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Foreign Banks and Global Finance in Modern China: Banking on the Chinese Frontier, 1870-1919

Author(s):Moazzin, Ghassan
Reviewer(s):Bonin, Hubert

Published by EH.Net (December 2022).

Ghassan Moazzin. Foreign Banks and Global Finance in Modern China: Banking on the Chinese Frontier, 1870-1919. Cambridge: Cambridge University Press (Cambridge Studies in the Emergence of Global Enterprise), 2022. 334 pp. $99.99 (hardcover), ISBN 978-1-316-51703-1.

Reviewed for EH.Net by Hubert Bonin, Sciences Po Bordeaux and BSE-Bordeaux University.


Ghassan Moazzin, Lecturer at the University of Hong Kong, has written an original and important book. Foreign Banks and Global Finance in Modern China focuses on German banks operating in China near the turn of the twentieth century. In addition to Chinese sources, the book draws heavily on German archives, notably those of the Deutsche Bank and other banks that sponsored the Deutsch-Asiatisch Bank (DAB), the main actor of Germanic capitalism in China in 1890-1914. Despite its importance in European commerce in the Far East, the DAB has received scant attention from researchers. (Exceptions include Müller-Jabuch 1940 and Akagawa 2009). The book follows a rather recent conceptual logic: it aims to demonstrate that the actors of the Chinese economy and administration were not subject to the economic imperialism of the “great powers of Europe.” Moazzin shows that the Chinese had a real capacity for action and modes of thought capable of understanding and driving a “modern” market economy, despite the legacy of China’s international withdrawal in previous centuries.

The book is therefore a plea for a non-colonial interpretation of the country’s evolution, now embedded in an “open economy,” although concessions and “unequal treaties” had been imposed on the Chinese empire since the 1830s and 1860s. Little by little, the balance of power tended toward rebalance, and Moazzin connects the history of relations between the German banking community, Chinese companies, and the Authorities of Beijing and regional capitals to support his argument in a plausible way. He further supports it with material from the archives of the English and German Ministries of Foreign Affairs and Frank King’s four-volume history of the Hong Kong & Shanghai Banking Corporation (HSBC).

In contrast to a history emphasizing the socio-economic victimization of China by imperial or imperialist companies and banks, the book enhances the interaction between the flows of capital and know-how from Europe–and then also from Japan and the United States–and the constitution of Chinese portfolios of business competences adapted to an insertion within some paths of globalization and to gradually structured relations by the Chinese bourgeoisies in the cities of trade and banking. These debates about relations of domination or cooperation have been recurring for decades (cf. Nield 2015).

Moazzin shows that the Deutsch-Asiatisch Bank had to break the stranglehold imposed by London–a key place for clearing bills of exchange and commercial paper and for placing Chinese bonds–and by HSBC, from Hong Kong or Shanghai. Just like the French Banque de l’Indochine and the Russo-Asian Bank, the Deutsch-Asiatisch Bank, created in 1889, implemented a strategy of rapprochement with the Chinese business communities to establish direct contacts with them and direct part of the business flows to Berlin, Frankfurt, or Hamburg square.

Moazzin uses the concept of “frontier” to characterize the fields of encounter and interbreeding between foreign and Chinese capitalist cultures, as other historians have also done recently (Becker 2017, Bergère 2007, Henriot & Bickers 2000). The agency function of Chinese intermediaries was strongly intensified in the context of internationalized financial connections and relayed by the networks of major trading places (in Chinese: guanxi) within regional production systems. Turning them into customers also allowed bankers to have useful intermediaries for better risk management.

The circumstances and motivations of the creation of the DAB are reconstituted. The banks, seeking to establish a German presence in the Asian market, sharpened their attractiveness for financial and commercial operations (flow of bills of exchange, financing of commodity trading or trade finance) and helped firms to export industrial products. A study mission was sent to China in 1885 by the Deutsche Bank and the Diskontogesellchaft, with the aim of weighing the development prospects of the railways. A first Chinese loan was issued in Germany in 1887. Bismarck himself intervened to federate the rival groups, which enabled thirteen banks (Deutsche Bank and Diskontogesellchaft, with Haute Banque merchant houses such as Oppenheim, Stern, Bleichröder and Warschauer) to set up the DAB in February 1889.

Seven German executives moved to Shanghai in 1890 with the mission of mobilizing know-how between Europe and Asia (correspondent banking for the discounts of drafts), including London, through the branch of the Deutsche Bank. It was indeed a strategy of banking imperialism to shake the British force (five banks in Shanghai, including HSBC and Chartered Bank) and the French (Comptoir national d’escompte de Paris, before the takeover of its Asian network by Banque of Indochine) in the 1880-1890s. Berlin thus attracted commercial bills and documentary credits generated by the tea bill trade by short-circuiting London. An overseas bank thus took shape.

Moazzin describes the strategy of the DAB to establish relations with about 80 Chinese banks (as of 1903) to accelerate its penetration in the Yangze valley. It also relied on the relational network and the staff of a comprador (Xu Chunrong) who, like his colleagues, served as economic ambassador within the business communities, leading to a collection of Chinese deposits and credits to local banks (quianzhuang), as well as a breakthrough at Hankow/Wuhan, Quingdao (1898) and Hong Kong (1900). A kind of partnership balance was thus achieved, far from the hegemony obtained by the British semi-colonization process, and the position of the DAB was recognized by HSBC in an interest rate agreement in 1895.

