The golden age of gentlemanly imperialism in China: changing perspectives and changing realities

The years 1905-11 thus became something like the golden age of gentlemanly imperialism in China. A British-inspired programme of foreign-financed infrastructure development (more precisely, railway construction)¹¹ was the central socioeconomic, political and diplomatic issue during these years.

To some extent a new departure...

Late in 1905, the Foreign Office under the new Foreign Minister, Sir Edward Grey, embarked upon a comprehensive review of British interests and strategies in China. Until now, Whitehall had, in economic matters, simply supported the demands of the mercantile community, provided they did not collide with political interests.¹² Now, Grey and his collaborators consciously strove to turn into reality a gentlemanly imperialist vision of development, combining considerations of 'high politics' with a programme of economic development and modernization. As a result, Britain's China policy became something like the conscious pursuit of a gentlemanly capitalist agenda. Railways remained a central part of British policy, but there was no longer any need to use them to counter other powers' expansionism; instead, they were conceived of in terms of economic development and political stabilization. The Foreign Office was prepared to support China's efforts to take the development of her railways into her own hands:

His Majesty's Government will... encourage and welcome [China's] efforts to develop the resources of the country under her own auspices, and on terms which will give her the help of foreign capital and experience when required, without being derogatory to her sovereignty or her independence.¹³

Basically, Grey proposed to offer concessions in practical matters while upholding the imperialist framework built around the 'unequal treaties'.¹⁴ In that sense, Grey was perfectly right in describing his new policy as 'to some extent a new departure'.¹⁵

British gentlemanly imperialism in China was distinguished from other forms of expansionism by its comparative breadth of view and perspective.

British diplomats did not entrust Progress to the intervention of an invisible hand. Railway construction for them was not only to facilitate economic development, but also to create the political conditions under which such a development would be possible. To quote from an FO memorandum written in 1908:

the tendency of railways must be to make the dismemberment of China more difficult... the power of the Central Government would be much increased, and the country would be more closely knit together and better capable of withstanding foreign aggression and dealing with internal disturbances.¹⁷

Foreign-financed railway construction thus was expected to start a virtuous circle of economic growth and political stability.

The British were convinced that railways in China, even if formally 'under the control of the Chinese Government' could not be built and operated efficiently - and thus would not be the development tool they were designed to be - without strong European participation: 'the Chinese are by themselves incapable of successfully building and work­ing a considerable railway owing to the immense amount of dishonest profits that would be made during the process.'¹⁸ That explains why the Foreign Office was reluctant to follow up the idea of a 'new departure' with specific proposals to give the Chinese more of a say in the railways they were supposed to build and to pay for.¹⁹ British diplomats supported the principle of 'foreign control of foreign capital' which they saw as indispensable for the success of their liberal development programme and for the maintenance of Chinese financial stability.

British railway policy in China fused motives and interests from finance, trade and diplomacy into 'a grand development strategy designed by Britain to reshape the world in its own image':²¹ China would become strong enough to withstand the pressure of Britain's rivals bent on acquiring territory and commercial privilege; the Beijing government would gain the strength needed to keep in check internal forces opposed to any sort of co-operation with 'imperialism'; China's economy and thus her demand for foreign goods would grow; and multinational railway finance would give other powers a stake in China's development under the auspices of gentlemanly capitalism. Finally, British presence and policy in China would be given special legitimacy by the pursuit of this programme - by promoting railway construction, Britain rose above selfish interests and was doing a service to Civilisation: 'All these railways will make a marvellous difference in China and one feels that one is doing real good in putting them through.'²² With 'the awakening spirit amongst the Chinese' making it increasingly 'unlikely that railways [would] in the future be utilized as instruments of conquest by any Power', Sir John Jordan, British minister in Beijing (1906-20), and the officials in London felt confident that they could concentrate on development instead of rivalry and seek the co-operation of other powers and of the Chinese government to put into practice the policy of the 'new departure', as it made 'little difference who constructs the railways so long as they are built'.²³

Co-operative financial imperialism

The success or failure of British gentlemanly imperialism in China now depended on good relations with the other powers, and on the co­operation of China.

