By Selena Li

HONG KONG, July 29 - China's well-heeled financial dealmakers are getting a crash course in austerity with pay cuts and perks reined in, as their state-owned employers respond to Beijing's "common prosperity" drive, eight people with knowledge of the matter said.

State-owned investment banks including China International Capital Corp (CICC) and Citic Securities have implemented pay cuts this year as well as delayed bonus payments to their staff, four of the people said. The cuts, in some cases, amounted to as much as 60%, they said.

Others such as state-owned China Merchants Securities have slashed travel and entertainment allowances since the beginning of the year, two other people familiar with the matter told Reuters.

"Capping the salary of the financial industry is in line with the broad trend, and it is also part of the common prosperity drive," said Xia Chun, chief economist at wealth manager Yintech Investment Holdings in Hong Kong.

Despite China's economic slowdown, the financial sector was one of the few lucrative industries for professionals after regulatory crackdowns on two other high-paying sectors - technology and property - led to job losses.

Pay cuts for investment bankers in China started last year in response to a business downturn as the economic slowed, but industry watchers said the trend has gained momentum this year under the "common prosperity" drive. That could affect talent retention at a time Western investment banks are expanding in China.

The trend of slashing salaries was reinforced after China's securities industry association urged the country's brokerages in May to set up a sound remuneration system, warning that excessive, or short-term incentives could lead to compliance risks.

The trigger was President Xi Jinping's renewed drive for "common prosperity", launched last year as an effort to reduce income inequality that threatens long-term economic growth and even the legitimacy of Communist Party rule.

Although official rhetoric on "common prosperity" may have ebbed slightly in recent months because of the slowing economy, sources said perks and pay at banks and financial companies remain under pressure.

Investment bankers are going to see a "thorough check on pay" with a spotlight on headline-grabbing remuneration, said a senior executive at a state-owned investment bank, declining to be named due to the sensitivity of the topic.

The executive said "common prosperity" was no longer a concern only for central government-owned financial firms but had trickled down to state investment banks and become the "guiding spirit" for pay talks this year.