British business in China, 1860s-1950s Jiirgen Osterhammel

7.1 Introduction The historical role of foreign business in any comparatively less developed country can be analysed from at least four different points of view. From a global perspel:tive that takes 'internatio"nal society' or the 'modern world-system' as its principal unit of reference, foreign business is one among several mechanisms which contrihute to the integration of 'peripheral' societies into universal political, economic and cultural structures as they have been shaped by Europe from the early modern period onwards. In this view, foreign business is a vehicle of general processes of system-building; its overall effects can alternatively be interpreted as inculcating modernity and accidental rationality into non· Western civilisations or as incorporating the agrarian societies of the East and South into the world-system in positions of inferiority and dependency. An imperial perspective adopts a more narrow focus. It looks out into the world from one of the dynamic capitalist centres and examines business operations in terms of the projection of metropolitan resources (people, technology, commodities, capital, ete.) into areas of the globe that have been linked up with a particular imperial system either through direct rule ('formal empire') or through indirect control ('informal empire'). In business history, this corresponds to a view from headquarters and to an analysis in terms of entrepreneurial strategies. By contrast, an expatriate perspective shifts the angle of observation to foreign enterprise 'on the spot'; it tells the story of Western firms and businessmen operating in non-capitalist or semi-capitalist economic environments and non-Western cultures. Finally, the indigenous (or host country) perspective poses the most difficult question of all, that of the 'impact' of the West on 'Third World' economies and societies. In particular it examines the ways in which various indigenous groups and classes respond to intrusion from abroad, Of course, these four approaches are by no means mutually exclusive. On the contrary, it is a challenge to historical interpretation to try to connect the different levels and perspectives in a manner that combines 190 191

empirical richness and theoretical subtlety,1 This chapter pursues Hong Kong, the out, protectorates declared and territories brought under colonial rule. By aholition of tht, Chinese monopoly, the estahlishmelH of cOIl'iular repre­ 1910, Burma, the principalities and kingdoms of Malaya and Indochina, sentation, and the fixatloll Of;l uniform and 'moder;ue' tariff. However, the Philippines, Korea, large areas in Central Asia, one Chinese province the more extravagant hopes were soon da-;hed. While the ilk-gal opium in its entirety (Taiwan), and parts of the province of Shandong had been trade cominued to grow, Wc~tern legal (r;,de, espl'l'ially that in British ahsorhed into the colonial empires of Britain, France, the United States, cotton goolh, came lip against Chinese re-;istJIH:e in various forms: ;1 Japan, Russia and Germany. They joined the old Dutch empire in the East ~imple lack of deJlland for \X.'e<;tt.'rn commodities, the re'iilience of indigt.'­ Indies. China, of course, escaped partition and wholesale occupation. In nollS trading networb,ll1gh t;1x;nion of imported goods outside the treaty this, however, it was not unique, Japan and Siam ~haring the same good ports, and a general Jefensive f(',lction whidl thl' British Wl'fC quick to fortune. China's uniqueness lies in the fact that it had been connected with denounce as Chine'il' 'xenophohia'. A second treaty settlement was the international economy long before it was incorporated, from 1842 imposed on Chill~l in 1 X~H and 1SOO: another twelvc treaty ports Wl'fe onwards, into the international political system. In a sense, this was also opened (at least on papt'r) to C01111llt'rce~ extraterritoriality W;1S extcnded; true for Japan: until about 16HO, European merchants regarded Japan as a th(' entire interior of China W;J<; made accessihle to foreign travellers; more promising trading partner than China. 1 But Japan strictly enforced ahove all, foreign shIpping wa.., !lOW allowcd to enter the rivl'f Yang;zi­ its own lieclusion,4 whert.'<1s China allowed maritime trade along its China's main artery for trafnr hetween tht, coast and the interior. south-eastern littoral, increasingly concentrated on the port of C~lIlton The years from I H60 to 18'1.