China cracks down on wealth flaunting, sets new rules for finance sector

In recent years, the Chinese government has increased its actions and criticism of conspicuous consumption and the flaunting of wealth on social media

China’s securities regulator is tightening its grip on the financial sector, with new draft guidelines that will penalise firms whose employees flaunt their wealth or indulge in excessive luxury. The proposed rules, published by the Securities Association of China, reflect Beijing’s ongoing effort to reshape an industry once known for its high salaries, lavish lifestyles, and speculative excesses.

 

If implemented, the revised framework will introduce stricter point deductions for firms that engage in “questionable pay incentives” or whose staff are seen displaying signs of wealth, according to Chinese financial media outlet Cailian Press.

 

The initiative is part of China’s broader “common prosperity” drive, which aims to curb income inequality and rein in industries perceived as driven by short-term profit motives.

 

 

Reining in China's finance industry

 

China’s financial sector has been under increased scrutiny in recent years, with a series of high-profile scandals fueling public criticism. In 2022, an employee at China International Capital Corporation faced suspension after his wife boasted about his high salary, more than 80,000 yuan ($11,000) per month, on social media.

 

For reference, Statista placed China's average annual salary in urban areas at around 120,700 yuan (around $16,700, with the median salary being 8,001 yuan ($1,115) per month, in 2023.

 

In another case, China Securities, a leading brokerage, was forced to manage reputational damage after an intern posted a video flaunting their wealth and leaking client information.

 

Last year, the Cyberspace Administration of China also launched a two-month social media "cleaning" process, which penalised influencers for "flaunting wealth" to attract followers.

 

President Xi Jinping has also repeatedly called for financial professionals to adopt a mindset focused on stability and long-term development rather than short-term gains. Last year, he emphasised the need for financial workers to be “honest and trustworthy” and to avoid behaviors that promote speculation and excessive risk-taking.  Also Read: Israel cuts electricity supply to Gaza to push Hamas on ceasefire, hostages

 

Pay disparities, conspicuous consumption

 

China’s crackdown on extravagant lifestyles in finance echoes concerns raised in other parts of the world. In India, former Prime Minister Manmohan Singh spoke out against excessive executive pay and conspicuous consumption. During a 2007 address to the Confederation of Indian Industry (CII), Singh urged corporate leaders to moderate their salaries and embrace social responsibility. “The better-off sections of our society must eschew conspicuous consumption and be role models of probity, moderation, and charity,” he said.

 

Singh’s stance was consistent with his long-standing economic philosophy. In 1991, while presenting India’s landmark economic reforms, he warned against the unchecked consumerism seen in Western economies. “Our approach to development must combine efficiency with austerity,” he said, arguing that a nation with severe poverty must prioritise basic needs over luxury consumption.

 

In the United States, CEO pay has also been a topic of intense debate, with executives often securing massive compensation packages regardless of company performance. Critics argue that corporate boards have become too lenient, allowing executives to secure "golden parachutes" even when they fail to deliver results.

 

Finance industry under tighter supervision

 

China’s financial industry has already seen widespread pay cuts, regulatory interventions, and layoffs as part of this broader effort to bring the sector in line with national priorities. Earlier this year, several state-backed financial institutions introduced salary caps for senior executives.

 

The updated guidelines proposed by the Securities Association of China also strengthen compliance measures and ethical oversight. Firms will face harsher penalties for reputational or risk-management failures, particularly if they lead to significant consequences. Meanwhile, chief economists who “actively communicate positive messages through state media to stabilise market expectations” will be rewarded with extra points under the new evaluation system.