This German-English bipolarization was expressed in negotiations with the Chinese authorities to issue loans to obtain the money needed to pay the compensation imposed by Japan on its military victory. Banks intended then to finance railway networks (chapter 4) or other infrastructure designed by the reforming government of Zhang Zhidong. Berlin and the DAB, which opened an agency in Beijing in 1905, then became part of these borrowing circuits that allowed China to restart after its defeat against Japan, and to affirm its will to modernize. Moazzin offers a meticulous account of the Chinese elites involved and the negotiations that led to the financial agreements in these years.

He highlights Germany’s contribution to this ramp-up. Germany obtained about 28.66% of the issues concluded in 1895-98 and 16.77% in 1899-1911, compared with 15.74% and 11.29% for France (p. 145). And DAB was part of the great loan of 1910-12, guaranteed by the customs revenues and therefore of the operations of financing of a State faced with large revolts in 1911-12, a crisis of confidence, and the need to maintain the payment of interest to the international holders of Chinese bonds. In an original and precise way, the book recounts the negotiations conducted by the new leaders around Yuan Shi Kai in 1912-13, from the correspondence between Berlin and the agencies in China, fortunately preserved in the archives, before the reorganization loan of April 1913.

Moazzin underlines the role of Germany and the banking community led by the DAB in supporting the emergence of a “new China,” economic and then institutional, and the genesis of the creative process that led to an acceleration of the interplays among the Chinese hinterland, railway and river axis, and port-cities. The DAB was thus one of the levers of this construction which is facilitated by the insertion of the country in the international financial circuits, without imperial inclinations. And chapter 6, which weighs the achievements of a quarter of a century of strategic offensive by the DAB and the coalition of German globalist interests (symbolized by the Deutsche Überseeische Bank worldwide), confirmed its success as Germany became the second largest investor in Chinese bonds in the mid-1910s and acquired a business network and reputable capital in the major Chinese markets.

Far from telling a simple German-Chinese banking story, Moazzin manages to reconstruct a whole section of “global history.” But one may think that he has somewhat neglected the colonialist policy applied by the German Empire in China when it, too, obtained concessions and built local clusters based on shipping companies, trading companies, and DAB credits (see So 2019).

The DAB’s history was abruptly interrupted because of geopolitical and diplomatic tensions during World War One. Despite German efforts to maintain China’s neutrality through a large loan in December 1916, it was not implemented, and, above all, geopolitical issues prevailed. This led to the breakdown of diplomatic relations in March 1917 and the sudden closure of the DAB agencies, the Shanghai one being liquidated in January 1919. Despite this failure, this banking, financial, and commercial adventure still makes for an exciting story. Moazzin, mobilizes the rich available archives to tell this story in detail. He adds intermediate conclusions, in each chapter, and an excellent conclusion that furthers our understanding of the internationalization of banks and firms, and the interweaving of the Euro-Asian economies.


Akagawa, Motoaki. “German Banks in East Asia: The Deutsche Bank (1870-75) and the Deutsch-Asiatisch Bank (1889-1913).” Keio Business Review, 2009, no. 45, pp. 1-20.

Becker, Bert. “Western Firms and Their Chinese Compradors: The Case of the Jebsen and Chau Families.” In Elisabeth Sinn & Charles Munn, eds., Meeting Place: Encounters across Cultures in Hong Kong, 1841-1984. Hong Kong: Hong Kong University Press, 2017, pp. 106-130.

Bergère, Marie-Claire. Capitalismes et capitalistes en Chine, des origines à nos jours, Paris, Perrin, 2007.

Henriot, Christian, & Bickers, Robert, “Introduction,” in Christian Henriot & Robert Bickers, eds., New Frontiers: Imperialism’s New Communities in East Asia, 1842-1953. Manchester: Manchester University Press, 2000, pp. 1-11.

Müller-Jabuch, Maximilian. Fünfzig Jahre Deutsch-Asiatich Bank, 1890-1939, Berlin, Otto van Holten Verlag, 1940.

Nield, Robert. China’s Foreign Place: The Foreign Presence in China in the Treaty Ports Era, 1840-1943, Hong Kong University Press, 2015.

So, Fion Wai Ling. Germany’s Colony in China: Colonialism, Protection and Economic Development in Qingdao and Shandong, 1898-1914, Abingdon, Routledge, 2019.


Hubert Bonin ( is a researcher in banking and business history at BSE-Bordeaux University. His recent publications include The Worldwide Legacy of Haute Banque, from 19th to 21st Century (Peter Lang, 2022), edited with Roger Nougaret, and Banking in China (1890-1940s): Business in the French Concessions (Routledge, 2020).

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Subject(s):Financial Markets, Financial Institutions, and Monetary History
International and Domestic Trade and Relations
Geographic Area(s):Asia
Time Period(s):19th Century
20th Century: Pre WWII