Finance

Here’s what they reported: Earnings of $8.62 per share vs. $8.34 per share LSEG estimate
Revenue of $12.73 billion vs. $12.46 billion estimate

David Solomon, Goldman Sachs interview with David Faber, September 7, 2023.

Goldman Sachs said Monday that it topped profit and revenue estimates on better-than-expected fixed income results and smaller-than-expected loan loss provisions.
Here’s what the company reported:

Earnings: $8.62 per share vs. $8.34 per share LSEG estimate
Revenue: $12.73 billion vs. $12.46 billion estimate

Goldman said second-quarter profit jumped 150% from a year earlier to $3.04 billion, or $8.62 per share; the bank’s results a year ago were hamstrung by write-downs tied to commercial real estate and the sale of a consumer business.
Companywide revenue rose a more modest 17% to $12.73 billion on growth in the bank’s core trading, advisory, and asset and wealth management operations.
Fixed income was a highlight for the quarter; revenue there jumped 17% to $3.18 billion, roughly $220 million more than the StreetAccount estimate, on activity in interest rate, currency and mortgage trading markets.
Another boost for Goldman came thanks to the firm’s shrinking exposure to consumer loans: The bank’s provision for credit losses in the quarter fell 54% to $282 million; that is significantly below the $435.4 million StreetAccount estimate.
In other places, the bank was merely in line with expectations; for instance, equities trading climbed 7% to $3.17 billion, matching the StreetAccount estimate, on strength in derivatives activity.

The bank’s asset and wealth management division produced a 27% increase in revenue to $3.88 billion, also essentially matching the StreetAccount estimate, on gains in equity investments and rising management fees.
The firm’s platform solutions division saw revenue climb 2% to $669 million, edging out the $652.1 million estimate, on rising credit card balances and deposits.
But Goldman’s well-known investment banking business disappointed compared to rivals; investment banking fees rose 21% to $1.73 billion, slightly under the $1.8 billion StreetAccount estimate. The source of the miss appeared to be lighter-than-expected advisory fees of $688 million, compared with the $757.3 million estimate.
Goldman’s 21% increase in investment banking fees in the quarter compared with jumps of over 50% for both JPMorgan Chase and Citigroup; JPMorgan in particular cited a flurry of activity toward the end of the period that boosted results.
Goldman CFO Denis Coleman told reporters that the bank still had a No. 1 market share for mergers and the comparison had to do with better relative performance a year ago.
Shares of New York-based Goldman fluctuated between gains and losses of less than 1% in premarket trading.
Expectations have been set high for Goldman Sachs, with Wall Street businesses in the midst of a rebound after a dismal 2023. That’s because out of the six biggest U.S. banks, Goldman is the most reliant on investment banking and trading to generate revenue.
On Friday, rivals JPMorgan and Citigroup both topped expectations thanks to surging investment banking fees and better-than-expected equities trading results.
Bank of America and Morgan Stanley report results Tuesday.
This story is developing. Please check back for updates. More

China’s National Bureau of Statistics on Monday said the country’s second-quarter GDP rose by 4.7%.
That’s slower than the 5.3% year on year GDP increase in the first quarter.
Retail sales for June missed expectations, while industrial production figures beat.

Chinese-made cars wait to be loaded onto a ship for export at Yantai Port on July 12, 2024, in Shandong province of China.
Vcg | Visual China Group | Getty Images

BEIJING — China’s National Bureau of Statistics on Monday said the country’s second-quarter GDP rose by 4.7% year on year, missing expectations of a 5.1% growth, according to a Reuters poll.
June retail sales also missed estimates, rising 2% compared with the 3.3% growth forecast.

