Ji Zhaojin - A History of Modern Shanghai Banking: The Rise and Decline of China’s Financial Capitalism

A HISTORY OF MODERN SHANGHAI BANKING

Studies on Modern China

CHILDREN'S LITERATURE IN CHINA
From Lu Xun to Mao Zedong
Mary Ann Farquhar

CHINA'S LAST NOMADS
The History and Culture of China's Kazaks
Linda Benson and Ingvar Svanberg

THE CHINESE NATIONAL CHARACTER
From Nationhood to Individualilty
Lung-kee Sun

HAKKA CHINESE CONFRONT PROTESTANT CHRISTIANITY, 1950-1900
Jessie G. Lutz and Rolland Ray Lutz

A HISTORY OF MODERN SHANGHAI BANKING
The Rise and Decline of China's Finance Capitalism
Zhaojin Ji

IMAGINING THE PEOPLE
Chinese Intellectuals and the Concept of Citizenship, 1890-1920
Edited by Joshua A. Fogel and Peter Zarrow

INDUSTRIAL REFORMERS IN REPUBLICAN CHINA
Robin Porter

THE KWANGSI WAY IN KUOMINTANG CHINA, 1931-1939
Eugene William Levich

"SECRET SOCIETIES" RECONSIDERED
Perspectives on the Social History of Early Modern South China and Southeast Asia
Edited by David Ownby and Mary Somers Heidhues

THE SAGA OF ANTHROPOLOGY IN CHINA
From Malinowski to Moscow to Mao
Gregory Eliyu Guldin

MODERN CHINESE WRITERS
Self-Portrayals
Edited by Helmut Martin and Jeffrey C. Kinkley

MODERNIZATION AND REVOLUTION IN CHINA
June Grasso, Jay Corrin, and Michael Kort

PERSPECTIVES ON MODERN CHINA
Four Anniversaries
Edited by Kenneth Lieberthal, Joyce Kallgren, Roderick MacFarquhar, and Frederic Wakeman, Jr.

READING THE MODERN CHINESE SHORT STORY
Edited by Theodore Huters

UNITED STATES ATTITUDES TOWARD CHINA
The Impact of American Missionaries
Edited by Patricia Neils

THE RISE AND DECLINE OF CHINAS FINANCE CAPITALISM

ZHAOJIN JI

First published 2003 by M.E. Sharpe

Published 2016 by Routledge
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Copyright 2003 by Zhaojin Ji

No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

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Library of Congress Cataloging-in-Publication Data

Ji, Zhaojin
A history of modern Shanghai banking: the rise and decline of Chinas finance
capitalism / Zhaojin Ji.
p. cm.
An East gate book.
Includes bibliographical references and index.
ISBN 0-7656-1002-7 (cloth: alk. paper)
1. Banks and bankingChinaShanghaiHistory. 2. Banks and banking,
ForeignChinaShanghaiHistory. 3. FinanceChinaShanghaiHistory. I. Title.

HG3340.S52 J5 2002
332.1'0951'132dc21

2002029407

ISBN 13: 978-0-7656-1003-4 (pbk)
ISBN 13: 978-0-7656-1002-7 (hbk)

To my parents Xia Huiqin and Ji Zhitai

Perhaps it is cultural bias, perhaps it is hometown affection. Having been away from Shanghai for more than fifteen years, I could not help but miss it. This emotion has stimulated me to write about the people, the city, and the history, in particular, Shanghai's banking history. This history amazes me and has a special meaning to my family. My grandfather devoted his life to Shanghai banking for more than a half-century, my father has worked and observed Shanghai's changing banking industry for the past half-century, and I have committed myself to writing about Shanghai banking in the twenty-first century.

This study of the modern history of Shanghai banking over the past 150 years grew not only from family interests but also from work experience and research seminars in Shanghai and Washington, DC. When I worked at the Shanghai Academy of Social Sciences between 1983 and 1985, I learned old stories about Shanghai and its economic history. When I attended a research seminar at the Paul H. Nitze School of Advanced International Studies of the Johns Hopkins University in the spring of 1994, I found that there were only a few comprehensive books on the subject during my preliminary research. I decided to commit myself to writing a book on Shanghai banking.

This book starts with a search for the origins of Shanghai qianzhuang (native banks) and their subsequent rise and fall in modern Chinese history. Some may question the importance of writing about native banks, considering them the product of a "feudalistic" society that belongs to the past. However, the phenomenon of native banks still exists today in terms of the relationship between private entrepreneurs and individual financial lenders. The pre-modern history of native banks provides many sources for understanding the development of China's modern banking and finance. At the same time, the pre-modern history of native banks also reflects the influence of Chinese traditional culture and the impact of Confucian values on economic life.

This book illustrates the intricacy of international relations in modern China by showing the cyclical nature of foreign banking and finance in Shanghai. The rise of foreign banks was a result of foreign trade and foreign loans (in terms of railways, telegraphy, and political indemnity). Under the protection of several unequal treaties signed in the mid-nineteenth century, foreign banks enjoyed extraterritorial rights in China, which included the freedom to issue their own banknotes. Shanghai's modern financial market has been closely related to world financial markets since the 1850s. With the adoption of the gold standard in Germany and the discovery of Nevada silver mines in the United States in the early 1870s, the value of silver in Shanghai depreciated quickly. China was forced to abolish the silver standard and to adopt a managed foreign reserve system after the onset of the world economic depression and the U.S. Silver Purchase Act in the early 1930s. Finally, Shanghai financial markets were very sensitive to London financial markets because telegraphy services had closely linked both cities since 1871. Thus, the concept of "globalization" is not new to Shanghai. It emerged early as a real theme, and then as reality in Shanghai in the modern era.