~ saw the rise of Si no-Western commercial (Guangzhou), to grow into one of the most important suh-systems of the capitalism in and around the major treaty P()rtS. 12 Tht're was little change international economy in the eighteenth century, in the composition of foreign trade, opium fro!11 India continuing to he the By 1715 the commercial mechanisms of the Canton trade had been leading Import Item IIntil 1890, with tea and silk contrihllting the hulk of estahlished In their basic form. \ On the Chinese side foreign trade was China's exports, The import of cotton pi('ce goods increased considerahly, conducted as 'administered' trade - in the words of a modern historian, hilt the allegedly limltle" potential of the Chinese market for the sale of 'perhap~ the most efficient mechanism for exchange between societies that European manufactured goods was still not realised, By 1 H96 China differed in eronomic assumptions hut were not prepared to press their absorhed (in value terms) little more than ahout HiX) of thc exports of the case against each other too vigorously'.b On the Western side, chartered British cotton industry compared to 2T~(l for India. 11 Still, the entire 192 19., foreign trade of China was handled by foreign firms, and the most period were those sponsored oy high Chinese officials as part of their important of them were British. Throughout the I H60s opiulll \l,Ias the programme of 'sdf-strengtheTliTlg'~!4 they relied heavily on imported mainstay of their bll'iinl'~s.14 In the 1X70s, the largest firm'i rt.'duced their machinery and raw materials and on the highly paid services of Western drpendencc 011 opium and began their transformation into managing experts - some of them of duhiolls qualifications. H Western firms did not agencies in\.Tt·a~ingly concerned with auxiliary services - shipping, insur­ regard these official ventures ;1S serious comretition. They rather sought ance, banking and treaty port utilities.I'i The buying and selling of to cooperate with those factions within the Chinese bureaucracy that were commodities was downgraded to one of several line~ of husincss; it was inclined towards development and modernisation, sometimes, as in the increasingly done on commission rather than on the firm's own account. case of Jardine Matheson, eager to attain the position of a 'special agent to When large companies, such as the old opium traders Jardine Matheson the Chinese goverlllnent'.lf, & Co. and Dent & Cn., del.:ided to diversify, this was partly in response to By the mid-1890s the structural foundations had been laid for the growing competition in the old lines of trade. The improvement of further expansion of British nusiness in China: the legal framework of the overseas comlllunication, especially after the introduction of the telegraph unequal treaties had heen worked out; the instruments of foreign influ­ in the 187()s,lf> and the easier availahility of credit due, among other ence and coercion, ranging from consular networks to gunboat fleets I had fa(tors, to the founding of 'local' hanks, above all the Hongkong and been deployed; a few old-established British firms had managed to Shanghai Banking Corporation (1866),17 attracted a multitude of adven­ transform themselves from opium-trading agency houses to widely diver­ turOll,) hllSillc'ismen. In the 1H90s there were about 400 British firms in the sified managing agents and were ready to take the next step towards being treaty ports.'~ Only a handful of them, however, extended their activities fully developed investment groups;17 several other large companies had heyond Shan~hai and Hong Kong and engaged in mass distrihution of entered China after 1860, most prominent among them Butterfield & goods; the majority catered to the needs of Europeans and wealthy Swire (1867); banking and insurance requirements could be met by Chinese in the treaty ports. facilities specifically tJilored to local needs. Cooperation at various levels EHn tho~e British firms which, in the nineteenth century. estahlished with Chinese merchants had hl"l'n practised and routiniscd to the extent of agencies outside Shanghai and Hong Kong seldom managed to assume the emergence of a kind of symhiotic Sino-foreign commercial capitalism; direct control of 'up-country' trade for any length of time. The distri­ the Imperial Maritime Customs had been thoroughly reorganised from hmion of cotton imports remained firmly in Chinl'se hands, I~ and the 1861 onwards by the energetic Ulsterman, Sir Robert Hart;!K the main foreign exporters of tea and silk received the finished product through shipping