The French government was late in adapting its China policy to a changing situation. In 1905-06, French consular officers had been just as aware of change in China as their British and German colleagues, but apparently their reports did not inspire any new reflections at the diplomatic and policymaking level. Of course, France was not involved in the unresolved financial and commercial issues that forced the other powers to keep their approach up to date, and policymakers had to con­centrate their attention on France's highly precarious international position. Thus Jordan expressed a common judgement when he wrote that French policy was 'behind the times and... blind to the changes that are going on in China'.²⁴ This changed in 1907-08. Diplomatically, the Quai d'Orsay sought to promote accommodation between French interests and those of Britain, Japan and Russia (the 'Far Eastern Agreements' of 1907). In addition, various initiatives that until now had marked French policy in the eyes of foreign observers as one of 'spheres of influence' (despite the formal rejection of that principle by Delcasse as far back as 1899) were abandoned. To name a few, France cut her informal ties to Sun Yat-sen's revolutionaries and concentrated on estab­lishing good relations with the Beijing Government;²⁵ cut back the funding of schools, post offices and shipping lines designed to prop up her influence in Southern China,²⁶ and - amid acrimonious self-critique - abandoned an ill-fated attempt to take over the manage­ment of China's maritime arsenal in Fuzhou.²⁷

Finally, Paris renounced the use of railway policy to generate export opportunities for French heavy industry and employment for the gradu­ates of French schools in China.

The Quai d'Orsay adapted its policy to the spirit of the times by focusing on development. The practical problem to solve now was, 'dans quelles conditions on arriverait a favoriser l'essor d'un grand mouvement a la fois industriel et commercial, developpant reellement les ressources latentes, au profit de ceux qui se consacreront a une pareille tache'. Much against her will, France had had to abandon hopes of gaining cultural influence and protected industrial markets through railway construction in China; her new policy in China now would be a financial imperialism based on the strength of the Paris capital market, international detente and co-operation, and China's insatiable need for loans: 'c'est en somme l'argent qui serait la marchandise la plus demandee [en Chine], celle que l'on pourrait importer avec le plus de profit.'²⁹

The French became possible partners for British gentlemanly imperial­ism after being forced by developments within China, by a changing international situation and by the internal contradictions of the policies hitherto pursued to reject policies incompatible with British aims.

German policy was again very different. Like the British, the Germans clearly perceived China's new economic nationalism and the impos­sibility of imposing their demands by force, and, again like the British, they felt that flexibility and a conciliatory attitude were called for. Minister Alfons von Mumm recommended that Germany withdraw from power politics in East Asia and concentrate on economic interests.³⁰ This implied, on the one hand, developing the trust and sympathy he felt were needed to promote German commercial interests, and, on the other hand, creating European solidarity to keep in check Chinese economic nationalism.³¹ German policy more or less followed these recommendations.³²

Thus, Germany succeeded in shaking off the image of the 'most hated power in China' that she had acquired by seizing Jiaozhou and starting off the 'scramble'. German industry, being competitive and well served by agents on the ground and active merchants, demanded only to be spared political complications.³³ The role of diplomacy under these circumstances was chiefly to remind the Chinese periodically of the fact that Germany did not seek to intervene in transactions between German industry and her Chinese customers, be they private or official.³⁴ China's decision to adopt a Krupp canon as her army's standard equip­ment was facilitated not by German diplomatic lobbying, but by the ostentatious abstention of German diplomats from joining their colleagues in adverse comment on political and administrative devel­opments in China.³⁵ Schools and cultural initiatives were to play a sup­porting role in this export-centred policy relying on advertising rather than power politics.³⁶

The most important effects of Berlin's new policy were felt in loan matters. Being prepared to offer railway loans with only minimal requirements as to the employment and powers of European executive personnel, the Deutsch-Asiatische Bank managed to establish itself among the leading European banks in China and decisively under­mined the principle of 'foreign control for foreign capital' defended by the other banks. For that, minister Count Rex felt entitled to the 'sincere thankfulness of all politically aware Chinese'. Jordan angrily noted that his German colleague sometimes acted 'almost more Chinese than the Chinese themselves'. One can, however, be sure that he did so rather reluctantly and for purely tactical reasons.³⁷

Concentrating on purely economic aims³⁸ implied, for German diplo­macy, a readiness to meet China's wishes, an unfaltering opportunism, and the search for short-term economic advantage over Germany's rivals and partners. It also implied a complete - and sometimes conscious - neglect of long-term perspectives. Rex, for example, demanded to 'create interests' in China in times of disorder and insecurity, in a typical way regarding 'interests' as justifications for claims to influence, and not influence as a means to promote interests.³⁹ German financiers of course were more cautious than Count Rex - after all, it was their money that diplomats wanted to convert not into profit, but into political influence, which paid no dividend. Thus, there was no common ideology shared by financiers and officials in Germany as there was in Britain. However, even German financiers did not develop the long-term considerations that are so prominent in British bankers' concern for the creditworthi­ness and financial stability of China.⁴⁰ There was virtually no reflection in Germany on the conditions for development in China or on the role European capital could be assigned in that process.

