for a more equitable financial landscape or further stifle individual ambition remains to be seen.