Ultimately China was undermined in the nineteenth century by its failure to industrialize at more or less the same time as the Western powers and Japan. From around 1860 there were significant examples of Chinese industrial development that were comparable with those in Japan, notably in Shanghai. [287] But, given China ’s vast size, they were too limited and too scattered. China, above all, lacked two crucial ingredients of Japan ’s modernization: a strong modernizing state and a prosperous agrarian sector that could generate the surpluses needed to fund industrialization. [288] In the second half of the nineteenth century, Chinese agriculture stagnated or even regressed as a result of the destruction wrought by civil war, insurrections, the rising price of silver, floods and famines. Worse, after the defeat by the Japanese in 1894, China was almost bankrupted by the terms of its reparation payments and then found itself defenceless in the face of yet further Western and Japanese demands. [289] The Western powers exploited China ’s vulnerability by carving out new spheres of influence and acquiring the so-called ‘leased territories’. [290] Foreign capital poured into China as the number of foreign businesses expanded rapidly, keen to exploit a situation where they could operate virtually without restraint or discrimination. [291] By 1920, Jacques Gernet writes:
the whole Chinese economy was dependent on the big foreign banks in Shanghai, Hong Kong, Qingdao, and Wuhan, and on powerful [foreign] companies… The customs, the administration of the salt tax, and the postal service were run by foreigners, who kept all the profits. Western and Japanese warships and merchant shipping were everywhere – in the ports, on the coast, and on the Yangzi River network. Apart from a few Chinese firms… the whole modern sector of industry (cloth mills, tobacco factories, railways, shipping, cement works, soap factories, flour mills and, in the towns, the distribution of gas, water and electricity, and public transport) was under the control of foreign companies. [292]
China’s plight during this period is illustrated by the fact that in 1820 its per capita GDP was $600, in 1850 it was still $600, by 1870 it had fallen to $530, in 1890 it was $540, rising very slightly to $552 in 1913 – still well below its level in 1820, almost a century earlier. By 1950 it had fallen to a mere $439, just over 73 per cent of its 1820 level, and lower than in 1850. [293] These figures reveal the disastrous performance of the Chinese economy over a period of 120 years, with foreign intervention and occupation being the single most important reason. It is hardly surprising that China now refers to the period 1850- 1950 as the ‘century of humiliation’. Over eighty years after the Meiji Restoration – and well over a century and a half since the commencement of Britain ’s Industrial Revolution – China had barely begun its economic take-off.