While the French sacrificed the interests of industrial exporters to those of financial imperialism, the Germans pursued a strategy based on the industrial exporter's characteristic short-term orientation. The long­term issues of interest to financiers and investors who would tie up their money for decades hardly received any attention. Having given up power politics - in response to strategic considerations, but also to public opinion which judged Jiaozhou a failure - and seeking export markets, the Germans were potential partners for gentlemanly imperi­alism. But, like the French, they did not share the basic assumptions of gentlemanly capitalism, and their policy was motivated by different considerations and supported by different forces.

With the abatement of great power rivalry, in the words of Rene Girault, 'le partage des affaires' became a more attractive prospect than 'le partage du monde', and modernization and development came to play a central role in European imperialism in East Asia. The industrial exports of Germany and capital exports of France depended on rapid infrastructure modernization in China. The British knew that economic growth and political stability in independent Asian states diminished strategic threats and allowed the integration of Asia into an order of international political and economic relations with London as the global financial centre. French adaptation to the spirit of the times, German weakness and opportunism, China's 'awakening', and Russia's and Japan's paralysis resulted in 'co-operative financial imperialism' (the term is Jürgen Osterhammel's), the international framework within which Britain could pursue the development programme of gentle­manly imperialism.⁴¹

The periphery: railway imperialism

Foreign-financed railway construction⁴² became the most important aspect of China's economic modernization in the early twentieth century, whether viewed from the perspective of European diplomacy and finance or from that of Chinese domestic politics and political economy. In China, the central government, local elites and intellectuals saw railway construction as a tool of economic growth and national regeneration, though these groups sharply differed on who should build, finance and control China's railways. The powers meanwhile wished to develop the concessions acquired in 1898 and to start further railway projects. In 1899-1911, China raised £30.7m worth of foreign loans, 90 per cent of which was for railway construction. Nearly all of China's railways in operation before 1949 were built in these years.⁴³ During the years 1906-09, multilateral agreements involving China, Britain, France, Germany, and, later, also the USA were concluded for the European-financed construction of five major Chinese railway lines. The chief issue in the negotiations preceding these agreements was described by one of the protagonists, Charles Addis of Britain's Hongkong Bank (HSBC), as that of reconciling 'the conflicting claims of China for the Chinese and foreign control for foreign capital'.⁴⁴ Competition between different European financial, political and indus­trial interests set free by the retreat of power politics forced European diplomats and bankers to compromise on several important points, including the control lenders could exercise over construction, ope­ration, and, most importantly, purchase of materiel. By renouncing some of the privileges extracted by force during the 'scramble', the Europeans transformed their concessions into real and potentially prof­itable businesses, while China obtained foreign capital on terms accept­able even to some of her more patriotic statesmen. Jordan described the process as follows: 'Chinese aspirations for more liberal treatment could no longer be disregarded... Chinese public opinion...rendered neces­sary a choice between two alternatives, namely, further concessions on our part or indefinite delay of railway expansion... the first of these alternatives was adopted.'⁴⁵

From the beginning, the gentlemanly imperialist vision of develop­ment had implied some readiness to compromise with peripheral interests, though in practice intra-European competition and Chinese resistance had been necessary to achieve it. Anyway, the curious mixture of imperialism, world market integration, and modernization which made up the development programme of gentlemanly imperialism in practice meant that market forces and financial considerations at least in day-to-day matters gradually took precedence over imperialist privilege guaranteed by treaty. While the imperialist framework of course remained in place, it could in practice no longer be used to exact tangible privileges.

Once European bankers and diplomats had defined their interests in a way compatible with gentlemanly imperialism and international co-operation had developed, 'peripheral' factors were of primary importance for the success of gentlemanly imperialism. The peripheral partners for co-operative financial imperialism in China were to be found in the central government in Beijing which needed railways to strengthen its position vis-à-vis provincial governments, to raise revenue and to promote economic development. China's authoritarian, centralist modernizers and the powers practising co-operative financial imperialism were natural allies.⁴⁶ But could the programme of foreign- financed railway construction be made acceptable to provincial elites and the general public who adhered to the doctrine of 'civilized anti- foreignism' and wanted to keep strategic assets such as industry and railways out of foreign reach?⁴⁷ The fate of the Huguang railway loan agreement may serve to illustrate the influence of such peripheral factors. This loan was sought by Chinese statesmen on their own initia­tive and on their own terms, in order to finance the construction of the important line Guangzhou-Hankou-Chengdu. It represented 'the crystallization of a new policy toward China'.⁴⁸ It also brought into being a banking consortium uniting all the relevant banks and supported by the major powers. Its terms granted China unprecedented freedom from control over the funds she borrowed. Its fate shows the limits of the gentlemanly imperialist development programme.⁴⁹