“We estimate that discretionary retail spending fell at the sharpest sequential pace since the April 2022 Shanghai lockdowns,” Oxford Economics Lead Economist Louise Loo said in a note.
The firm now pegs China’s 2024 GDP growth at 4.8%, higher than the 4.4% it estimated in December 2023 for the year ahead.
Industrial production year-on-year growth in June, however, beat expectations at 5.3%, compared with Reuters’ estimate of 5%. High-tech manufacturing saw an 8.8% increase in value added in June.

Urban fixed asset investment for the first six months of the year rose by 3.9%, meeting expectations. Investment in infrastructure and manufacturing slowed on a year-to-date basis in June versus May, while real estate investment declined at the same 10.1% rate.
Housing-related wealth in China rose by 2.2% in 2023, down sharply from the13% average annual pace between 2016 and 2021, Oxford Economics said in late May.

“We must work harder to invigorate the market and stimulate the internal impetus,” the bureau said in an English-language press release.
It also called for efforts to “consolidate and enhance the momentum for economic recovery and growth, so as to ensure the sustained and sound development of the economy.”
The urban unemployment rate in June was unchanged from the prior month at 5%, the bureau said. The jobless rate for people ages 16 to 24 who are not in school typically comes out a few days after the overall figure. The latest data available showed the youth unemployment rate remained high, at 14.2% in May.
For the first half of the year, average per capita disposable income for city residents was 27,561 yuan ($3,801), a nominal growth of 4.6% from a year ago, the data showed.
Rural disposable income grew at a faster rate, up 6.8% in nominal terms, but at 11,272 yuan, it was less than half that of urban residents.

No press conference

The National Bureau of Statistics did not hold a press conference for the data release. Separately, China’s high-level policy meeting, the Third Plenum, kicks off Monday.
Bruce Pang, chief economist and head of research for Greater China at JLL, said he was looking forward to how the plenary meeting can boost confidence and stabilize expectations.
More work will be needed for China to reach its target of around 5% growth, because the economy only expanded by 5% in the first half, and growth in the second half will likely be slower, he said.
China’s GDP grew by 5.3% year on year in the first quarter in real terms.
In nominal terms, GDP grew by 3.97% in the first quarter, and 4.01% in the first half of the year, according to data accessed via Wind Information.
China’s exports as a driver of growth have held up better than expected, but there are uncertainties about the future due to trade tensions, said Xu Hongcai, deputy director of the Economics Policy Commission at the China Association of Policy Science.
He said China could increase its fiscal support and ease monetary policy in the second half of the year.
China’s exports rose by a more-than-expected 8.6% from a year earlier, customs data released Friday showed. But imports fell by 2.3% year on year in June, missing expectations for slight growth.

Cosmetics sales plunge

Retail sales for the first six months of the year rose by 3.7%, with online sales of physical goods rising by 8.8%. Services sector sales rose by 7.5%.
Sales of communications equipment, sports and other entertainment goods, as well as alcohol and tobacco rose by more than 10%. Sales of grain, oil and food jumped 9.6%.
In June, the sports category saw sales drop by 1.5% from a year ago, while alcohol, tobacco and communication equipment saw sales rise.
Cosmetics product sales plunged by 14.6% year on year in June as the worst-performing category.
Catering sales rose by 5.4% in June from a year ago, for 7.9% growth for the first half of the year.
Other measures also pointed to muted domestic demand.
China’s consumer prices rose by 0.2% in June, year on year, missing expectations. Core CPI, which strips out more volatile food and energy prices, rose by 0.6% year on year in June, slightly slower than the 0.7% increase in the first six months of the year.