routes in ocean traffic as well as in Chinese coastal and inland long chains of indigenous middlemen.liJ The China market not only waters had been explored and were now regularly used by steamships proved remarkably resistant to penetration by foreign business organi­ under the British flag;'· finally, Shanghai had outstripped all the other sations, hut the Chinese also quickly learned to seize the new opportuni­ treaty ports and had evolved into a second centre, next to Hong Kong, of ties. from the very beginning of treaty port trade, Western merchants had the British mercantile system in China. However the disproportionate to rely on the expertise and the husiness connections of their Chinese growth of the expatriate communities of Shanghai, and the increasing (-ompradores. These compradores and their associates soon began to invest concentration of foreign husiness there at the expense of treaty ports like in foft·jgn firms, thu" benefiting. among other things, from extraterritorial Hankou or Fuzhou. was a symptom of the difficulties in penetrating or protection. A considerahle number of small Briti,.,h companies virtually replacing the commercial institutions of a tightly organised pre-modern suhsisted on Chinese credit and most of the large muhi-functional China society. hOlll)e') took Chinese capital into partnership.11 Several of the early industrial ventures initiated hy foreigners were also 7.3 Completing the system, 1895-1914 supported by Chinese investors. For example, Jardine Matheson's 'Ewo 'ilk Filature', opened in Shanghai in 1882, was financed 40% by foreign Imperialism in China was never the unchallenged domain of anyone Jnd 60% oy Chinese capita1.11 In general, there was little foreign great power_ From its very beginning in 1842, the treaty system, with the IIldustrial investment before 1895, and the shipyards, silk filatures and most-favoured-nation clause as an essential component, was a multi­ brick tea factories (the latter in Russian ownership) that had been national instrument. Even so, there can be no doubt that Britain predomi­ established III Shanghai, Hankou and elsewhere" were justly regarded as nated among the foreign powers in China - in political-military as well as illegal by the Chinese. The most spectacular industrial enterprises of the in economic terms - until the last decade of the nineteenth century_ 194 195 turn of the century. Below the level of high diplomacy, cooperation between the representatives of civilisation (including the Japanese who had heen promoted to the status of 'honorary whites', especially after their victory over RUSSia in I Y()5) W in a 'semi-barbarian' environment characterised the daily routine of foreign preponderance. Moreover, the dramatic stTlJggies between the powers during the period 1 H95-1905 soon gave way to a new unanimity and fairly dear demarcation of interests. On the eve of the First World War the governments of the major puwers and (he heads of East Asian hig husiness were looking hack at tWO decades of largely successful joint subjugation and mise en llaleur of China. During that period the emphasis shifted from trade to invl'stment. Investment in sectors of the ecollomy not immediately connected with foreign trade became the most promising form of expansion for British business in China. Investment in turn stimulated varrous new lines of trade. An increasing proportion of imports comprised equipment for the railways, factories and mines that now appeared in China. British investments in China in 1914 have been estimated at around US$600 million (equivalent of around £ 120 million), two-thirds of which were direct investments and one-third ohligations of the Chinese government. II The total was the equivalent of ahout one-third of British investments in India and Ceylon. Among non-colonial recipients of British investments in Asia, Africa and Latin Amerira, China (including the Crown Colony of Hong Kong) ranked third after Argentina (LJS$) ,550 million) and Brazil (LJS$700 million), and before Japan and Mexico (US$500 million each). 12 In other words, China received more British capital than any other Asian country except India. According to C. F. Remer's estimates, ahout US$100 million, that is, one-fourth of total British husiness investments in China, went into manufacturing. \ \ The estahlishment of manufacturing industry in the treaty ports was legalised hy the Treaty of Shimonoseki in 1895. A great variety of small industrial enterprises sprang up, but only very few large-scale British plants were constructed. Significantly, the early attempts to gain a foothold in the silk reeling industry had to be 7. J The Shanghai manager of the J-{ongkong and Shanghai Bunk abandoned and were never again revived. From around the turn of the (A. C . .Itcphm, who hccame Chief Mal1agero( the Bal1k III 192()) poses century, the silk industry was almost exclusively developed hy Chinese seated, around 191 (), '(I;th his compradore standing In'hind him. capital, although the export of silk remained entirely in foreign hands.l4 Thereafter, new power

