hong kong economic history

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  • 1.SOSC005Hong Kong Economic History CHEN, Y.C.Assistant ProfessorDivision of Social Science[email_address]

2. Overview

  • I. The Early Colonial Economy (1840-1860)
  • II. The Rise of Chinese Capitalist (1861-1941)
  • III. Integration with China before the Crisis(1980-1997)
  • IV. Integration after the 1997 crisis

3.

  • Early Colonial Economy
  • (1941-1960)

4. The Occupation

  • British was the 18 thcentury colonial empire that colonized many territories.
  • By 1899, British has occupied land that is 61 times larger than it own territory.
  • On 26 Jan 1841, British occupied the Hong Kong island, and began a 150 years of colonization

5. Why British occupied Hong Kong?

  • Mainly commercial interest
    • A place to fix their commercial boat after a long journey
    • A place where British merchants were under direct protection of British military might.
  • Materials support for the British army in the Opium War 1940-1942.

6. Hong Kong as free-trade port

  • 4 months after British occupied Hong Kong in 1841, Hong Kong was declared as free-trade port
    • All vessels from China or Chinese merchants that came to Hong Kong for trade did not have to pay any form of taxes.
    • Until today, Hong Kong only tax on limited goods such as cigarette, alcohol, drinks, cosmetic.. etc.
  • There were no restriction import goods in term of warehousing, categorization, re-manufacturing, repackaging nor re-export.

7. Why free-trade port?

  • Hong Kong lack of natural resources and exportable goods
  • Food and other consumer goods need to be imported
  • Good transportation location
  • Good natural harbor
  • Strong British colonial army to protect the port and trade security, e.g. fight the pirates.

8. Build infrastructure

  • Land office was erected in 1841 to measure and divide the land for auction (for sale).
  • By 1846, all the lands in the Victoria city was auctioned (or rented) out except military and government land.
  • There were residential buildings, offices for the European, warehouse and some factories.

9. Early economic ordinances ( )

  • 1843 LEGCO was established and many important economic ordinances was released.
  • 1847
  • 1856
  • 1866
  • 1875
  • 1877
  • 1883
  • 1885
  • 1886
  • 1888
  • 1892

10. Three main industries

  • Import and export trading
    • Hong Kong has a natural harbor. By 1848, the number of British vessels (457), American vessel (118), and Chinese (42) and Spanish (23).
    • Hong Kong was a mid-way trading center between China, Britain and India.
      • Indian cotton and opiumChina
      • Chinese tea and silverBritain and India
      • British industrial goods (textile, cigarette)China.
    • British trading companies in Hong Kong monopolized the trade.
      • The two main trading items were opium and Chinese bonded labors.

11. Shipping industry

  • Many British companies built vessels for
    • Trade between Hong Kong, China, India and the West.
    • Taking passengers on routine routes, such as , , , , .
  • Peninsular and Oriental Steam Navigation Company ( )Jardine Matheson & Co ( )were largest shipping companies that engaged in opium trade.

12. Ship Building Empire

  • To strengthen long-distance navigation and navy power, British colonial government continuously support shipping industry, more than other industries.
  • 1863 Whampoa Dock Co. ( )
  • 1888 with the assistant of British Navy, Whampoa Dock Co. built a new shipping dock atthat can accommodate the largest British Navy fleet.

13. Banking Industry

  • Many British banks were established to provide trading services.
    • Import and export financing
    • Credit insurance.
  • Oriental Banking Corporationfocused on opium trading services.
  • Standard Chartered Bankwas the largest remittance service ( ) between China, Britain and India.

14. Illegal Opium Trade

  • Opium trade continues to be the major trading item in the early Hong Kong colonial history, especially after the Treaty of Nanjing ( ) in 1942 that granted British trading rights and privileges in five Chinese ports.
  • Almost every British trading companies (12 largest) in Hong Kong involve opium trade.
  • In 1847,86.5%of Hong Kong total export was opium.
  • The large opium vessel entered Hong Kong harbor and reloaded on to smaller vessel, and shipped to Shanghai.
    • There were 40 opium pontoons ( ) along the China coastal region. Most of them belong to the British companies

15. Coolie Trade

  • In 1847, the gold rush in San Francisco and gold mine discovery in Australia 4 years later stimulate the coolie trade in Hong Kong.
  • Young male workers were smuggled to Hong Kong by Chinese brokers . They were forced to sign a contract to work continuously to repay their travel and food expenses.
  • Theseindentured labor ( ) were then shipped to the U.S., South America, Australia and Southeast Asia.
  • 25% of coolies dies in the journey between 1850-1856.

16. Good Business

  • 1851 - 1872, around 320, 000 coolies were exported from Hong Kong.
  • Shipping company made $90,000 for each trip.
  • Coolie trader made $160-283 per coolie sale.
  • 1851-1875, the annual revenue of coolie sale was 3.4 million.

17. Early Colonial Economy

  • 1841-1843: British military used Hong Kong as a entry port to supply military resources during the Opium War.
  • 1844-1848: After the Nanjing Treaty, Hong Kong trade decreased because merchants could enter freely into the 5 ports in China.
  • 1949-1860: capital accumulated from illegal opium and coolie trade were reinvested in Hong Kong. Hong Kong become thetransit trade center( ).
  • Hong Kong financed 1/4 import to China 1/3 of the export from China

18. Urban Land Development

  • In 1858, most trading companies set up their headquarters in Hong Kong.
  • The increase in real estate price stimulated colonial government to reclaim new land. Most auctions went to 25-30 Western trading firms.
  • They dominated real estate business through construction of offices, shop houses, residential, warehouse and port.
  • By 1855, colonial government had reached balanced budget, and thus did not need any budgetary subsidy from the British government.

19.

  • Mid Colonial Economy
  • (1861-1941)

20. The Rise of Chinese Capitalist Class

  • Chinese capitalist class formation started by working as broker for their British companies.
  • Chinese merchants from China and oversea brought capital to Hong Kong and opened stores and trading firms.
  • The began trading in China, and later expanded to international trading.
  • The numbers of Chinese business in Hong Kongincreased from 35 in year 1858 to 393 in 1881.

21. From collaborators to competitors

  • Colonial government encouraged Chinese capitalist to invest in Hong Kong because they were good business collaborators who have good connection with China and oversea Chinese networks, and have good knowledge of the markets.
  • At the end of 19 thcentury, many Chinese capitalist gradually became the competitors of the Western Capitalist.

22. The naturalization of the Chinese capitalist class

  • The 8 thgovernor John Hennessy understood that they could not isolated 95% of the Chinese population, especially the Chinese capitalist class.
    • The Chinese was crucial to British business interest.
    • 90% of colonial government revenue came from the Chinese.
  • Against segregation, Hennessy allowed Chinese elites to live in the European area ( ), become Legco member, enter the town hall freely
  • Chinese Naturalization Ordinance was passed to provide British citizenship to the Chinese elites.

23. Chinese Business

  • Manufacturing : Small scale light industries have emerged textile, food and drink industries. Grew faster after 1 stWar World.
  • Retailing : Oversea Chinese started retailing. , , , .
  • Banking : Bank of East Asia ( ) and other Chinese banks were established. Together with traditional , , , Chinese slowly became the third largest financial power.

24. Banking