Top executives at state-owned enterprises (SOEs) will have their salaries cut and perks reduced, the central government announced yesterday.
The reforms were passed at a Politburo meeting chaired by President Xi Jinping , who has led the campaign against extravagance.
Former premier Wen Jiabao was unable to carry out a pledge to introduce similar reforms.
Xinhua reported that the government wanted to narrow the gap between what top executives earned and the salaries of employees lower down the ladder.
A survey by the State-owned Assets Supervision and Administration Commission showed that from 2010 to 2011, the average salary level of top executives at firms it controlled was between 650,000 and 700,000 yuan (HK$817,000 and HK$880,000).
In the banking, finance and insurance sectors, top managers could command salaries of more than 2 million yuan.
Executives at SOEs controlled by the central authorities and provincial governments will be affected by the reforms.
Yesterday's announcement did not go into details, but the South China Morning Post has reported that pay cuts would be of as much as 50 per cent.
Mainland media said some may even face cuts of 70 per cent, with salaries capped at 600,000 yuan.
On top of that, the job responsibilities of government-appointed executives would also be gradually amended, with some joining their boards of directors. Day-to-day operations will be handled by senior managers recruited from outside, with salaries in line with international standards.
The model would be similar to that at the MTR Corporation in Hong Kong. The MTR is majority-owned by the government and it appoints officials to the board of directors. Daily operations are run by professional executives.
Executives will also see their perks reduced. "Absolute prohibitive provisions and caps will be set to regulate business vehicles, office buildings, training services, business entertainment, business trips and telecommunications," Xinhua reported.
Memberships of private clubs paid for by the state would also be cancelled, Xinhua said.
In an earlier article, it said: "Some executives have enjoyed privileges ranging from clothing, meals, homes and travel to recreational activities in the name of job-related expenses."