Bank managers can handle a salary cut

For years, top Chinese banking executives have made only a fraction of what their foreign counterparts earn. Some in the media believe that the central government's plan to cut executive salaries at centrally administrated State-owned enterprises (SOEs), including banks, will lead to a brain drain in the financial industry.

It seems highly unlikely, however, that bank executives will jump ship if their salaries get cut.

To begin with, bank executives already earn higher salaries than other top SOE managers.

They might make less than their foreign counterparts, but it's justifiable because Chinese banks are easier to manage than foreign banks. Unlike their foreign counterparts, Chinese bank executives don't need to assume the risk of bank failure.

In China, a banking executive can earn a high salary without being responsible for the bank's credit risks.

It is easy to see that there are tremendous differences between Chinese and foreign bank executives not just for salary but in terms of management philosophy and risk awareness.

Until Chinese bank executives take on these greater risks and responsibilities, they don't deserve the greater rewards.