China’s financial sector is reeling from a series of new corruption probes and a surge in surprise audits of venture funds, as President Xi Jinping sharpens his focus on an industry he sees as failing to serve the broader economy.

With Beijing’s graft-busting Central Commission for Discipline Inspection warning against “hedonism” and “high-end lifestyles”, banks have also been making deep cuts to executive pay and bonuses as former high-ranking officials come under investigation.

Since February, more than a dozen executives have been investigated or penalised as the CCDI began a fresh drive to “resolutely” fight misconduct in the sector and eradicate executives’ “wrongful pursuit” of becoming financial elites, as it put it. In the most high-profile case, Liu Liange, a former chair of Bank of China, one of the country’s biggest banks, came under investigation at the end of March.

Financiers with links to leasing deals, loans for equipment and logistics in industrial sectors, are also subject to CCDI probes. They include Cong Lin, who previously led the leasing department at Industrial and Commercial Bank of China, the world’s biggest bank. Cong joined China Renaissance in 2020 and that investment firm’s founder Bao Fan has been missing since February, believed to be in state custody.

Cong previously overlapped at ICBC with Li Xiaopeng, former chair of state-owned financial conglomerate China Everbright Group. The CCDI this month announced Li was under investigation for “serious violations of discipline and law”.

Also this month, Li Li, former Shanghai president of the Export — Import Bank of China, was charged in the south-western province of Yunnan with taking bribes equivalent to about $14mn after signing off financial leasing loans to corporates.

CCDI special inspections have extended to other institutions such as the Shanghai Gold Exchange, while venture capital investors in Beijing say they have been hit with additional tax audits as pressure on the sector broadens.

According to a Financial Times analysis of more than 20 mainland financial brokerages, about three-quarters have cut management pay in the past year. CICC, a top investment bank, slashed salaries by more than 10 per cent in 2022 while bonuses are likely to fall as much as 40 per cent, two bankers told the FT.

Financial regulators are also set to see their salaries fall after a demotion outlined in recent reforms.

Xi, who has for years warned that the financial sector should better serve “the real economy”, in October pledged that the party would deepen structural reform and “place all types of financial activities under regulation”.

Victor Shih, a professor of Chinese political economy at the University of California San Diego, said that Xi harboured deep-seated “distrust of the financial sector” and the latest campaign reflected the new Chinese leadership — selected following Xi’s successful securing of a third five-year term as party leader late last year — “flexing their muscle” over the industry.

Since assuming leadership of the party in 2012, Xi has targeted more than 4mn “tigers and flies”, or high- and low-ranking government officials, for corruption. Initially, members of China’s 100mn-strong CCP were the focus, but since 2017, the CCDI has broadened the scope to probe state-linked organisations and private-sector companies.

As Xi launched a “common prosperity” drive in 2021 against excesses and inequality in Chinese society, the watchdog spent months inspecting more than 20 financial institutions, including the central bank, the banking and insurance regulator, stock exchanges, commercial banks and asset-management companies.

Zhu Jiangnan, an expert in Chinese corruption at the University of Hong Kong, said the leadership genuinely saw a “serious problem” in the risks of financial sector corruption damaging stability.

“The party centre . . . worries that corruption in this sector, which takes many different forms and involves cadres of different levels, as well as financial agencies of different types, may jeopardise the financial safety of the country,” she added.

Additional reporting by Ryan McMorrow in Beijing