Morgan Stanley’s former China partner orders brokers to fly coach, skimp on expenses to toe the line on common prosperity

China International Capital Corp. (CICC) has scaled back travel perks for senior bankers to bring the nation’s most international brokerage in line with Xi Jinping’s “common prosperity” drive, according to an internal document seen by Bloomberg News.

The first global joint-venture investment bank in China no longer allows managing and executive directors to fly business class on international and domestic routes, and requires them to book the cheapest seats on most trains. Hotel accommodation, including taxes and breakfast, has been cut by as much as 38 per cent to 850 yuan (US$123) per day in first-tier cities, according to the document issued in the middle of last year.

Under Xi’s common prosperity campaign, China has launched a sweeping crackdown on the private sector to rein in “disorderly expansion of capital.” The nation’s biggest state-controlled securities firms and asset managers are drafting plans to narrow the compensation gap between senior and junior staff while Wall Street banks operating in the country have also been warned over lavish pay.

For Beijing-based CICC, the new travel measures reflect its commitment to “strictly implement the spirit” of government regulations and follow the expense policy of its state-owned parent company, according to the document. CICC is China’s third-biggest broker by market capitalisation.

Other big Chinese brokerages, including Citic Securities and CSC Financial, have already cut travel budget as policymakers are pressuring the biggest financial groups to reduce salaries and costs to support China’s recovery from the pandemic. Financial firms, including China’s massive sovereign wealth fund and its biggest banks, were given details on how to limit pay at the beginning of 2021 by the Ministry of Finance, people with knowledge of the matter have said.