New Directions on the Twentieth-Century Chinese Economy
This panel presents current historical research on the economy of Republican China (1911-49). We focus in particular on the economic impact of the limited liability company, the challenges of corporate finance, and debates on industrial policy. Recent works in Chinese business history have approached critically the question of formal institutions in economic change, and in his paper Taisu Zhang argues that the economic impact of the limited liability company in China was narrow. Not only were these companies few in number, the limited liability company was ill adapted to the highly personalized nature of Chinese business transactions, which, coupled with the state’s limited ability to enforce formal rules, meant that it remained a weak driver of economic growth. Tomoko Shiroyama tackles a similar problem facing China’s modern companies – the difficulty of raising capital – in her paper focusing on the Lower Yangtze Delta. Observing the relative incompatibility of the traditional business partnership (hegu) system with modern industrial development, she questions how industrial enterprises managed to obtain the necessary start-up capital to begin their operations, and how entrepreneurs secured funds from sources beyond their networks of personal acquaintances, based on evidence from newly opened business archives. Joyman Lee adopts an intellectual approach in analyzing Chinese debates on industrial policy in the period, seeking to identify in his paper the lingering influence of a Japanese system of rural and bottom-up policies aimed at providing information to the traditional sector, which the Chinese adopted in the 1900s. These “Japanese” policies continued to influence Chinese thinking in the interwar years, owing both to the compatibility of the adopted institutions and concepts with China’s poverty in resources, and a shared political culture between the two countries which emphasized the role of the state in spite of its fiscal weakness in China.
Together the three papers aim to challenge the notion that Western business forms, based largely in the treaty ports, functioned as the prime movers in Chinese economic change in this period. We argue instead that the sources of dynamism should be found in the informal, rural and political-cultural resources that Chinese businesses and policymakers drew on in spite of their weakness vis-à-vis international capital. Although the impact of these Republican experiences on the period immediately following 1949 was limited, the liberalization of the Chinese economy since the opening up reforms of 1978 underlines the contemporary relevance of these historical questions.
The panel is aimed both at scholars of China and business historians more generally. All three panelists are historians who engage extensively with the related disciplines of law and economics, and the panel will also be of interest to colleagues dealing with similar problems that developing economies around the world faced in the nineteenth and twentieth centuries. Our commentator, Naomi Lamoreaux, is an economic historian of the United States, and we hope to use this conversation to help place our work in international and comparative context.