China’s public sector generates 40% of the national GDP, which does not prevent it from being at the forefront. By 2020, the world’s 500 largest companies globally include 92 Chinese state-owned enterprises and 30 private enterprises, three times as many public companies. A company’s strength can be reflected in its costs. A 2018 study shows that access to short-term credit is cheaper for state-owned enterprises. They benefited from rates ranging from 5.06% to 5.17%, while the private sector ranged from 6.05% to 6.14%. The spread is the same for long-term and bonds. The public sector is advantageous, as are most, but not all, of its employees. What is the paradox?
Salaries,+51% compared to the private sector … on average
The average wage of employees of state-owned enterprises, 91607 yuan, is lower than that of foreign-owned enterprises 106,180 (about 14% lower), slightly higher than that of Hong Kong, Macao, and Taiwanese joint-stock and joint-stock companies (slightly higher) 90164, and higher than that of other private enterprises 60551 and thus higher than the national average, 75229. It is estimated that the average wage in state-owned firms is 51% higher than in private firms and 21% higher than in all sole proprietorships.
Given the more stable positions in state-owned companies, the social and security aspects, it is not difficult to understand why students are now rushing into them.
No higher salaries for “political” leaders
The Chinese banking sector is very profitable; the salary and benefits are also high. Statistics produced by China Economic Net, based on the 2019 annual report, show that the salaries and benefits of employees of the six major state-owned commercial banks range from 267,800 yuan (Agricultural Bank of China) to 375,100 yuan (Bank of Communications). The presidents of the six banks’ annual salaries range from 469,900 yuan (ICBC Chen Siqing) to 779,300 yuan (Bank of Communications Ren Deqi). ICBC is the “largest bank in the universe” with a profit of 313.4 billion yuan in 2019, but the annual salary of its president is only 1.65 times the average annual salary of the bank’s employees (285,200 yuan).
A state-owned enterprise in Chinese :
Among the Big Six banks, there is a “pay “rollover” between government-appointed “executives” with wage restraints and 1. executives from the labor market, and 2. branch managers with no wage restraints. These annual salaries (including those of financial, risk, audit, information manager, secretary of the board of directors, etc.) can exceed one million yuan. The annual salary of some provincial or foreign branch presidents is more than two million yuan.
The salary levels of the chairmen, presidents, and vice-chairmen of China’s six largest state-owned commercial banks are significantly lower – three to four times less – than those of the ten largest joint-stock commercial banks (China Merchants, Pudong Development, CITIC, Everbright, Huaxia, Minsheng, Guangfa, Xingye, Ping An and Zheshang) If we compare the six largest Chinese commercial banks with their six foreign counterparts (JPMorgan Chase, Bank of America, Citi, Wells Fargo, Goldman Sachs, and HSBC), the salaries of the president, chairman, and vice-chairman of the latter are 266 times, 225 times and 152 times higher, respectively.
The salary restrictions for government-appointed executives are probably politically motivated, to show that the state’s money is not being wasted and that it is properly managed? Is this a model of socialist management with Chinese characteristics? I don’t think so!
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10 0ctober 2020