British industrial investment in mainland China 1895-1940.

Abstract

British industrial investment in China before 1895 was slight - mainly marine engineering (51% share) and silk processing (25%). The liberalising Treaty of Shimonoseki then led to an upsurge of British investment which by the late 1930s was in real terms about a third of that currently. The profile of British investment changed rapidly - by 1897 cotton textiles accounted for 19% to be outstripped by mining (63% by 1903). By 1912 the tobacco industry took first place with a peak share of 70% in 1920. These three sectors account for less than 2% of current investment with 74% being in oil/gas and chemicals. The analysis then considers the various sectors of this British investment by 1940 and their differential impact on the Chinese economy. In terms of interface with other investing countries, there was modest competition with other Western countries - indeed, there was, especially with French and Belgian interests, significant cooperation with British investors. The greater competitive interface with Japan was marked in cotton textiles and tobacco. The effect of UK (and other foreign) industrial investment on Chinese development is a contentious area. In terms of alleged financial exploitation (high profitability well in excess of that in the investors' country and most of these profits being siphoned off abroad) analysis of the financial evidence suggests that these charges must be considerably tempered. This conclusion coupled with the prior analysis of the sectors of British investment implies that many of the charges concerning the impact of British industrial investment in China by 1940 must be given a more favourable verdict. It would seem that the reason for the disrepute in which UK industrial investment has been held by both Chinese and Western sources is more due to the arrogant manner in which, in many cases, these investments were carried out rather than the nature of the investment itself.