Weak credit demand

China’s credit data released Friday showed a sharp drop in the growth of broad money supply and new yuan loans in the first half of the year versus the same period in 2023.
Household loans increased by 1.46 trillion yuan ($200 billion) in the first six months of the year, nearly half the 2.8 trillion yuan in new loans for the category last year, according to the People’s Bank of China.
Loans to businesses increased by 11 trillion yuan in the first half of the year, slightly less than the 12.81 trillion yuan recorded for the same period last year.
“June money and credit data indicated credit demand remained weak,” Goldman Sachs analysts said in a report Friday. “The recent policy communication suggests that the PBOC continues to focus on enhancing monetary policy transmission and downplay the importance of aggregate credit growth. Looking ahead, the growth of new CNY loans and M2 may gradually slow down further.” More

Deflation measures how quickly prices are declining for consumer goods and services.
Prices have deflated for a range of items like physical goods, airfare, gasoline and some groceries since June 2023, according to the consumer price index.
One explanation: Supply and demand dynamics have normalized after being thrown out of whack during the Covid-19 pandemic.

97 / Getty

Inflation has throttled back significantly since peaking two years ago. The U.S. economy is even seeing some prices deflate for consumers.
Deflation measures how quickly prices are falling for a consumer good or service. It’s the opposite of inflation, which gauges how quickly prices are increasing.

Physical goods have accounted for much of the deflation over the past year, according to economists. This is happening as supply and demand dynamics that were thrown out of whack in the pandemic normalize.

Commodity prices (excluding those related to food and energy) — so-called “core” goods — have declined by 1.8%, on average, since June 2023, according to the consumer price index, a key inflation measure.
“We have seen core-goods deflation in quite a few categories,” according to Olivia Cross, a North America economist at Capital Economics.
“It’s quite broad based,” she added. “I think that’s something we expect to persist for a little while.”
Prices on gasoline and many grocery items have also pulled back.

However, consumers shouldn’t expect a broad and sustained fall in prices across the U.S. economy. That generally doesn’t happen unless there’s a recession, economists said.

Why prices are deflating for goods

Demand for physical goods soared in the early days of the Covid pandemic as consumers were confined to their homes and couldn’t spend on things such as concerts, travel or dining out.
The health crisis also snarled global supply chains, meaning goods weren’t hitting the shelves as quickly as consumers wanted them.
Such supply-and-demand dynamics drove up prices.

The environment has changed, though: The initial pandemic-era craze of consumers fixing up their homes and upgrading their home offices has diminished, cooling prices. Supply-chain issues have also largely unwound, economists said.
Since June 2023, consumers have seen prices deflate for goods like home furniture for a living room, kitchen or dining room (down by 4.9%), appliances (-3.6%), toys (-6%), dishes and flatware (-10.2%) and outdoor equipment like grills and garden supplies (-4.3%).
More from Personal Finance:High inflation largely not Biden’s, Trump’s fault: economistsHere’s the inflation breakdown for June 2024 — in one chartHere’s why housing inflation is still stubbornly high
Car buyers have also seen prices for new vehicles fall more than 1% and for used vehicles by roughly 10% over the past year. Vehicle prices were among the first to surge when the economy reopened broadly early in 2021, amid a shortage of semiconductor chips essential for manufacturing.
“Vehicle prices remain under pressure from improved inventory and elevated financing costs,” Sarah House and Aubrey George, economists at Wells Fargo Economics, wrote in a note this week. (Higher financing costs are the result of the Federal Reserve raising interest rates to tame inflation.)

Outside of supply-demand dynamics, the U.S. dollar’s strength relative to other global currencies has also helped rein in prices for goods, economists said. This makes it less expensive for U.S. companies to import items from overseas, since the dollar can buy more.
Long-term forces like globalization have also helped, such as importing more lower-priced goods from China, Cross said. However, a shift toward higher tariffs and less free trade could serve to push up goods prices “quite significantly,” she added.

Why there’s been deflation for food, travel, electronics

Prices have also declined for items including food, travel and electronics.
Grocery prices have fallen for items such as ham, rice, potatoes, coffee, milk and cheese, according to CPI data.
Each grocery item has their own supply-and-demand dynamics that can influence pricing, economists said. For example, apples prices are down 12% in the past year due to a supply glut, while egg prices surged in 2022 due largely to a historic and deadly outbreak of bird flu.