With the Huguang loan, the Europeans hoped, China was binding herself to those powers who were interested in her economic development instead of hindering her progress through territorial ambitions, as the German charge Count Luxburg put it.⁵⁰ In order to implement the railway policy agreed upon with the powers, the Beijing government in May 1911 seized control over all major railway lines hitherto controlled by provincial interests and private investors. This was, for Jordan, 'beyond doubt the boldest and most statesmanlike pronouncement that the Chinese Government has made on any question of policy in recent years'.⁵¹ It was also, as Jordan and at least some Chinese ministers knew, highly risky.⁵² In the end, provincial opposition forces found in the central government's railway policy the long-awaited issue necessary to fuse all kinds of griev­ances into a revolutionary movement, so that a localized army uprising could turn into a revolution toppling the Qing dynasty. Foreign-financed railway construction, far from securing Beijing's authority and spurring on economic development, led to the downfall of that government and to a period of instability which was as harmful to China's international posi­tion as to her economic prospects.

This also meant the end of the 'golden age' of gentlemanly imperialism. The conditions on which co-operative financial imperialism had depended now gradually eroded. While negotiating about a £25m 'reorganization loan', the powers were still nominally bound to co­operate and to seek a solution which would achieve both the long-term financial stabilization of China and the protection of the lenders' inter­ests. Britain was especially active in pursuing this policy which aimed at preserving the gentlemanly-imperialist framework and reintegrating the new regime into it as smoothly as possible. But the desperate need of Chinese administrations at all levels for money created tempting opportunities for concession-hunting and for the acquisition of exclusive privilege, in the face of which co-operation among the powers was not easily preserved. The Quai d'Orsay, for example, secretly supported the shady Banque Industrielle de Chine which sought to obtain industrial concessions in China by offering loans on (financially) easy terms and thus broke the ranks of the consortium enjoying the official support of the powers, including France. The German foreign ministry meanwhile turned a blind eye to the activity of commercial firms like Carlowitz & Co. who gave local Chinese administrations large 'advances', supposedly to finance future purchases of machinery. While France and Germany thus undermined stabilization efforts by an opportunistic search for short-term industrial or financial success, the Foreign Office's struggle to preserve the existing system by giving exclusive support to the HSBC and firmly discouraging rival financial institutions from providing China with alternative sources of money came under increasing domestic criticism: the HSBC was denounced as being under the influence of German interests, and industrialists and financiers alike complained about being barred from competing for business in China. As to China, she now clearly lacked the minimum of strength and stability necessary for inte­gration into the framework of co-operative financial imperialism.⁵³

Thus, nationalism and protectionism became increasingly prominent not only in China but in Europe as well. The result was a revival of policies pursued before 1900 - policies that were generated by 'ungentle- manly' forces such as greedy merchants, disreputable financiers and protectionist industrialists; that were directed towards 'ungentlemanly' aims incompatible with political stability, sound finance, and the 'open door'; and conducted in an 'ungentlemanly' manner, involving bribes, diplomatic pressure, reckless lending, short-termism. The 'golden age' of gentlemanly imperialism came to an end, and, by early 1914, things had partially reverted to where they had been in the last years of the nineteenth century: British gentlemanly capitalism now was but one force among others and could no longer set the overall course for European imperialism, while, at the same time, facing the disintegration of a regime in China which had been both able and willing to co-operate with gentlemanly capitalism. This suggests that gentlemanly imperialism demanded too much from China: based as it was on long-term consider­ations, it had much stronger domestic policy implications for the society subjected to it than had other forms of Western domination. No wonder then that gentlemanly imperialism relied on an authoritarian govern­ment and on the stifling of forces demanding greater democracy and government accountability.⁵⁴ The gentlemanly-imperialist development programme failed because the market-based relationships proposed to substitute for more openly imperialist ones were just as unpopular in China as imperialism itself and because most powers were only tem­porarily prepared to co-operate with a policy they clearly saw as merely a second-best solution.⁵⁵