HER annual bonus was slashed by 60 per cent and her salary was frozen. Family expenses are on the rise with two kids in school. After a rough 2023, it did not take long for Gracie, who works at an investment bank in Shenzhen, to come up with her resolution for the Year of the Dragon: landing a job just across the border in higher-paying Hong Kong.

“I feel lost and I don’t see many ways out,” she said, asking to be identified only by her first name due to the sensitivity of the matter. Her biggest worry is losing her job as companies across China downsize, she said.

Vilified by Beijing as “hedonists” over their lavish lifestyles, finance workers such as Gracie are rethinking their careers. President Xi Jinping’s call for “common prosperity” has hit salaries hard and triggered belt-tightening. On top of that, a dragnet on alleged corruption has ensnared more than 100 financial and executive officials last year alone, unnerving the entire industry.

More broadly, indications are growing that Xi is shifting away from four decades of market-oriented reforms and financial innovation. The most powerful Chinese leader since Mao Zedong has emphasised the Communist Party’s “centralised and unified leadership” of the sector and pledged to build “a modern financial system with Chinese characteristics” that’s completely different from the West.

“I see a new Chinese economy coming into shape soon in which the financial sector will have only two types of players: government-run banks and government-run insurance companies,” said Zhiwu Chen, a professor in finance at the University of Hong Kong. “While it will not totally go back to its pre-1978 planned-economy mode, it will be close. Thus, China’s financial sector will not need so many professionals and many will have to find jobs elsewhere, whether there are other options or not.”

China’s economy is struggling to regain momentum as confidence has cratered among domestic consumers and international investors. Banks have been urged to step up lending, but demand is weak for new credit. The real estate market is still in a deep slump and investors have fled the stock market, wiping more than US$5 trillion off China’s markets as calls have mounted for authorities to do more to stoke the economy.

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Mike, a department head with a brokerage in Beijing, is feeling stuck as China’s sputtering economy and a broader crackdown on tech and education companies have hurt businesses across the board. Career progression within the finance sector may now hinge more on siding with the right political camp or excelling in ideology studies, rather than at one’s job, he said.

Another former bond trader at a major brokerage in China, who asked not to have his name used, said his colleagues and friends likened the message of “centralised and unified leadership” as asking the financial industry to “spit out” the money that it has made.

Top banks and brokerages have been slashing bonuses and travel perks. China International Capital cut some compensation for senior bankers by more than 40 per cent last year, while Citic Securities lowered basic salaries by 15 per cent for some staff.

At the same time, bankers and traders are being caught in an ideology push to study the top leader’s musings as Beijing elevates politics above everything else. Xi’s economic slogan for pursuing “high-quality development” signalled a desire to avoid another bout of unsustainable debt-fuelled growth, potentially squeezing profits at the financial sector.

The authorities have not held back in their critique. Last year, a 3,500-word commentary from the country’s top anti-graft watchdog called on bankers to abandon the pretence of being “financial elites” and to clean up their “hedonistic” lifestyles.

“The slogans and crackdowns are about control,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis. “Chinese leaders think control is needed to avoid financial instability and make sure lending is going into the sectors deemed important by the state such as manufacturing.”

The heated rhetoric has gone hand-in-hand with anti-graft probes that have shocked the industry. Bao Fan, one of the nation’s most well-known dealmakers, was detained last year without any official explanation and some top bank and financial executives have even been sentenced to death over the past few years.

While China has every reason to keep a tight lid on the sector to avoid systemic risks, the crackdown risks paralysing an industry badly in need of innovation. Some financial institutions, including Gracie’s brokerage, are now “lying flat” and refraining from setting long-term strategy or making big-ticket investments for fear of potential setbacks.

“You never know when authorities might come up with another campaign to regulate the finance industry, there’s no certainty,” Gracie said. “It’s better to sit tight and do nothing, than doing something that could potentially be deemed wrong.”

Broken dreams

About 80 per cent of firms in China’s banking and financial services sector have lost talent in the past six months, according to a recent survey by Morgan McKinley. The overall figure for all sectors is 78 per cent.

“Graduates may still try their hand at banking and enter internships or traineeships,” said Lei Sihui, an associate director at Robert Walters China. “The bigger problem is that not many stay after their programmes end.”

Hao, who used to work for a boutique investment fund, has become an influencer on China’s Instagram-like Xiaohongshu offering financial consulting services after quitting her job in 2022 partly due to low pay and an unstable career. She’s now earning a six-figure monthly income.

Leaving the mainland for Hong Kong or elsewhere is also difficult. Global banks have been cutting China-focused jobs for more than a year and pay for most senior investment bankers at Wall Street firms in Asia has dropped to the lowest level in almost two decades.

That means fresh graduates are now looking elsewhere for work. Emma, who majored in finance and interned at a top brokerage to start a career as an investment banker, decided instead to pursue a master’s degree in computer science at the University of Oxford.

“I don’t think I can get as well paid as before in the finance industry,” she said, also asking her full name not be disclosed. The vow to beef up the Communist Party’s leadership also signalled a policy stance to discourage financial innovations, steering her away from becoming an investment banker.

But Beijing-based Mike said that while finance is losing its allure, he’d still advise graduates to join.

While the average salaries for new hires across all sectors suffered a record drop in the fourth quarter, finance still offers some of the highest paying jobs, according to data from the online recruitment platform Zhaopin.

“I’d like to think the finance industry is still of relevance and importance,” he said. “A lean camel is still larger than a horse.” BLOOMBERG