Chinese President Xi Jinping strives for economic reforms aimed at reducing income inequality and ensuring a fair distribution of wealth. His campaign, which began seriously in 2020, sought to solve issues such as excessive payment of wages, inequality of wealth and the fight against poverty. Nevertheless, recent events in the sectors of finance and technology suggest that the efforts of SI are faced with serious problems, since the reduction in wages and regulatory repressions threaten to undermine his vision of a more fair society.
One of the key pillars of the SI campaign was to solve the problem of excessive wages in the financial industry of China. The goal was to more closely agree on executive compensation with the results of the company and curb extravagant salaries and bonuses, which became the usual occurrence in this sector.
However, the implementation of these reforms was faced with resistance. Many senior leaders in state and private financial institutions saw how their income is reduced as a result of the government’s efforts to teach differences in wages. Although these measures are aimed at reducing income inequality, they expressed concern about the retention of talents and the ability of Chinese banks and financial firms to compete on a global scale.
The reduction in wages in the financial sector also raised questions about the effectiveness of the SI campaign in reducing the inequality of wealth. Although it is important to take into account excessive payment of the executive branch, it is equally important to create a system that rewards innovation and hard work, which can lead to general economic growth.
In addition to the financial sector, the Chinese technology industry was also thoroughly analyzed as part of a wider Economic Campaign of SI. The Chinese government introduced a number of regulatory measures aimed at curbing the power and influence of technological giants such as Alibaba, Tencent and Baidu.
One of the most significant events in this regard was the repression of the initial public proposal Ant Group (IPO). Ant Group, a branch of Fintech Alibaba, was ready to become the world’s largest IPO in 2020 before Chinese regulators suspended it. This step was seen as a direct challenge to the uncontrolled growth of technical giants and their charismatic founders, such as Jack Ma.
The normative actions taken against technological companies also had a direct impact on the payment of work and the general financial health of these companies. Companies such as Alibaba and Tencent, saw a decrease in promotions, which had a cascading impact on the cost of options on shares held by their senior leaders. In response, some technical leaders voluntarily took on a reduction in wages to demonstrate solidarity with their companies and employees.
Problems and consequences:
While the President SI campaign to reduce income inequality and the creation of a more fair society is boasted, it is faced with several problems in the sectors of finance and technology:
- A combination of talents: a reduction in wages and regulatory pressure in these sectors can drive away the best talents from China. High -caliber managers and technological specialists can look for opportunities in a more financially useful and less regulated environment abroad, which can potentially prevent China’s innovation and competitiveness.
- Risk aversion. Since leaders in these sectors are faced with greater uncertainty and financial pressure, they can become more prone to risk. This can suppress innovations and entrepreneurship, which are crucial for stimulating economic growth and technological progress.
- Global competitiveness: the financial and technological industry of China was key in the economic growth of the country. Restrictive measures and reduction of wages can destroy the global competitiveness of Chinese firms, especially in the technological sector where innovation is needed.
- Inequality in wealth: although the efforts of the government to combat excessive payment of the executive branch are important, they should be balanced with measures that encourage the creation of wealth and economic growth. Focusing attention exclusively on reducing differences in wages can inadvertently impede the creation of a new wealth.
The campaign of President Xi Jinping to reduce income inequality and the promotion of economic justice is a commendable goal. Nevertheless, the problems that are faced in the sectors of finance and technology emphasize the delicate balance, which should be removed between the redistribution of wealth and economic growth. Since China seeks to navigate these problems, it is important to ensure that built -in politicians inadvertently suppress innovations, entrepreneurship and global competitiveness. Ultimately, the success of the economic campaign of SI will depend on the search for a sustainable and fair way forward for the China economy.