(Bloomberg) -- Several Chinese mutual fund managers have proposed to cap staff salaries at about 3 million yuan ($415,000), in response to President Xi Jinping’s “common prosperity” drive, according to people familiar with the matter.

Some of the firms have submitted their proposals to regulators for approval, the people said, requesting not to be named because they weren’t authorized to speak publicly. The plans are preliminary and could be subject to change. 

The China Securities Regulatory Commission didn’t immediately respond to a faxed query for comment on Friday. 

The moves follow broader decisions to cap pay and defer incentive bonuses for longer periods at other Chinese financial institutions. The sector has fallen under tighter party control, while state-owned banks have also limited compensation for staff. 

The Asset Management Association of China first asked fund houses to set up “reasonable” pay structures in June 2022 to avoid excessive rewards, following similar guidance for brokerages a month earlier. 

The proposed caps mark a drastic shift from the era where star fund managers exerted outsized influence on China’s $3.7 trillion mutual fund industry. Just a few years ago, global and local asset managers alike were competing to fight for top talent with big checks that ran in the range of tens of millions of yuan, according to local media. 

Those figures are under increasing scrutiny after mutual funds in China lost a collective 1.9 trillion yuan in the two years through 2023. 

China had 146 mutual fund firms as of the end of February. Caixin first reported on Thursday brokers and funds were planning to impose a pay cap of 3 million yuan, citing unidentified people familiar. 

--With assistance from Zhang Dingmin and Amanda Wang.

©2024 Bloomberg L.P.