Gasoline prices have fallen by 2.5% in the past year. Weaker recent prices were the result of “tepid gasoline demand, increasing supply, and falling oil costs,” according to AAA.
Travelers have seen deflation for airline fares (prices are down 5.1% annually) amid factors like an increased volume of available seats. Hotel rates are also down, by 2.8%, and car rental rates by 6.3% since June 2023.

Consumers also appear to be more price sensitive, which has caused retailers to be a bit more cautious, economists said.
For example, there have been more price promotions lately at grocery stores, with a few “major retailers recently announcing price cuts that are likely to pressure competitors’ pricing,” wrote House and George of Wells Fargo.
Elsewhere, some deflationary dynamics may be happening only on paper.
For example, in the CPI data, the Bureau of Labor Statistics controls for quality improvements over time. Electronics such as televisions, cellphones and computers continually get better, meaning consumers generally get more for the same amount of money.
That shows up as a price decline in the CPI data.

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Citigroup on Friday posted second-quarter results that topped expectations for profit and revenue on a rebound in Wall Street activity.
Investment banking revenue surged 60% to $853 million, driven by strong issuance of investment grade bonds and a rebound in IPO and merger activity from low levels in 2023.
Citigroup was just this week rebuked for failing to address its regulatory shortfalls, so analysts will be keen to ask Fraser about her long-running efforts to address the issue.

Jane Fraser, CEO of Citi, speaks during the Milken Institute Global Conference in Beverly Hills, California, on May 1, 2023. 
Patrick T. Fallon | AFP | Getty Images

Citigroup on Friday posted second-quarter results that topped expectations for profit and revenue on a rebound in Wall Street activity.
Here’s what the company reported:

Earnings: $1.52 a share vs. $1.39 a share expected, according to LSEG
Revenue: $20.14 billion vs. $20.07 billion expected, according to LSEG

The bank said net income jumped 10% from a year earlier to $3.22 billion, or $1.52 a share. Revenue rose 4% to $20.14 billion.
Equities trading revenue rose 37% to $1.5 billion, driven by strength in derivatives and a rise in hedge fund balances, roughly $300 million more than the StreetAccount estimate.
Fixed income revenue dipped 3% to $3.6 billion, essentially matching analysts’ expectations, on lower activity in rates and currency markets.
Investment banking revenue surged 60% to $853 million, driven by strong issuance of investment grade bonds and a rebound in IPO and merger activity from low levels in 2023.
Shares of the bank climbed 3% in premarket trading.

“Our results show the progress we are making in executing our strategy and the benefit of our diversified business model,” Citigroup CEO Jane Fraser said in the release. “Markets had a strong finish to the quarter leading to better performance than we had anticipated.”
Citigroup was just this week rebuked for failing to address its regulatory shortfalls, so analysts will be keen to ask Fraser about her long-running efforts to address the issue.
Last year, Fraser announced plans to simplify the management structure and reduce costs at the third-biggest U.S. bank by assets. But earnings will take a backseat if the bank cannot appease regulators’ concerns about its data and risk management.  
JPMorgan Chase reported results earlier Friday, while Goldman Sachs, Bank of America and Morgan Stanley report next week.
This story is developing. Please check back for updates.
Correction: This article has been updated to correct that Citigroup reported revenue of $20.14 billion for the second quarter. A previous version misstated the figure due to a rounding error. More

JPMorgan Chase on Friday posted second-quarter profit and revenue that topped analysts’ expectations as investment banking fees surged 52% from a year earlier.
Revenue rose 20% to $50.99 billion, topping the consensus estimate of analysts surveyed by LSEG.
CEO Jamie Dimon noted in the release that his firm was wary of potential future risks, including higher-than-expected inflation and interest rates.

