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FT editor Roula Khalaf selects her favourite stories in this weekly newsletter.

The author is the founder and chief economist of Enodo Economics. She is also a senior fellow for Chinese economics at the Center for China Analysis of the Asia Society Policy Institute.

My friend Wang seems to have it all. A financial expert in chic Shanghai, Wang has earned his success. He was the first in his farming family to go to college; then the first to go abroad to study and work in Britain. China kept calling – his parents were desperate for grandchildren – so Wang went home to take a lucrative job in the country’s expanding financial sector.

He married his college sweetheart and this summer showed me their second child, a beautiful, roaring baby who is making Wang’s parents and his government happy. The couple can count on subsidies and cheaper child care as authorities rush to reverse the population decline accelerated by China’s previous “one-child policy.”

The People’s Republic of China has enjoyed decades of strong growth, raising living standards across the country and fueling the dreams of millions of recent graduates who aspire to follow in Wang’s footsteps. But Wang worries about supporting his growing family in an economy that has seen better days. He’s working much harder for less money as China’s leader Xi Jinping tightens his grip on the financial sector. His home is worth less and his savings are yielding next to nothing in bank deposits.

Wang, who is considering a move to Hong Kong, is one of many people in China’s financial industry who have told me they are feeling the impact of Xi’s efforts at income and wealth redistribution. There are plans to cap annual salaries at all state-backed financial institutions at around $412,000 and require retroactive repayments. Many financial firms have already cut salaries and bonuses and asked employees not to wear expensive watches and clothes at work. According to Reuters, China’s anti-corruption watchdog has vowed to eliminate the notion of a Western-style “financial elite” and correct the hedonism of excessive pursuit of “high taste.”

Of course, ambitious finance professionals in China still enjoy salaries that are hard to match in other professions. The average annual salary in Chinese cities remains below $17,000. But their grievances and the political factors behind them matter to the world: A stagnant, sullen China would weigh heavily on the global economy.

Wang’s worries about the future help explain China’s extraordinarily weak consumption, the Achilles heel of the Chinese economy. Private consumption accounts for just 37 percent of GDP, compared to 68 percent in the United States. To revive China’s flagging economic performance, higher spending is essential.

The financial sector is just Xi’s latest target, having previously cracked down on internet platform companies, the tutoring sector and the real estate sector. All of this is part of Xi’s broader mission to narrow China’s large income and wealth gap.

But Xi’s strategy can only succeed if it does not deprive the well-educated middle class of the incentive to get ahead in life. In China, the Communist Party largely determines interest rates, exchange rates and lending to companies and households. This allows it to channel people’s savings to those parts of the economy that serve its interests the most. It can also push bank deposit rates below the inflation rate, thereby punishing savers. And through capital controls, it prevents people from investing much of their money abroad.

These and other measures are making it difficult for Chinese households to grow their wealth and earn a decent income from their assets. Most of China’s wealth is invested in real estate, so the collapse in house prices is a major drag on household wealth. And the stock market in China is still more of a casino than a trustworthy investment alternative. The result is that households are saving more for rainy days.

The Communist Party’s third plenum in July, which set economic priorities for the next five years, did indeed produce some good policies that support the consumer. Promises to give equal status to undocumented migrant workers, improve medical and social security, and reduce education costs are all welcome. But the plenum was silent on the economy’s most pressing need: a redistribution of income from businesses to households.

It is true that the government has responded by putting forward a series of plans to encourage consumers to save less and spend more. The measures include better care for the elderly, a five-year urbanization plan and continued support for a subsidy program for replacing cars and other goods with cleaner substitutes. But these measures are just a band-aid when what is really at stake is a bigger operation. They are unlikely to convince my friend Wang and consumers like him that the good times are returning.