#2985 - Potential Section B Questions And Answers - Chinese Economic History Since 1850

1. How should one characterize the nature of different Chinese governments and their role in Chinese economy from the mid-nineteenth century to the 1930s?

2. After the opening of China in the mid 19^th century, why was economic growth initially slow, and what accounts for its success in the early 20^th century?

• Patronage Economy (Feuerweker, 1958)

  • Internal resistance

    • Guilds and merchant groups, handicraft workers

  • Tight networks, that were difficult to infiltrate, cellular economy (MacPherson and Yearley, 1987)

  • Political instability broke down these networks

• “Small islands of privilege” (Tawney, 1932)

  • Took time to penetrate rural areas

    • Domestic prices correlated to international in late 1880s (Brandt, 1985)

  • Was only on expansion of the treaty port system following Treaty of Shimonoseki 1896 with manufacturing rights, navigation rights on Woosung and Yangtze that they became more significant

• Political resistance to change

  • Self-interest in preservation of a unitary and centralized empire

    • Tongzhi Restoration 1861-1875: revitalising traditional institutions

  • Self-strengthening movement: Small number of large enterprises under state funding and control (taking change under wing of state)

    • E.g. Arsenals… Jiangnan Arsenal in Shanghai

• Lack of infrastructure (Perkins, 1967)

  • Currency system, banking, transport, legal

  • Legal system: Weber view of institutions and Western style legal system which didn’t begin to occur until early 20^th century

    • Alternative view that merchant guilds, political stability and predictable provided stable property rights

    • Contracts, working with more extended networks was an obstacle

  • Transport networks were poor i.e. silk sector and cocoon supply problems (e.g. Ewo Filature)

3. Evaluate the strengths and weaknesses of traditional Chinese commercial and business organization

Strengths

• Social organisations

  • Deep commercial networks (Rawski, 1972)

  • Provided security and stability without formal property rights etc. (Zelin, 1994)

  • E.g. Organisations were sometimes deeply integrated with lineage

  • In the absence of formalised governance structures via commercial law, lineage often behaved with business-like characteristics (Faure, 1989)

    • Efficient at pooling capital

      • Donated on per capita basis towards an ancestral trust to put out capital to seek a profit

    • Examples:

      • Paddy farming commercialized activity in late Ming and early Qing, coordinated via lineage trusts

      • Salt and coal mining, which required economies of scale

  • Furthermore patronage networks were developed where intermediaries were used to help conduct business

    • E.g. members of imperial family and senior officials prevented harassment for officials for goods under their patronage

    • Formalisation of merchant groups and guilds which connected via patrons to help guest merchants conduct business and trade

• Evidence of practicing accounting and bookkeeping

  • Traditional view of Weber (1951) that Chinese organisations didn’t have use a valuable commercial accounting or bookkeeping methods

  • Revisionist view that late Imperial Chinese and Western methods were both adequate (Gardella, 1992)

    • Examples:

      • Dragons Gate Ledger (longmenzhang) used by the Shanxi bankers

        • Standardised transaction categories and harmonizing the dragon gate

      • Money shops and pawnbroking industry had remarkable reputation for accounting use (Zelin, 1991)

Weaknesses

• Resistant to change

  • Guilds and other merchant groups helped to protect local handicraft industries

    • E.g Protests against modern silk filatures such as Ewo Filature (Brown, 1979) and Chen Qiyuan Filature in Guangdong (Ma, 2005) which overcame resistance through charity

    • They discouraged the use of modern techniques and the transfer of Western technology

  • Those that succeeded were adaptable to change

    • E.g. The Ningpo merchants who saw opportunities to help foreign firms who needed a group with knowledge of the Chinese financial system. Political and financial stability caused their downfall, which would have came earlier had they resisted change (Jones, 1974)

• Over-dependence on networks

  • Obstacle to growth and expansion

  • Although these networks were arguably necessary, they caused complacency and inflexibility when it came to working with foreign enterprises and Western institutions

  • Over reliance on family capital, was a liability to their long-run success, and Western firms with access to capital were able to out grow the traditional firms

Conclusion

• Many were not adaptable and flexible and thus although their strengths helped many to thrive in the traditional Chinese economy, most failed to adapt to changes which would lead to growth as China opened up.

