War of Resistance Against Japanese Aggression
(1931-1945)
Civil War and Founding of the PRC
(1945-1949)
Tales of Hong Kong
(1840-1949)
Tales of Macao
(1840-1949)

(4) The Influx of Foreign Capital into the Semi-colonial China

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Since the 1870s, the imperialist powers accelerated their capital expansion in China. Besides dominating the merchandise market and intensifying raw material extraction, they also exported capital with their best endeavours. Through the Treaty of Shimonoseki, Japan became the first to obtain the right to open factories in China, a move other powers wasted no time in emulating.

First, they strove to be China’s creditors, forcing it to take huge loans to finance the war indemnities owed to Japan and to redeem the Liaodong Peninsula (遼東半島). Foreign banks granted loans to the Qing government, allowing it to use its tariff revenues and other forms of tax as collateral.

Secondly, they demanded the right to establish factories, build railways, and open mines. France, for example, obtained the right to build a railway connecting Vietnam, and the provinces of Yunnan (雲南) and Guangxi (廣西); Russia to build and operate a railway in north-eastern China; and Germany to build roads and open mines in Shandong Province (山東). Between 1895 and 1898, the powers obtained railway concessions of 10,000 kilometres of railway in China.

Through capital export, the powers strengthened their hold on the Chinese economy and made it increasingly semi-colonial. Domestic industry and commerce deprived of business were devastated.

What is a semi-colony? Besides China, which Asian countries were semi-colonies at the end of the 19th century and into the 20th?

See answer below.

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Pictured is the Shanghai branch of the Sino-Russian Righteousness Victory Bank. After its defeat in the First Sino-Japanese War, China borrowed a mint from Russia and France. The Sino-Russian Righteousness Victory Bank played a key role in facilitating this.

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Established from Russian and French capital, the Sino-Russian Righteousness Victory Bank was headquartered in St. Petersburg, Russia. Its Shanghai branch opened its doors in 1896. It was the sole agent responsible for collecting the installments of loan interest repayments from China to Russia and France from the second installment onwards.

China was desperate for a loan from Russia and France to service its massive war indemnity incurred in the First Sino-Japanese War. In July 1895, China took a loan of 400 million francs from Russia and France at an annual interest rate of four per cent and a repayment period of 36 years, with its tariff revenues as collateral. From then on, China was pressured by the powers into taking more loans, plunging the country ever deeper into debt.

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On the left: the Xiamen Branch of the Japanese Mitsui & Co., in the late 19th century; on the right: a contract dated 1899 for mining concessions between the German Buchheister & Co. and the Hunan Mining Bureau (湖南礦務局). Taking advantage of China’s weakness following its defeat in the First Sino-Japanese War, foreign investors poured more capital into the country to control its light and heavy industries. It thus began the takeover of China’s resources and market. China’s domestic enterprises, handicraft, and cottage industries were unable to compete.

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Pictured is a late Qing cartoon that shows the imperialist powers divvying up China’s railways. Railways were instrumental in getting China loans from foreign banks as well as facilitating the transportation of resources, finished goods, and even armies. It also made it easier for the powers to incorporate areas along the railways into their own spheres of influence. Thus, railway concessions in China were much sought after by the powers.

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Pictured is the Chinese Eastern Railway’s (東清鐵路) commencement ceremony of construction taken on 28 August 1897. Opened in 1903, the Chinese Eastern Railway connected to the Trans-Siberian Railway. It cut across the Chinese territory to link Russia and Vladivostok up. The railway enabled Russia to strengthen its control over north-eastern China.

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Pictured are Russian troops stationed along the Chinese Eastern Railway. Railway was of great economic as well as military significance.

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A photo of Qingdao (青島) station of the Jiaoji Railway (膠濟鐵路) in Shandong taken shortly after it commenced operation (left), and a modern-day photo of the station (right). During the late Qing dynasty, this Germany-operated railway linked Qingdao and Jinan (濟南) up. Its construction began in 1899 and operation commenced in 1904.

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A modern-day photo of the Kunming-Haiphong Railway (滇越鐵路). After the First Sino-Japanese War, France was one of the countries that pressured Japan into giving up its possession of the Liaodong Peninsula. France then demanded that China reward it for this "good deed". It was granted the concession to extend the French railway from Vietnam into the Chinese territory. The construction of the southern section of the Kunming-Haiphong Railway commenced in 1901; the Yunnan section in 1904; and the entire line became fully operational in 1910.

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Pictured is the opening ceremony of the Kowloon-Canton Railway (九廣鐵路) held at Luowu (羅湖) station on the British section.

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To expand and consolidate its interests in southern China, Britain pressured the Qing government into the joint construction of the Kowloon-Canton Railway in 1898. The railway connected Kowloon (九龍) and Guangzhou (廣州). Britain was granted the right to operate the railway. The British section commenced construction in 1906 and began running on 1 October 1911; the Chinese section commenced construction in 1907 and started running on 5 October 1911.

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On 5 October 1911, the Chinese and the British representatives attended the opening ceremony of the railway’s Chinese section in Shenzhen (深圳).

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Pictured is a late Qing editorial cartoon: Britain, France, and Germany all provided loans to China to finance the construction of the Chuan-Han Railway (川漢鐵路) connecting the provinces of Sichuan (四川) and Hubei (湖北). Meanwhile, the United States was trying to make a loan on China. By working together to finance and monopolise the Chinese railways, the imperialist powers were able to grip the country’s economy. The caption reads “the perilous situation of being carved up economically” shows the Chinese economic situation at that time.

What is a semi-colony? Besides China, which Asian countries were semi-colonies at the end of the 19th century and into the 20th?

A semi-colony, in comparison with a de facto colony, is a country that appears to be independent and autonomous, but is in fact dependent on the imperialist countries economically and politically. They are typically under the indirect rule or actual control of one or more such imperialist countries. Prior to the First World War in 1914, Asian countries under semi-colonial rule included China, Persia (now Iran), and the Ottoman Empire (now Turkey).

Sources of most photos used in this feature piece: Fotoe (pictures 1-6, 8-10), Visual China Group (picture 7), misc. photo sources.

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