When the US people blame AIG which paid its executives 165 million US dollars, what will China, which is haunted by the same problem, plan to do?

Though previously the Ministry of Finance of the PRC issued the relevant regulations, setting a cap on the salaries of the state-owned enterprises’ executives, most people still consider the maximum salary, which is set at 2.8 million yuan (USD 400 thousand), is still too high.

Frankly speaking, it is not surprising at all. The widening gap of the income distribution is one of the most dissatisfactory problems in China. Since the reform and opening up, Chinese people have earned more. But compared with the shocking salaries of those SOEs’ executives, it is really a matter of unworthy mark. Therefore, the limitation on the SOEs’ executives has become a sensitive topic.

We always say the salaries of enterprises’ executives shall be pegged to the enterprises’ performance. No doubt: good performance means good salaries. Such an item can be seen in nearly all the SOEs’ regulations but it just can be seen. The executives determine their salaries by themselves without consideration of the enterprises’ performance and this has not been a secret. In 2008, the state-owned Guotai Junan, though suffering drastic decline in the business performance, still gave its executives annual salaries of millions of yuan. The SOEs perform badly but their executives live a good life with the hand of national subsidies, which can not be said to be fair.

From the 1990s the SOEs began their reforms in order to build a consummate modern enterprise system. However, the right of appointing and removing the SOEs’ executives never escapes from the government’s hands. Those SOEs’ executives are mostly playing roles in the government. The political administration is closely tied with those SOEs and this phenomenon has never been really changed. This is the basic reason of the exorbitant salaries of the SOEs’ executives.

Xie Yalong, former Vice Chairman of China’s Football Association, was removed from his post in January after his so many absurd and ridiculous measures and speeches which pushed Chinese football into an embarrassing situation and angered all the Chinese football fans. But he was appointed as the executive of an SOE and his annual salary increased by nearly 2.5 times. One famous football analyst said: “making Chinese national football team lose so many games can give him such a high annual salary. That’s really admirable.”

Inefficiency doesn’t mean impoverishment. That unfair situation needs changing. After all, the phenomenon that the SOEs’ executives are also the government officials in China should be immediately and permanently changed. Only when the real professional managers system is built can the problem of the exorbitant salaries of SOEs’ executives be solved.