China to curb SOE officials’ salaries
Print Edition
PARTY leaders decided yesterday to cut “excessive” salaries of executives in state-owned enterprises (SOEs).
At a meeting chaired by Chinese President and Party General Secretary Xi Jinping, the Central Committee’s Political Bureau approved plans to reform the system that determines centrally administered SOE executives’ salaries and the size of their expense accounts and other privileges.
In a statement released after the meeting, the Political Bureau said excessive salaries will be cut to reasonable levels.
It urged SOEs to improve their corporate ethics, saying that income gaps between executives and other employees, and salaries among different industries should be maintained at an appropriate level.
Ceilings will be set on SOE executives’ expense accounts and prohibitions placed on their official vehicles, offices, training, business receptions, domestic and overseas business trips and communications.
They prohibit any spending of public funds for personal purposes in a bid to stop the misuse of such funds for club memberships, health care, entertainment and anything else irrelevant to their duties.
Locally run SOEs are urged to follow suit.
China has thousands of SOEs, 113 of which are directly administered by the central authority. They are considered the backbone of the economy, but their inefficiency, monopolies in many areas, unchecked spending and corruption have long been a source of public complaint.
Statistics show that the average annual salary of executives at centrally administered SOEs were between 650,000 (US$105,800) and 700,000 yuan in 2010 and 2011.
In addition to the high salaries, what has most irritated the public has been the so-called “invisible income,” such as transport and communication allowances and other benefits that SOE officials enjoy.
Regulation of SOE salaries is not new. In an effort to narrow the widening gap between rich and poor, the government announced an income distribution reform plan in February last year.
It stipulated that SOEs had to impose ceilings on payments to state-appointed senior management as well as to ensure that the growth in senior staff salaries was slower than the average for ordinary employees.
Compared with the broadly worded income distribution plan, the latest move proposes more detailed measures to help place real restraints on high incomes, said Ding Yuanzhu, a Chinese Academy of Governance researcher.
He said that the policy was just one part of broader reforms in the SOE sector which have centered on bringing in private capital to foster modern governance and develop a mixed-ownership economy.
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