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crell' (or In 1H9X-9, the golden yean for concession hllntcrs, British subjects 7.2 A samplmg LlIld advertising placard "('LlrerS British 41 Americafl Toha((o's Sll'a//ow "ralld at Kirm, central Mmtt"hur;d" oht;lined five COllct,s.,iOI1S and lict'nces for exploiting coal deposits. Howl'vcr, several of Ihe conces~i()naires bcked the financial resources \X:'e~tern-()wnl'd og The main effect of this arrangement was political: the Pekin of BlItt('ffield & Swirl' {'Taikoo').IH Swirl'S never wcnt into large-scale Syndicate became largely immunc to pre~sllr(' from the Henan provim:ial manufacturing in the treaty ports, preferring investmcnt in Hong Kong, government. whert.' the Taikoo Sugar Refinery wa., opened in ISH4. Originally it \\'as British control of China's 1l1o..,t importaTll modern coalminl', Kaiping intended to 'iupply sugar to Japan, Ausrralia and the United St;ltt.'s, but in Hcbei province (North China), did not ut'rive from any concession. The from 1898 China was its principal m;lTket. I~ A smaller sugar factory had Kaiping mine~ had hecn l·"tahlisht.'ll in 1878 as a semi-official company; in already heen established by .lardine Matheson in 1876. Both companies the early 18S0s they were a 'going conct'Tn'.4 7 Production expanded also possessed huge dockyards in Hong Kong: Jardine Matheson owned during the 18905; simultaneollsly the mine fell increasingly under foreign the f/ongkong and Whampoa Dock Company l.td (established in 1865) financial controlY' An outright foreign take-over was made possible in and Swires the Taikoo Dockyard (founded in 1908). In 189.\ Jardine 1900 when during the rchellion of the Yihetuan (the 'Boxers) Kaiping's 19R 199

Chinese management sought protection under the British flag. Clever Kowlooo Railway, opened to traffli.." in 1 y 10-1 I, that crossed the territory manoclIvcring on the part of two 'advisers' to the Chinese government, leased in I H9H and ended ;1t the southern tip of Kowloon peninsula. the German Gustav DetTing and the American Herhen Hoover, ensured British interests in Chinese raih.... ays w('re financial and ought to he that within months ownership of Kaiping had passed into the hands of classified as portfolio inve ... tmenh. In other words, British capital was the newly formed Chinese Engineering and Mining Co. Ltd, an Angio­ invested alongside and in various comhinations with funds from other 4 Belgian syndicate based in London. in China. Most importantly, the KMA and, to a much lesser extent, the Financial railway concessions di ffered in the tnlTIS of control ohtained smaller Pekin Syndicate were integrated into this system as suppliers of by the foreign leaders. The dlfferen..:cs were mainly in control of construc­ fuel [0 steamers and railways, power stations and steam-powered fac­ tion, control of expenditure and control of receipts. The outcome of tories. Both exported only a fraction of their output, Jnd although bargaining depended in each individual case 011 a numher of factors: foreign-produced coal was not exclusively consumed by expatriate cus­ availahil1ty of capital from altern.Hive sources, cooperation or compe­ tomt'rs, coal mining certainly fulfilled an important function in relation to tition between different foreign interests. policy and scope of action of the other British husiness interests. ~4 Chinese side (which comprised the central government as well a!i provin­ In several ways, mining and railways were closely connected. Railways cial elite groups), diplomatic support by representatives of the foreign were indispensahlt, for the tran;portation of coaL in turn, they weft' one of powers, l'tC.~:- Much more than China Navigation Company, followed by Jardine Y,-lTlg7i and Tianjin (Tient\in) in North China were ccntf('" of secondary Matheson's Indo-China Steam Navigation Company. In the early 1930s, import;lI1ce; the other trt'East India Company's exported from Britain for direct investment in China'. The growth of conservative monopoly hy private traders during the first three decades of business investments during this period was mainly due to 'local' factors, the nineteenth century, was spearheaded by the British. They organised especially the reinvestment of profits earned in the Far East. 144 Finally, the opium trade which remained the pr

