August 21, 2014 / 2:13 AM / 4 years ago

Bosses of China's state-owned firms face hefty pay cuts: paper

China's President Xi Jinping waves to the media after arriving in Venezuela at Simon Bolivar airport in Caracas July 20, 2014. REUTERS/Jorge Silva

HONG KONG (Reuters) - Senior executives of China’s state-owned enterprises (SOEs) face pay cuts of up to 50 percent under a reform plan approved by President Xi Jinping, the South China Morning Post reported on Thursday, citing sources.

China needed to speed up reforms targeting the pay of top executives at state businesses, the newspaper quoted Xi as saying at a meeting on Monday.

The Post’s sources said the salary cuts were aimed at executives at major SOEs, in particular those in finance and banking, and would be followed by gradual changes in their job responsibilities.

Senior government-appointed executives were likely join the board of directors, while day-to-day operations would be handled by senior managers hired from outside at salaries in line with international standards, the newspaper said.

The reforms are aimed at addressing public discontent over the ambiguous status of top SOE executives, some of whom get perks and privileges and are also paid like western business executives, earning more than their fellow officials, it added.

China must improve income distribution at state companies and ensure executives are not overpaid, among other things, President Xi was quoted by Xinhua as saying on Monday.

Chinese state firms - which control sectors regarded to be of vital national interest - are often criticized for being inefficient and not handing over their profits to the nation despite being generously subsidized by the state.

Reporting by Donny Kwok; Editing by Eric Meijer

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