JPMorgan Chase on Friday posted second-quarter profit and revenue that topped analysts’ expectations as investment banking fees surged 52% from a year earlier.
Here’s what the company reported:

Earnings: $4.26 per share adjusted vs. $4.19 estimate of analysts surveyed by LSEG
Revenue: $50.99 billion vs. $49.87 billion estimate

The bank said earnings jumped 25% from the year-earlier period to $18.15 billion, or $6.12 per share. Excluding items related to the bank’s stake in Visa, profit was $4.26 per share.
Revenue rose 20% to $50.99 billion, topping the consensus estimate of analysts surveyed by LSEG, helped by better-than-expected investment banking fees and equities trading results.
CEO Jamie Dimon noted in the release that his firm was wary of potential future risks, including higher-than-expected inflation and interest rates, even while stock and bond valuations currently “reflect a rather benign economic outlook.”
“The geopolitical situation remains complex and potentially the most dangerous since World War II — though its outcome and effect on the global economy remain unknown,” Dimon said. “There has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world.”
Shares of JPMorgan slipped 1% in premarket trading.

A rebound in Wall Street activity, especially on the advisory side, was expected to aid banks this quarter, and JPMorgan’s results bear that out.
JPMorgan reaped $2.3 billion in investment banking fees, exceeding the StreetAccount estimate by roughly $300 million.
Equities trading revenue jumped 21% to $3 billion, topping the estimate by $230 million, on strong derivatives results. Fixed income trading jumped 5% to $4.8 billion, matching the estimate.
But the bank had a $3.05 billion provision for credit losses in the quarter, exceeding the $2.78 billion estimate, which indicated that it expects more borrowers will default in the future. A rise in charge-offs and moves to build loan loss reserves in the quarter was driven by the firm’s massive credit-card business, the bank said.
“JPMorgan has navigated a challenging interest rate environment very well,” said Octavio Marenzi, CEO of consulting firm Opimas.
Still, while banking and equities trading boosted results, “We see Main Street banking beginning to sputter,” Marenzi said. “Provisions for credit losses were up significantly, showing us that JPMorgan is expecting to see a rough patch in the US economy.”
Wells Fargo and Citigroup also posted earnings Friday, while Goldman Sachs, Bank of America and Morgan Stanley report next week.
This story is developing. Please check back for updates. More

In the second quarter, Wells Fargo recorded $11.92 billion in net interest income, a key measure of what a bank makes on lending, marking a 9% year-over-year decline.
That was below the $12.12 billion expected by analysts, according to FactSet. The bank said the drop was due to the impact of higher interest rates on funding costs.
Wells Fargo’s second-quarter earnings and revenue exceeded Wall Street expectations.

Wells Fargo on Friday reported a 9% decline in net interest income, even though its second-quarter earnings and revenue exceeded Wall Street expectations.
Here’s what the bank did compared with Wall Street estimates, based on a survey of analysts by LSEG:

Earnings per share: $1.33 versus $1.29 cents expected
Revenue: $20.69 billion versus $20.29 billion expected

The San Francisco-based lender recorded $11.92 billion in net interest income, a key measure of what a bank makes on lending, marking a 9% year-over-year decline. That was below the $12.12 billion expected by analysts, according to FactSet. The bank said the drop was due to the impact of higher interest rates on funding costs.
Shares of Wells Fargo fell more than 5% in premarket trading.
“We continued to see growth in our fee-based revenue offsetting an expected decline in net interest income,” CEO Charlie Scharf said in a statement. “The investments we have been making allowed us to take advantage of the market activity in the quarter with strong performance in investment advisory, trading, and investment banking fees.”
Wells Fargo saw net income dip to $4.91 billion in the second quarter, from $4.94 billion during the same quarter a year ago. The bank set aside $1.24 billion as provision for credit losses, which included a modest decrease in the allowance for those losses. Revenue rose to $20.69 billion in the quarter.
The bank repurchased more than $12 billion of common stock during the first half of 2024 and it expects to increase the third-quarter dividend by 14%.
The stock is up more than 22% this year, outperforming the S&P 500.

