One of China’s best-known finance professors had a surprising call for the country’s next generation of bankers when they graduated this summer: there was no need to be ashamed of their choice of profession.
“Some people have started to think that the finance industry is worthless because it does not seem to involve hardcore technology, or because it supposedly creates unnecessary transactional costs,” said Li Feng, deputy dean of Shanghai Jiao Tong University’s Advanced Institute of Finance, in a hall filled with 800 finance graduates.
“Some of our alumni have even developed a sense of shame about their profession . . . but that mindset needs to be corrected,” Li said in July, adding that bankers should instead feel “deeply proud” of their work.
Like their counterparts worldwide, China’s finance professionals once viewed their career as a source of prestige, their salaries among the highest in the country. Star bankers such as Bao Fan rivalled their Wall Street peers, in terms of public profile and remuneration, epitomising the rise of finance and tech and the Chinese economy’s transformation.
But the government has in recent years increased scrutiny of the sector, initially in the guise of an anti-corruption crackdown. It has also favoured “real economy” sectors such as manufacturing.
Bao Fan’s disappearance and suspected detention last year has cast a long shadow on the sector. China’s President Xi Jinping has repeatedly emphasised the importance of “new quality productive forces” as part of a nationwide campaign for what he calls “high-quality development”.
Bankers have also been under fire as Xi has pushed for “common prosperity”, an ideological campaign against inequality and the financial elite’s excesses. Finance professionals have faced pay cuts and in some cases have had their bonuses clawed back.
All of this has cast a long shadow over the next cohort of finance professionals. “That leads to a drop in talent studying the discipline,” said Kelvin Lam, senior China economist of Pantheon Macroeconomics. “Students who have a basic understanding of where the [Communist] party direction of economic policy is heading will study a discipline that gives them better economic prospects.”
Pay in general remains high — average annual pay at brokerage Citic Securities was Rmb797,000 ($112,000) in 2023, compared with the urban average of Rmb120,698.
But once among the most sought-after fields, finance and economics are no longer the top choice for China’s brightest students. The minimum entrance exam score required for high school students in affluent Zhejiang province to enter finance studies at Shanghai University of Finance and Economics fell this year by 11 points from a year ago to 668, a reflection of lower demand.
Scores for economics and finance studies at Peking University, one of the country’s most prestigious institutions, have also fallen far below levels seen a decade ago even as overall student numbers have grown.
By comparison, the points required for computer science and pharmaceuticals have risen. “The pay caps and clawbacks clearly dull incentives in the venture capital industry, and may push high-skilled talent away,” Christopher Beddor, analyst at Gavekal Dragonomics, said in a recent note.
Some finance and economics students are trying to diversify their skillset by gaining hands-on experience in other careers such as gaming or tech through internships, positions that are now just as competitive as full-time roles.
Others are heeding their parents’ advice to pursue civil service exams. “The crackdown will reduce the overall profitability of the industry,” said Weng, a 47-year-old Shanghai-based lawyer who said he would not recommend finance as a career to his son. “If I were an employer, I’d keep veteran staff and hire new graduates only if they could bring in new business.”
Even those sticking with finance are proceeding cautiously. “Everyone is flocking to roles in relatively stable state banks, state-owned and central enterprises, which are now considered more stable, especially when the finance industry is in turmoil,” said a finance graduate from Tsinghua University in Beijing who did not want their name published.
Steven Yang, a 24-year-old who studied mathematics in Shanghai, secured an internship at a brokerage this summer but was unable to land a permanent job. In China’s shrinking financial sector, only those from the best universities are landing positions. “My mentor said there were no openings for me in the market downturn,” Yang said.
Rui Pang, a student at Renmin University in Beijing, is reassessing his future.
“I chose finance because it genuinely interests me. However, things aren’t unfolding as I had hoped. With fewer opportunities available now, I feel the need to reassess my future path,” he said, adding that he was considering pursuing a masters or doctoral degree abroad.
“I might focus on emerging markets like the Middle East or south-east Asia first, and return to the China market when it recovers,” Rui said. “I just might go wherever has the best opportunities. Finance students should have a global view.”
Patrick Liu, who studied statistics, is still hopeful about a future in finance. He wants to become a quantitative strategist at a mutual fund.
“I know that the financial industry is experiencing pay cuts and very juan at the moment,” Liu said, using a term that refers to the intense competition within the finance industry. “But I’m an optimist. Who’s to say the environment won’t improve overnight? For now, I’d rather lower my expectations and be content with what I have.”
Additional reporting by Joe Leahy in Beijing
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