Potential Section A Mt With Answers Notes

1. How do you interpret ‘guanxi’?

• Central concept in Chinese society and Confucian social theory (Butterfield, 1983)

• Western interpretation ‘connections’ or ‘relationships’ Wrong!

• Describes special relationship which reflect social duty

• Distinguished from social relationships (concept of order)

• Bourdieu (1986) – Social capital More fitting

• Unifying feature in China

• Distinguished from business concerns, but still encouraged during Mao period to strength work-unit systems

• Interpret at social network and the perceived duties in non-convention relationships in orderly society

2. What were the features of agricultural developments in Imperial China?

• Village and family-based, peasantry - Richardson (1999)

• Low-scale, highly labour intensive

• 1) Absence of fundamental changes in tech, organization and belief systems

• 2) Rate of return low

• 3) High population density Livestock farming not economical, uncommon

  • Pressure to change commercialization developing Markets

• 4) Open-frontier economy developed in Manchuria from mid 19^th

  • Settlement of empty land, opening of Port Darien in 1907

  • Well-developed compared to China proper

3. What explains Japanese competitiveness in modern silk-reeling industry over that of China from the mid-1850s?

• Silk-reeling most important export commodity for traditional China and Japan

• As 19^th century progressed, Japanese competitiveness increased over China (Kiyokawa, 1987)

  • Japanese exports by 1930s, 3 times greater than China

• Firth’s hypothesis (1929): Acceptance of new foreign technology follows acceptance of associated institutions and beliefs

  • Main factor in explaining Japanese success

• 1) Readily adopted Western style factory management

• 2) Meiji enlightenment policies overcame prejudice and xenophobia

• 3) Better infrastructure (mention Ewo Filature (Brown, 1979) and failings)

• 4) Direct govt. support for modernization Bi-voltine silkworm

4. What explains the success of the Ningpo merchants in China up to 1911, and what accounted for their demise?

• Network of family merchant businesses

• 1) Highly adaptable (Shiba, 1977)

• 2) Self-regulation via strong governance structure guilds (Lin, 2005)

• 3) Strong financing

• 4) Dominance of modern style banks led to demise

• 5) Only 30% of native banks survived 1911 revolution (Jones, 1974)

5. What are the Shanxi Bankers and what is their governance structure?

• Based around Pingyao in Shanxi First to provide whole range of banking services (Morck and Yang, 2010)

• Result of Shanxi merchants Tea route

• Financed by Shanxi merchants Monopoly over lake Xiechi salt works

• Specialised in Piaohao

• Connections with important officials

• 1) Dual classes of equity

• 2) Managerial incentives Jade parachutes

• 3) Dividends paid to family

• 4) Unlimited liability

• 5) Hiring from lineage + background checks + guarantors

6. What is Chinese Tong, and what was controversial about them to the British courts?

• Literally translated as ancestral hall

• Unit of shareholdings and store of wealth in Chinese lineage trusts

• Legal entity in traditional Chinese commercial organization

• Controversial point for British law (Chung, 2010)

• ‘Rule against Perpetuities’ – corporations not allowed to own land indefinitely (Law of Mortmain)

• Analogy with British trusts, but had to be charitable

• Required to register with government to be treated as legal entity

• No initial impact before 1910

• Political instability in 1920s - increased number registering for protection from looting

• New rule on common owned property

7. What are the key differences between the traditional Chinese and British legal systems?

• Rule of man vs. rule of law

• Concept of disciplinary mode of social control and justice

• Focus on hierarchical order and maintenance of harmony throughout social structure

• Advice from superiors, focus on social rules and norms

• British law – adjudicative model of social control and justice

• Rigid, universal codes enforced through a judiciary system

• Long established civil and commercial law with case law system in Britain

• Guilds and other merchant groups provided own set of standards and regulation

• Lack of contract enforcement laws, but tight social structure meant relatively successful enforcement

• Importance of social harmony in Chinese Confucian culture (Stephens, 1992)

• Informal property rights

• Britain had independent judiciary with professional lawyers

• China had local magistrates with little expertise

8. What were the main commercial law reforms in the period prior to 1945?

• Little commercial law prior to 1904 other than primitive joint stock companies

• Weberian school of thought that western style laws resulted in non-development of China (Fairbank, 2006; North, 1990)

• 1904 Company Law – Hybrid of Japanese and English company law Ambiguous, vague, poor translations (Kirby, 1995)

• Courts unwilling to handle commercial disputes

• 1911-1929 – hierarchical system of modern courts developed Became instrumental in dispute settlement

• Businesses remained suspicious of the public and government Few registered as companies

• During Republican era – New Company Law 1929 – New taxes, duties, tariffs negative impact on business

• Ministries and other agencies issued own rules Complexity

• By 1931 only 17.5% of Shanghai industrial enterprises were incorporated (Kirby, 1995)

• State enterprises incorporated to give Nationalists more control of them e.g. Commercial banks

• Did not distinguish foreign vs. Chinese company 1946 New Company Law defined foreign companies and stopped Chinese pretending to be foreign

9. What were the main banking institutions in Imperial China?

• 3 main banking institutions (Rawski, 1989)

• Foreign banks Introduction of trading in 16^th century Expanded with ‘unequal’ treaties

  • Mainly international trade finance e.g. HSBC (King, 1988)

  • Safe-haven during political instability

• Commercial banks Developed late in 19^th century (Horesh, 2009)

  • Sheng Xuanhuai (Qing Minister for Transportation) Advocated creation of Imperial Bank of China

  • Major force in Shanghai etc. Particularly following...

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