7 British business in China. 1860s-t950s For a discussion of the 'level of analysis' problem in the context of theories of theories of imperialism, See J. Osterhammel, 'Semi-colonialism and Informal Empire in Twentieth-century China: Towards a Framework of Analysis', in W.]. Momrnsen and J. Osterhammel (eds.), Imperialism and After: Continui- ties and Discontinuities (London, 1986), pp. 290-] 14. 1 See G. W. Gong, The Standard of 'Civilization' in International Society (Oxford, 1984), and his 'China's Entry into International Society', in H.Bull and A. Watson (eds.), The Expansion of International Society (London, 1984), pp. 171-8]. ,1 L. Dermigny, La Chine et I'Ouident: le commerce cl Canton au X VII r sieele, 1719-1833 (ParIS, 1964), vol. I, p. 91; O.H.K. Spate, The Pacific since Magellan, vo!. 11: Monopoltsts and Freehooters (London and Canberra, 198]), p. 98. 4 On the one exception - the Dutch presence in Japan - see G. K. Goodman, Japan: The Dutch Exper;ence (London, 1986). 5 E. H. Pritchard, Ang/o-Cbinese Relations during the Seventeenth and Eighteenth Centuries (Urbana, Ill., 1929), p. 80. For a comprehensive descrip­ tion of these mechanisms see Dermigny, La Chine, especially vo!. I, pp_ 274ff, and C. J. A. Jiirg, Porcelam and the Dutch China Trade (The Hague, 1982), pp. 46-90. 6 M. Mancall, China at the Center: JOO Years of Foreign Policy (New York and London, 1984), p. 55. 7 K. N. Chaudhuri, 'The English East India Company in the 17th and 18th Centuries: A Pre-modern Multinational Organizarion', in L. Blusse and F. Gaastra (eds.l, Companies and Trade (Leiden, 1981), pp. 29-46. See also Chaudhuri's The Trading World of Asia and the English East India Company, 16611-1760 (Cambridge, 1978), especially pp. 19ff. 8 On rhi<; final phase see Hoh-cheung Mui and L. H. Mui, The Management of Monopoly: A Study of the English East India Company's Conduct of Its Tea Trade, 1784-1833 (Vancouver, 1984). 9 M. H. Hunt, The Makmg of a Special RelatIonshIp, The UnIted States and China to 1914 (New York, 198.l), pp. 8-12. to Dermigny, La Chine, vo!. Ill, pp. 1197ff. For a concise account of the China trade in the early nineteenth century see F. Wakeman, Jr, 'The Canton Trade and the Opium War', in J. K. Fairbank (ed.), The Cambridge History of China, vol. X (Cambridge, 1978), pp. 166-71. liOn these crises see W. E. Cheong, 'The Crisis of the East India Houses 1830-1R34', Rel!ue internationale de I'histoire de la banque, 9 (1974), pp, 107-_Bi Cheong, Mandarins and Merchams: Jardine Matheson & Co., a 280 2H I

China Agency of the farly Nineteenth Century (London and Malmo, 1978), a (:hinese City, 1796--1889 (Stanford, 19R4), pp. I] 1-6. Among Europeans, pp. 32-43, 87ff; T. Hamashita, 'Foreign Trade Finance in China, 1810--50', only the Russian .. managed to penetrate the Chinese countryside and to In L. Grove and C. Daniels (eds.), State and Society in China: Japanese estahlish tea facrorie .. in the interior. On the organisation of silk exports see Perspectll'f!s on Ming-Qing Social and Economic History (Tokyo. 1984), L. M. Li, China's Stlk Trade: Traditional Industry i" the Modern World, pp. 387-4.15. lR42-1937 (Camhridge, Mass., 1981), pp. 154-62. 12 See Hao Yen-p'jng, The Commercial Revolution in Nineteenth-Century 11 See T.G. Rawski, 'Chinese Dominance of Treaty Port Commerce and its China: The Rise of ,"ino-Western Mercantile Capitalism (Berkeley, Los Implications, 1860-1864', Explorations in Economic History, 7 (1970), Angeles and London, 1986). pp. 451-7]; Hao Yen-p'ing, The Comprador in Nineteenth-century China: I.l D. A. Farme, The EnglISh Cotton Industry and the World Market, 1815-1896 Bridge between Fast and West (Cambridge, Mass., 1970), pp. 154-62. The (Oxford, 1979), p. 91, Table 5. For broader discussions of China's resistance seminal research on this question was done by the eminent economic historian to foreign goods see R. Murphey, The Outsiders: The Western Experience in Wang jingyu and was first puhlished in 1965, now republished in his hook India and China (Ann Arbor, Mich., 1977), p. 99ff; S. R. Brown, 'The Sh,jiu shiji xifang Zlbenzhuyi dui ZhonRguo de jing;; qinliie {The Econ(lmic Partially Opened Door: l.imitations on Economic Changes in China in the