According to Bloomberg, global banks are quietly cutting jobs in China and plan to slash more next year as bonuses are reduced.

Concerns over growth in China and cost-cutting have forced banks to cut bonuses. About 10% to 20% of the banks will pay no bonus, while over half will reduce by significant amounts. 

The dramatic shift is caused by Beijing’s zero-COVID policy and Xi Jinping’s crackdown on the private sector and offshore listings. 

Christopher Marquis, Sinyi professor of Chinese Management at Cambridge Judge Business School, told Bloomberg, “It’s clear China can switch direction and crack down quickly as has been shown in many industries in recent years.” 

The news outlet reported that banks are trying to avoid cutting jobs by narrowing the pay gap among bankers as investment deals might recover next year. 

Other banks expect 10% to 15% of the workforce will quit due to near-zero bonus pools. 

Morgan Stanley reportedly plans to cut about 50 employees in the Asia Pacific, while Goldman Sachs has already fired investment bankers in September, most of them from the Greater China area. 

Credit Suisse also has seen nearly half the senior managers gone at its China securities ventures. The troubled Swiss bank still operates in China after it reportedly reconsidered its business in the country.  

Investment funds such as Warburg Pincus and Carlyle Group have downsized their workforce in China. Carlyle Group has cut half its team in its new $8.5 billion Asia fund amid zero-Covid concerns and falling earnings. 

In addition, Hedge fund Tiger Global Management is reducing its investments in the country as it suffered heavy losses last month.

Due to Beijing’s crackdown on the tech sector, property crisis, and disruptions from Covid measures, portfolio managers of big China-focused hedge funds are reportedly reducing China’s assets and increasing non-China stocks to avoid risks in their portfolio.Last month, the South China Morning Post cited a Goldman Sachs report, saying investors might cut $100 billion to $200 billion in China’s investment in the worst case scenarios.

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