4. Assess the impact of Western or foreign influence in general on internal political, institutional and economic change in China in the nineteenth to twentieth century

5. How do you assess the role of Western influence in China? Positive, negative, neutral or all of the above?

• Different levels and areas of influence at different times

  • European powers and US (1850s to 1900s)

  • Japan (1890s to 1930s)

  • Soviet Union (1930s to 1960s)

• Important to define how we assess Arguably the most important outcome for evaluation is the effect on citizens and for long-term economic growth and thus increased living standards for them

Political Influences

• Treaty port system made Qing government appear weak disunity instability Encouraged Nationalism (Western challenge, Chinese response)

• Stability of a highly centralized, unified government, hinges on capacity to head off external and internal threats

  • Sino-Japanese War 1894-1895 – disastrous shock

  • Taiping Rebellion 1850-1864 – Relied on UK and France to support Qing government

• Pressure to develop infrastructure, foreign loans to finance key railway between Wuhan, Guangdong and Sichuan leading to rebellion, West influenced Sun Yat-Sen and his diaspora financed revolution Collapse of Qing government (Moise, 1986)

• Soviet Union played a key role in the United Front (KMT, CCP and Comintern)

  • Considerable degree of control over CCP policy from 1921 to 1935

  • Also helped develop KMT into a legitimate party, supported by Chiang following death of Sun Yat-Sen

  • NEGATIVE: Disastrous social impact Rebellions, deaths, revolutions, civil war, and arguably influenced the ability of CCP to come to power and those subsequent disasters

  • POSITIVE: However, can be argued it broke the economic stagnation trap that Imperial China was in, and was inevitably going to course upheaval

Institutional Influences

• Instability of government weakens informal property rights

  • Guilds, lineage etc. broke down following rebellions as a result of instability caused by foreigners

  • Western property rights provided security and advantages over tax downfall of merchant groups

• Disrupted banking institutions

  • Foreign banks introduced competition to Native Banks, provided safe financing facilities

• Disrupted the decentralized monetary system

  • US via Silver Purchase Programme 1934

  • Indirectly via Great Depression and WW1 through affects on silver

• Missionaries disrupted the Confucian ideology, which was an institution key to social stability. On the other hand they had a positive effect e.g. Nanking University 1888

  • NEGATIVE: Had a cultural impact and impact on tradition and thus social cohesion

  • POSITIVE: However, it can be argued that some of these were necessary for economic growth and social change

Economic Influences

• Treaty of Shimonoseki 1896 – Manufacturing rights, navigation rights set stage for economic change.

  • Japanese Zaikabo were key to the Cotton industry in China: By 1936 40% of China’s machine-spun yarn and 57% of its machines (Duus, 1989)

• Western firms brought with them new goods, competing with merchant groups and handicraft sector (Keller et al., 2011)

  • Increase in imports from 80 to 483 goods from 1868 to 1947

  • Increase in exports from 62 to 356 goods from 1868 to 1947

  • But demand for some goods were not particularly strong e.g. James Matheson & Co could not sell Lancashire shirts seen as inferior to Nankeen cloth

  • POSITIVE: Bought new products, potential for increased living standards and economic growth

  • NEGATIVE: Devastated the traditional economy

6. Evaluate the patterns of economic change and living standards of Chinese people during 1850-1950 based on available quantitative evidence

7. How do you assess the analytical framework of Western challenge, Chinese response on understanding economic change or non-change within China in the 19-20^th century?

8. What is the nature of the traditional political regime in China and its impact on long-term Chinese economic growth?

9. What role did formal legislation such as the promulgation of company law play in the Chinese economy during the 19-20^th century?

10. How does the Chinese legal system affect commercial and industrial organization in Qing and Republican China?

• Chinese system consisted of both formal and informal legal institutions

• Prior to the early 1900s there was little formal legal structure for organisations

• Weber (1951) argued of the importance of a Westernized legal system for successful capitalism and growth

  • But some organisations were successful despite a lack of such a system in China

Informal...