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Jamie Dimon, President & CEO,Chairman & CEO JPMorgan Chase, speaking on CNBC’s Squawk Box at the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 17th, 2024.
Adam Galici | CNBC

JPMorgan Chase CEO Jamie Dimon on Friday issued another warning about inflation despite recent signs of easing in price pressures.
“There has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world,” Dimon said in a statement along with the bank’s second-quarter results. “Therefore, inflation and interest rates may stay higher than the market expects.”

His comments came after this week’s data showed the monthly inflation rate dipped in June for the first time in more than four years, which fueled bets that the Federal Reserve could cut rates soon.
The consumer price index, a broad measure of costs for goods and services across the U.S. economy, declined 0.1% in June from May, putting the 12-month rate at 3%, around its lowest level in more than three years.
Fed Chairman Jerome Powell earlier this week expressed concern that holding interest rates too high for too long could jeopardize economic growth, teasing that rate reductions could be on the horizon as long as inflation continues to show progress.
Dimon joined many economists in sounding the alarm on the U.S.’ burgeoning debt and deficits. The federal government has so far spent $855 billion more than it has collected in the 2024 fiscal year. For fiscal 2023, the government’s deficit spending came in at $1.7 trillion.

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The much-anticipated policy meeting, scheduled for Monday to Thursday, is a major gathering of the top members of the ruling Communist Party of China that typically happens only once every five years.
This plenum was widely expected to be held last fall but has been delayed.
“The key challenge faced by Beijing is to find an alternative fiscal system, as the current one, which relies heavily on land sales, is under severe pressure due to the plunging land market,” Larry Hu, chief China economist at Macquarie, said in an email to CNBC.

High-rise buildings are being seen in the West Coast New Area of Qingdao, Shandong province, China, on July 6, 2024.
Nurphoto | Nurphoto | Getty Images

BEIJING — China’s real estate problems may be massive, but analysts expect the upcoming Third Plenum to focus on other areas — such as high local government debt levels and a push for advanced manufacturing.
The much-anticipated policy meeting, scheduled for Monday to Thursday, is a major gathering of the top members of the ruling Communist Party of China that typically happens only once every five years. This plenum was widely expected to be held last fall but has been delayed.

“The key challenge faced by Beijing is to find an alternative fiscal system, as the current one, which relies heavily on land sales, is under severe pressure due to the plunging land market,” Larry Hu, chief China economist at Macquarie, said in an email to CNBC.

He expects next week’s meeting to focus on fiscal reform and other structural policies. Hu pointed out that cyclical policies — which can include property — are usually discussed at more regular meetings such as that of China’s Politburo, expected in late July.
“Other than that, policymakers are also likely to reiterate [their] commitment to innovation, i.e. the so-called new productive forces,” Hu said, referring to Beijing’s push to support advanced manufacturing and high-tech.
The Central Committee of the ruling Chinese Communist Party, made up of more than 300 people including full and alternate members, typically holds seven plenary meetings during each five-year term.
The Politburo is a group of about 24 people within that committee. 

The Standing Committee of the Politburo, made up of seven key members, is the highest circle of power in China which is headed by Xi Jinping, General Secretary of the Party and President of China.

The Third Plenum, set for July 15-18, is one of the most important political meetings of the Chinese Communist Party.
Bloomberg | Bloomberg | Getty Images

The Third Plenum has traditionally focused on economic policy. Under Deng Xiaoping’s leadership in 1978,  the meeting officially heralded significant changes for the communist state, such as China’s “reform and opening.”
At next week’s plenary meeting, “the number one thing I’m looking out for is the so-called financial reform,” Dan Wang, chief economist at Hang Seng Bank (China), told CNBC.
She’ll also be watching for details around consolidation in the banking sector, as well as signals on policy around local government finances and taxes.
“For real estate markets, I don’t think it should be a focus of the plenum, because it’s already [in a] state that everyone has a consensus [on],” Wang said. “It’s in a downturn. It hasn’t reached the bottom yet.”