Invasion of China hy Western Capitalism In the Nineteenth Century I (Beijing, 1860s', Modern Asian Studies, 12 (1978), pp. 177-92; and, in particular, 198.1), pp. 48.1-5.17. G. G, Hamilton, 'Chinese Consumption of Foreign Commodities: A Com­ 22 Li, China's Silk Trade, p. 16S. On this early factory see also S. R. Brown, 'The parative Perspective', American Sociological Review, 42 (1977), pp. 877-91. Ewo Filature: A Study of the Transfer of Technology to China in the 19th 14 On the opium trade of the 1850s and 1860s see E. LeFevour, Western Century', Technology and Culture, 20 (1979), pp. 550-68. Enterprise in Late Ch';ng Chitta: A Selective Survey ofJardine. Matheson and 23 For a summary of foreign direct investment in China before 1895 see S. R. Company's Operations, 1842-1862 (Cambridge, Mass., 1971), pp. 22-30. Brown. The Transfer of Technology to China in the Nineteenth Century: The The imports of opium, as registered by the Imperial Maritime Customs, Role of Foreign Direct Investment', Journal of Economic History, 39 (1979), peaked in J 879, and then slowly declined until the First World War. See Hsiao pp. 1S 1-98. For a more comprehensive sun'ey see O. E. Nepomnin, EkoNo- liang-lin, China's Foreign Trade Statistics, 1864-1949 (Cambridge, Mass., micheskaya istoriya Kitaya 1864-1894 gg. (Moscow, 1974), pp. 204-29, 1974), pp. 52-.1, Table 2. The opium trade had been legalised in 1858. and, above all, Wang jingyu, Shjjiu shiji, especially pp. 114ff. 1.) LeFevour, Western Enterprise, p. 48. 24 For an overview of these enterprises, see S. C. Thomas, Foreixn Intewention 16 J. Ahvenainen, The Far Eastern Telegraphs (Helsinki, 1981), pp. 44-5; Wang and China's Industrial Dl'IJeiopment, 1870-1911 (Boulder, Col. and London, Shu-huai, 'China's Modernization in Communications, 1860-1916: A 1984). pp. 59-108. Regional Comparison', in Hou Chi-mmg and Yu TlOng-shian (eds.), Modern 25 On the role of Western techmcal advisers sce the case-studies in T. L. Kennedy, Chinese Economic History (Taipeh, 1979), pp. 3]5-6. On the 'communi­ The Arms of Kiangnan: Moderlllzation in the Chinese Ordnance Industry, cations r!"Volution' in general see D. R. Headrick, The Tools of Empire: lR60-189S (Boulder, Col. and l.ondon, 197R). Technology and European Imperialism in the Nineteenth Century (New York 26 LeFevour, Western Enterprise, pp. 7.3-9.1. and Oxford, 1981), pp. 129ff. 27 The organisational type 'investment group' is defined and described in S. D. 17 On the Hongkong Bank as a 'local' hank see F. H. H. King, 'Establishing the Chapman, 'Bntish-based Investment Groups hefore 1914', Economic History Hongkong Rank: The Role of the Directors and their Managers', in King (ed.), Review, 2nd ser., 38 (1985), pp. 2J0-----47, and the same author's The Rise of Fastern Banking: Essays in the History of the Hongkong and Shanghai Merchant Banking (London, 1984), pp. 14U-4. Banking Corporation (London, 1983), pp. 32,39-42,57. 28 See S. F. Wright, Hart and the Chinese Customs (Belfast, 1950); L. K. Little, 18 Wu Chengming, Diguozhuyi ZaI jiu Zhongguo de touzi [Imperialist Invest­ 'Introduction', in j. K. Fairbank, K. f. Bruner and E. M. Matheson (eds.), The ment in Pre-revolutionary China] (Beljing, 1958), p. 41. I.C. in Peking: Letters of RoiJert Hart. Chmese Maritime Customs, 186R- 19 A. Feuerwerker, 'Economic Trends in the Late Ch'jng Empire, 1870-1911', in 1907, vol. I (Cambridge, Mass., 1975), pp. 7-.10. J. K. Fairbank and Liu Kwang-ching (ed,.), The Cambridge History of China, 29 On early British steamship husiness in China see Liu Kwang-ching, AnX1o- vol. XI (Cambridge, 1980), pp. 50-3. The same is true for the early twentieth American Steamship RilJalry in China. I R62-1874 (Cambridge, Mass., century, see j.Osterhammel, Britischer Imperialismus im Fernen Osten. 1962); and his 'British-Chinese Steamship Rivalry in China, 1873-R5', in Strukturen der Durchdringung und einheimischer Widerstand auf dem chine- C. D. Cowan (ed.), The Economic Development of China mId Japan: Studies 5ischen Markt 1932-1937 (Bochum, 198.1), pp. I.lJ-7. in Economic History and Political Economy (l,ondon, 1964). pp. 49-78. 20 On tea, see R. P. Gardella, 'The Boom Years of the Fukien Tea Trade', in E. R. 30 j.-P. Lehmann, The Image of Japan: From Feudal Isolation to World Power. May and J. K. Fairbank (ed'i.), America's China Trade in Historical Perspec- 18S0-1905 (London, 1978), pp. 163-7. tive: The Chinese and American Performance (Cambridge, Mass. and 31 C. F. Remer, Foreign 111llestments in China (New York, 1933), p. 361. Table London, 1986), pp. 37-49; W. T. Rowe, HankouI: Commerce and Society in 4, Remer's criterion for 'direct' investment is that 'the property remains under 282 283

