smallsenior staff China’s largest investment bank has been flying economy class instead of first class in recent months. They spend less time entertaining clients and drink less (if at all) alcohol at banquets. One banker said he had been warning junior colleagues to avoid flaunting their wealth. He reported that it was for their own benefit.
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The “common prosperity” campaign launched by Xi Jinping in 2021 is about to land in investment banks. On February 23, the official anti-corruption watchdog issued a recent comment ordering financiers to crush “financial elitism, the cult of wealth and the reverence of the West”. Meanwhile, the reported disappearance of Bao Fan, a prominent banker involved in the investigation, has put the industry on edge.
Just a few years ago, a steady stream of Chinese-born, Wall Street-trained bankers was flocking from London and New York to Beijing, Hong Kong and Shanghai. Increasingly, people are swapping most of their mid-level (but sometimes senior) jobs at elite Western financial firms for better-paying roles in Chinese investment banks.
However, this trend is not just about compensation. Many bankers hope to return to their richer and more dynamic home countries after spending years abroad. Foreign financial firms were and are expanding their local offices. Nightlife, restaurants and luxury car dealerships exert their own appeal. In short, Chinese cities are ready to cater to a class of young bankers with money to burn.
Now the party is coming to an end. Even before focusing on China’s financial culture, the industry has been hit by a years-long corruption campaign against bosses. The country’s zero-coronavirus policy has prevented ambitious bankers from traveling abroad for years – forcing those who have recently returned to consider whether their future really is in China.
It is clear that the Communist Party has taken an extremely harsh approach to finance. The regulator’s critical comments directed bankers to dismiss any notions they might have of “exceptionalism, uniqueness and superiority”. At times, the document talks about finance as if it were a virus with “hidden variants” that had to be fought in such a way that “one cannot be too tired to fight”.
The detention of Mr. Bao, founder of China Renaissance, a boutique technology-focused investment bank, has also shocked local executives. His company has not been able to reach him since he disappeared in mid-February, but said it has been informed that he is cooperating with the investigation.according to wall street journalMr Bao has been detained by the same corrupt watchdog that issued recent attacks on the financial industry.
The Communist Party has already claimed to have successfully staved off the rise of a “crypto bro” culture by banning cryptocurrency trading. Some talent that would have been used to develop related products has been transferred elsewhere. Maybe Xi Jinping thinks he can do the same to a generation of West-loving, hedonistic bankers. ■
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