A Deep History of Chinese Shareholding

Abstract

By the turn of the twentieth century the absence of codified law governing private economic transactions was a key target of foreign and Chinese critiques of the imperial legal system. Expectations ran high that China's first legal transplant, the 1904 Company Law, would lead to unprecedented public investment in large-scale industrial projects. Their disappointment, and the continued dominance of small business in the Chinese marketplace, has been attributed to factors ranging from Chinese cultural aversion to impersonal investment to shortcomings in the law itself. This study shifts our attention to the indigenous practices that company law was meant to supplant, examining the diverse sources of Chinese shareholding practices and the rich menu of options they provided investors. Most importantly, it argues that by the late imperial period shares were well-established as abstract income producing assets that could be bought and sold, creating the possibility of partnership relationships that could be both impersonal and long-lived despite the absence in China of a formal company law. That this tradition did not lead to the emergence of an analogue to the corporation in the West raises new questions about the demand for such entities and the role of transplantation in suppressing indigenous solutions to business problems.