European nations and China seek to curb pay for executives and bankers

Sickened by years of financial crises and reports of huge salaries and bonuses for the executives and bankers they say plunged the global economy into chaos, governments and voters around the world are moving to put the fat cats on a pay diet.

The European Union is edging closer to strict limits on bank bonuses, while even Switzerland, traditionally Europe's staunchest bastion of free market capitalism, will rein in executive pay after voters backed pay curbs in a referendum on Sunday. Other European countries are also acting to curb pay.

But while European governments - particularly Britain's - warn of an exodus of talent and capital to Asia, those looking to restrict executive pay may have a new ally rising in the East: China.

Outgoing Premier Wen Jiabao has left his successors a gift on the eve of his retirement - directives designed to ease social inequality in part through raising wages for the poor but also by limiting incomes of senior managers at state-owned monopolies. Detailed plans are being studied at ministries.

It may sound odd to compare the initiatives in China, Switzerland and the EU given their sharply different economic structures, as well as the different root causes of problems. And economists say the reasons for the initiatives have subtle but significant differences.

"The Swiss vote was triggered by widespread anger at banks rather than a general desire to tackle income inequality," unlike the case in China, said Mark Williams, chief Asia economist at Capital Economics.