Latest move is part of efforts to establish a modern corporate system and push forward reform of income distribution

China's leaders have decided to cut the hefty salaries and restrict the expense accounts and other perks of top executives at large State-owned enterprises. During a meeting on Friday, presided over by General Secretary Xi Jinping, the Political Bureau of the Central Committee of the Communist Party of China approved plans to reform the payment system that determines centrally administered SOE executives' salaries and the size of their expense accounts and other privileges.

China has thousands of SOEs, 113 of which are directly administered by the central authority. These SOEs are considered the backbone of the economy, but their inefficiency, monopolies in some sectors, unchecked spending and corruption have become a source of growing public complaints. Statistics show the average annual salary of executives at centrally administered SOEs ranged from 650,000 ($105,690) to 700,000 yuan in 2010 and 2011. These salaries were significantly higher than those of ordinary employees and those of government civil servants.

In addition to their high salaries, many top executives at major SOEs carry a vice-ministerial or ministerial-level administrative ranking that bring them so-called invisible income, such as transportation and communication allowances and other material benefits.

Citing a statement released after the meeting, Xinhua News Agency said that "excessive salaries will be cut to reasonable levels". And the central authorities have started soliciting public opinions on a draft rule to cut SOE salaries to around 30 percent of current levels with annual pay capped at 600,000 yuan.

The salaries of top executives at SOEs seem enormous to the majority of the public, because they may equal half the lifetime earnings that many people can expect to make. Therefore, some suggest that SOE executives should be paid at the same level as civil servants in government departments. While such a salary standard may conform to public opinion, it is not in line with a market economy.

It is not an easy job to be an SOE executive. People play different roles in society, and society needs people to play different roles. SOE executives have to integrate the conflicting roles of being an official and being a fortune-making businessperson in reality.