foreign control and management' and that 'the business risk and, usually, the 49 Ibid., pp. 57-69, 71-4; V. Schmidt, AufRahe und Eint1uss der europiiischen legal owndshlp remain With the investor' (ibid., pp. 65 and 66, n. 14). Remer Berater ;', China: Gustav Defring (1842-19 JJ) im Dienste Li Hwzg-changs includes investments made by residents in China possessing foreign nation­ (Wieshaden, 1985), rp. 99-108; C. N. Na"h. Tht' Life of Herberl HootJer: ality. Since the legal and ethni( position of foreigners in China was dearly The blKi,zeer, 1874-1914 (New York and l.ondon, 1983), pp. 117-59; den1

104 G. A. Ha1er, 'The Chemical and Dye Trades of China', Chinese Enmomtc 121 Wllson, History of Un/leller, vol. 11, p ..~65; ICI, Annual Report for 19JR, Journal, 9 (1931), p. 984. pp. 4, 19, and Amlllai Report (or 1919, p. 18. 105 ICI Archives, Central Registry Papers, file 211-2 8/4; PRO FO 371/202571 122 See the slatistical materials in Chen Zhen (ed.), Zhongguo ;indai gongye shi F6591, Tsingtaorrsinan Intelligence Report, April-September 1936. zifiao, 2nd collection, vo!. 11, pp. 850-1,8.16-7,862,874-5; for BAT, in 106 See Cochran, Big BI/siness, pp. 61-77, 145-50, 176-95. particular, see Ymg-Mei Ylm Gongsl (as in note 9] above), vol.lV, p. 1527. 107 See Xiong fu, 'Shilun Minsheng gongsi de fazhan' I'On the Development of lL~ Wright. Coal Minmg, p. 127; Osterhammel, Britischer lmperialis/nus, the Minsheng Company'), Sichuan daxue xuebao, 1981, no. 4, pp. 34-9. p.29.1. 108 T. G. Rawski, China's Transition to Industrialism: Producer Goods and 124 Gull, British Economic Interests, rp. 198-9. Economic Dt'll elopme1tl m the Twentieth Century (Ann Arbor, Mich., 125 See G. B. Endacon, Hong Kong Fcbpse (Hong Kong, 1978), especially 19HO), pp. 7-15. pp. 69ff. For an account of the experiences of a member of staff of Jardine 109 Remer, Foreixn 1111Jestrnents, pp. 401-2; W. K. K. Chan, 'The Organi­ Mathe .. on & Co. in Japanese internment set' G. H. Gomperz, China in zational Structure of the Traditional Chinese Firm and its Modern Reform', Turmoil, 1924-i1.J4H (London, 1967). Busmess History Rel'ieH', 46 (1982), pp. 229-32. 126 A. Shai, Britain a"d China 1 941--47: imperial Momentum (London, 19R4), 110 Ih,d., p. 21.1; Berghe, L'JXe d"or, pp. 159-71. pp. 106-24. 111 See P. M. Cohlt", The Shanghai Capitalists and the Nationalist Government, 127 PRO FO J7116HH2/F846, G. V. Kitson, memo 'The British Position in 1927-1937 (Cambndge, Mass., 1980), especially chapter 8; W.e. Kirby, China', 21 January 1947; PRO fO 371/6.'413/F585 Foreign Office Indus­ Germany and Republican China (Stanford, 1984), chapters 4 and 7; A. V. trial and Economic Planning Staff, memo 'British Business Investments in Meliksetov, Byurokraticheskyi kapital v Kitae (Moscow, 1971); Bergere, China' (n.d. lJanuary 194711. L 'age d'or, pp. 208H, and her 'The Chinese oourgeoisie, 1911-37', in J. K. 128 PRO FO .HJ/53595/F6952, British Emhassy Chungking, memo, 18 April fairoank (ed.), The Camhridge History of China, vol. XII (Camhridge, 1946. 19R3), pp. H09-25. 119 School of Oriental and African Studies (London),John Swire & Sons Papers, 112 For an elaboration of this argument see J. Osterhammel, 'Imperialism in 112/20 (hox 4(7), memo 'China and Japan 1946' (n.d.). Transition: British Rmine<;<; and the Chinese Authorities, 1931-]7', China 130 Shai, Britain mId China, rp. 151-2. Quarterly, 98 (June 1984), pp. 260--86. On the differences of opinion 131 On diplomatic a'is{'ssments see D. C Wolf, '''To Secure a Convenience": among British husinessmen in China see S. L Endicoft, Diplomacy and Britain Recognizes China - 1950', Journal of Contemporary History, 18 Enterprise: BritIsh China Policy, 1933-1937 (Manchester, 1975), pp. 26ff. (19~n), pp . .302-4. See also R. Ovendale, 'Britain, the United Statrs, and the 113 See R.A. Day~r, Bankers and Diplomats in China 1917-J92S: The Anglo- Recognition of Communist China', Historical Journal, 26 (1983), American Relationship (I,ondon, 19H 1). pp. 1.19-58. 