Links to local government finances

While pertinent to the wealth of most households in China, the property sector’s troubles are also intertwined with local government finances and their piles of hidden debt.
Local governments once relied heavily on land sales for revenue.
“In the medium and longer term, the importance of cultivating sustainable revenue sources for local governments will increase,” HSBC analysts said in a June 28 report previewing the Third Plenum.
“Broadening the imposition of direct taxes on, for example, consumption, personal income, property, etc., is often considered as a solution. Among these possibilities, a consumption tax might be the most effective,” the analysts said, noting it could incentivize local authorities to boost consumption.

We believe transitions need to be carefully designed and carried out at this juncture, considering the low confidence level in the private sector…

It’s not necessarily that straightforward to boost sentiment, however. In the weeks ahead of the plenum, Chinese stocks slipped closer to correction territory — or more than 10% from a recent high.
“We believe transitions need to be carefully designed and carried out at this juncture, considering the low confidence level in the private sector, or it may work in the opposite direction to a supportive fiscal stance,” the HSBC analysts said.
Attempts to tackle broad financial risk have prompted more restrictions on the broader banking and finance industry. Since the latest Central Committee was installed in October 2022, the Chinese Communist Party has increased its oversight of finance and tech with new commissions.
“The scale of real estate has become so large, it’s absorbed all of China’s resources,” Yao Yang, professor and director of the China Center for Economic Research at Peking University, said last month, according to a CNBC translation of his speech in Mandarin.

In his view, excessive growth of the financial sector was behind the hollowing out of the U.S. industrial sector.
“For China to compete with the U.S., we need to develop manufacturing and tech,” Yao said. “Consequently we must constrain the financial industry, including real estate. That’s the underlying reason for tightened regulations on both real estate and finance.”
Goldman Sachs analysts said in a report last month that average wages at brokerages, affecting about 0.1% of China’s urban population, fell by almost 20% in 2022 and ticked lower last year.
Together with the far larger impact of constrained local government finances, the analysts found that finance and public sector pay cuts dragged down urban wage growth by about 0.5 percentage points each year in 2022 and 2023.
Separately, China reportedly plans to limit the financial industry to an annual salary of around 3 million yuan (about $413,350) — a cap that would apply retroactively and require workers to return excess earnings to their companies, the South China Morning Post said last week, citing people familiar with the matter.
China’s National Financial Regulatory Administration did not immediately respond to CNBC’s request for comment.

Long-term goals, existing challenges

Beijing’s official announcement of the Third Plenum said leaders will discuss “comprehensively deepening reform and advancing Chinese modernization.” The readout noted China’s goals to build a “high-standard socialist market economy by 2035.”
Beijing said in 2020 such “socialist modernization” would include per capita GDP of “moderately developed countries,” an expanded middle-income group and reduced disparities in living standards.
It won’t be an easy task, especially following the shock of the Covid-19 pandemic and rising geopolitical tensions. China’s per capita GDP last year in constant U.S. dollars was $12,174 — less than one-fifth of the United States at $65,020, according to the World Bank.

It may be that a slowing economy means fewer opportunities and raises more concerns about inequality and fairness than before.

Big Data China

While income inequality is a global issue, new research indicates that people in China have become significantly discouraged by perceived “unequal opportunity.” That’s according to surveys since 2004 by teams led by Martin King Whyte of Harvard University and Scott Rozelle of Stanford University.
The latest survey found that regardless of income bracket, more respondents thought their families’ economic situation had declined in 2023 compared to prior years.
“It may be that a slowing economy means fewer opportunities and raises more concerns about inequality and fairness than before,” a summary of the survey by Big Data China said. “In other words, inequality may be more acceptable when the pie is growing very quickly, but it becomes less so when the economy falters.” More