China and the World Financial Markets 1870-1930: Modern Lessons From Historical Globalization
China began to borrow in the world capital markets in the late 19th century, issuing bonds to pay for defense as well as for large-scale economic development. Particularly interesting is the role that the clash between domestic and international investors played in China's 1911 revolution. The protection of external investor rights was perceived at the time as an infringement on Chinese sovereignty. In this paper we interpret the conflict over foreign investor rights in terms of a disequilibrium in the development of financial markets. Europe's high level of investor diversification put her investors at a relative advantage in bidding for development projects in China, while European investor expectations about protection from expropriation and default, lowered Chinese cost of capital, but also led to erosion of national sovereignty and a dramatic, grassroots political backlash. Despite fundamental differences between China today and China 100 years ago it is still important to consider the dangers of an imbalance between domestic and international investor markets, and the mismatch between domestic and foreign expectations about investor protection. The lessons of the last century suggest that China today should consider opening Chinese investor access to foreign capital markets in order to equilibrate the level of diversification between foreign and domestic investors. In addition, protection of domestic corporate investor rights is at least as important as protecting foreign investor rights.
|Date of creation:||Jul 2001|
|Date of revision:|
|Contact details of provider:|| Postal: 3301 Steinberg Hall-Dietrich Hall, 3620 Locust Walk, Philadelphia, PA 19104.6367|
Web page: http://fic.wharton.upenn.edu/fic/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rene M. Stulz, 1999. "Globalization of Equity Markets and the Cost of Capital," NBER Working Papers 7021, National Bureau of Economic Research, Inc.
- Kristen L. Willard & Timothy W. Guinnane & Harvey S. Rosen, 1995.
"Turning Points in the Civil War: Views from the Greenback Market,"
NBER Working Papers
5381, National Bureau of Economic Research, Inc.
- Willard, Kristen L & Guinnane, Timothy W & Rosen, Harvey S, 1996. "Turning Points in the Civil War: Views from the Greenback Market," American Economic Review, American Economic Association, vol. 86(4), pages 1001-18, September.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, .
"Investor Protection and Corporate Governance,"
19455, Harvard University OpenScholar.
- Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997.
"Legal Determinants of External Finance,"
Harvard Institute of Economic Research Working Papers
1788, Harvard - Institute of Economic Research.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Legal Determinants of External Finance," Working Paper 19443, Harvard University OpenScholar.
- RAFAEL LaPORTA & FLORENCIO LOPEZ-de-SILANES & ANDREI SHLEIFER & ROBERT W. VISHNY, . "Legal Determinants of External Finance,"," CRSP working papers 324, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," NBER Working Papers 5879, National Bureau of Economic Research, Inc.
- Paolo Mauro & Yishay Yafeh & Nathan Sussman, 2001.
"Emerging Market Spreads: Then Versus Now,"
OFRC Working Papers Series
2001fe03, Oxford Financial Research Centre.
- Paolo Mauro, 2000. "Emerging Market Spreads: Then Versus Now," Economics Series Working Papers 2001-FE-03, University of Oxford, Department of Economics.
- Yishay Yafeh & Paolo Mauro & Nathan Sussman, 2000. "Emerging Market Spreads; Then Versus Now," IMF Working Papers 00/190, International Monetary Fund.
- Roll, Richard, 1972. "Interest Rates and Price Expectations During the Civil War," The Journal of Economic History, Cambridge University Press, vol. 32(02), pages 476-498, June.
- A. P. Winston, 1916. "Chinese Finance under the Republic," The Quarterly Journal of Economics, Oxford University Press, vol. 30(4), pages 738-779.
- Maurice Obstfeld & Alan M. Taylor, 2002.
"Globalization and Capital Markets,"
NBER Working Papers
8846, National Bureau of Economic Research, Inc.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998.
"Corporate Ownership Around the World,"
NBER Working Papers
6625, National Bureau of Economic Research, Inc.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers 1840, Harvard - Institute of Economic Research.
When requesting a correction, please mention this item's handle: RePEc:wop:pennin:01-30. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel)
If references are entirely missing, you can add them using this form.