114 See E. S. K. fung, 'Th(' Sino-Bnw.h Rapprochement, 11)27-1931', Modern I n PRO FO 371/69S4S/fI74~6, llrquhart, 'Note 011 Prospects in;\ Commun­ ASlml Studies, 17 (1I)H.l), pp. 71)-105; W.R. LOUIS, British Strategy in the i'itic China', 29 November 1945. On the views among Britons in Shanghai at Far Fast, 191Y-·19J9 (Oxford, 1971), pp. 109-70; P. Lowe, Britain in the this time see also N. Barber, The Fall ofShmlf?hai: The Commm,ist Takeover Far East (London and New York, 19H1), pp. 128-35. of 1949 (London, 1979), pp. 59ff. See also the eye-witness account, LTaire, liS On Beale, see Osterhammel, Britischer Imperialismus, pp. 97-9. Beale's Shan?,hm Episode: The End of Western Commerce, 2nd ed. (Hong Kong, ideas were not entirely novel, their ancestry reaching far back into the 19.18). nineteenth century. But they gained new urgency in the 1930s. J H PRO to 3711695~OIF18520, Urquhart to Stevenson, 17 December 194H. 116 Gylt, British f:conomic Interests, p. 190. 1 H V. H. Li, 'State Control of Foreign Trade after Liberation', in V. H, Li (ed.), 117 H. Ahend, My Years in Chj,ra, 1926--/941 (London, 1944), p. 267. Law and PolitICS in China's Foreign Trade (Seattle and London, 1977), 118 R. W. Barnett, EconomIc Shanghai: Hostage to Polit;cs, 1937-1941 (New p. 339; B. Grossrnann, Die wirtschaftliche EntwickJ,mg der VolksrepuhUk York, 1941), p. ]9; British Chamber of Commerce Journal (Shanghai), 25 China (Stuttgart, 1960), p. 52. For a detailed account of Western business in (1940), p. 74. China after 1949, see B. Hooper, Chma .)tands Up: Ending the Western 119 Wang Yizhong, 'Ba nian lai Shanghai gongye de wng qingsuan' ['A Prese"cc 1948-19W (Sydney, In6), pp. X5ff. Sumlllary ACl'ount of Industry in Shanghai during the Past Eight Years'], III PRO to 171/92259/FCIIO.1/2, British Chamber of Commerce (Shanghai), Jutg;; zhoubao, 1, no.6 (6 December 1945), p. U. On the concept of 'Memorandum on British Trading Conditions in China', 15 October 1950. 'forelands' see G. C. Weigend, 'Some Elements in the Study of Port Geog­ One example i~ given In The House of Dodwell: A Century of Achievement, raphy', GeographIcal Rel1iew, 48 (1958), p. 195. IHH-1958 (London, 1958), pp. 51-2. 120 Hongkong and Shanghai Banking Corporation, 124th Report of Directors to ) ~6 T. N. Thompson, China's No.lttonalizarion of Foreign Firms: The PoJitit"s of the Ordinary General Meeting of Shareholders (Hong Kong, 1940), p. 12. Hostage Capitalism, 1949~ 19 P (Baltimore, 1979), p. 53. 288 LP Ibid., p. 60; China Association, Annual Report 1954155 (London, 1955), p.2. 1.18 PRO FO .l71/8.B52/FClI06/210, John Kenyon (Patons & Baldwins), 'G~neral Report on China' (n.d., [August 19501). 1.l9 PRO FO .l71175864/FI472, P. D. Coates, Minute, 29 January 1949. 140 J. Gallagher and Ronald Rohinson, The Imperialism of Free Trade', Economic History RevIew, 2nd ser., 6 (1953), pp. 1-15. 141 See, for example, R. P. T. Davenport-Hines, 'The BritIsh Engineers' Associ­ ation and Markets in China 1900-1930" in R. P. T. Davenporr-Hines (ed.), Markets and Bagmen (Aldershot, 1986), pp. 102-30. The broader issues are discussed in C. A. Wurm, 'Britische Aussenwirtschaft 1919-1939: Export- verfall, Aussenhandelsorganisation und Unternehmerverhalten', Scripta Mereaturae, 17 (1983), pp. 1-40, especially pp. 15-29. 141 Bureau International du Travail, L'lndustrie textile dans le monde, vol. I (Geneva, 1937), p. 148: Manchester Chamber of Commerce Annual Report for 1937, p. xxxvi. 14.1 Calculated on the basis of Hsiao Liang-lin, China's Foreign Trade Statistics, pp. 22-4, 148-50. 144 According to estimates by Remer and Hou Chi-ming, during the period from 1902 to 19]0, 60% of profits derived from (all-foreign) direct investments were reinvested in China. Hau Chi-ming, Foreign Investment, p. 103. Perhaps more conclusive is the qualitative evidence we have, such as the statement by a knowledgeable observer that before 1937 most of the profits of British shipping lines in China were reinvested. PRO FO 3711758641 F2240, Money (Ministry of Transport) to Coates, memo 'British Shipping Interests in China Trade' (January 1949). 145 Remer, Fore;Kn investments, p. 364. 146 Osterhammel, Britischer imperialismus, p. 60, Table 8. 147 King, The History of the Hongkong and Shanghai Banking Corporation, vo!. I, pp. 54-5, 143-4,466--7. 148 I have elsewhere called this 'symbiotic penetration': Osterhammel, 'Semi­ colonialism', p. 304. 149 In March 19J7, the government-controlled China Merchants Steam Navi­ gation Company opened regular trafnc to Manila - its nrst venture heyond Chinese coastal waters. John Swire & Sons Papers, 111/1117 Butterneld & Swire (Shanghai) to John Swire & Sons, 3 April 1937. 150 St't' Wu Yugan, Zhongguo guoji maoyi gailun rOutline of China's Foreign Tradel (Shanghai, 1930), pp. 490--9; F. E. Hyde, 'British Shipping Com­ panies and East and South-East Asia. 1860-1939'. in C. D. Cowan (('d.), The EconomIc Development of South-East Asia (London, 1964), pp. 39ft.