The commission did not comment on the story until late that evening when a denial was issued via Xinhua. Then China Mobile refuted the story.

What actually happened, we'll never know. But the pressure on salaries at state-owned enterprises is real. But is the anger justified or is it just jealousy?

With that in mind, I studied the pay at seven companies. They include the largest players in telecommunications, power and petrochemicals and either enjoy monopoly or semi-monopoly status, and are protected by price controls or entry barriers. I shall call them the Big Seven. (see table)

By the end of 2008, employees at the seven firms were earning between 85,430 and 158,520 yuan per year. That included not just salary but also housing and retirement benefits. (I have not taken out the value of share options because they are negligible when compared with the total.)

I compared these figures with what people are earning in Beijing, Shanghai and Tianjin - the top three cities in terms of salaries in China. The per capita GDP of the cities ranges between 79,000 and 96,220 yuan. After tax, disposable income ranges between 21,430 and 28,838 yuan.

Even if you discount the pay at the Big Seven by 50 per cent to reflect the tax and non-cash compensation, it is fair to say that they are doing much better than the average citizen.

That can be justified, if they are doing a good job. But as I compared personnel expense and profit growth for the period between 2001 and 2008, I noticed that it is not the case. (I chose 2001 and 2008 because the former is the year the country ended its austerity measures, and the latter is the year with the latest available annual reports.)

With only one exception, all the companies rewarded their employees with compensation increases that are way above the growth in profit.

While coal prices have pushed the two power firms into the red, their employees enjoyed double-digit growth in compensation. Growth in oil prices and acquisitions increased the return of the petrochemical players by two to almost three-fold, while pay rose four to five times.

The exception is at the much criticised China Mobile, where per capital personnel expenses rose by only 4.9 per cent during the period. That is less than half of the profit increase.

So is China Mobile more cost conscious? Well, most SOEs tend to increase their pay significantly after the first few years of their listings because of the introduction of performance-based compensation schemes. Listed in 1997, China Mobile was no exception. But its early pay increase has not been reflected here. Mind you, its employees were already earning 137,420 yuan annually in 2001. Its 2008 pay was 2.2 per cent above its Hong Kong peer, PCCW.

Sure, the management will come up with lots of mitigating factors. The energy companies can point to rising coal costs and capped electricity prices. The petrochemical firms can blame it on the hefty monopoly tax. The phone companies can point to their loss-making historical legacy.

All these may explain what happened to profits, but not the failure to control personnel costs. Ironically, almost every increase in personnel expense is explained by either the effect of a performance-based compensation scheme, better business or the need to attract talent.

The compensation bill has been able to creep up largely unnoticed, thanks to the fever of a growing economy and the capital intensive nature of these industries. But there are increasing signs that the good days may be over. Mounting political pressures have pushed the government to check the tide, or least promise to do so.

In October last year, Sasac issued a directive for all central SOEs that links the pay of all ranks to the bottom line and other financial parameters. The Ministry of Finance issued a similar guideline for state-owned banks this week.

And in an unprecedented move, the National Development and Reform Commission this week submitted a report on SOE pay to the National People's Congress that pledged to strengthen control of non-cash benefits for employees.

Behind these moves is an increasing public distaste for SOEs - whether it is about pay, profits or land accumulated - as well as a growing doubt among officials over the long-held belief that individual reward will ensure corporate rewards. The doubt has been intensified by the fiasco they have seen in US financial institutions.

For investors, the question is whether these political pledges can actually result in a performance-linked compensation scheme that will improve efficiency - or a blind cut that will turn talent away.