Western Capitalism in China: A History of the Shanghai Stock Exchange

Emerging stock markets have attracted considerable academic interest over the last ten years. The growth of these emerging markets has been impressive as developing countries seek to mobilize both domestic and international funds to finance investment. In this respect the stock exchange has become a symbol of development. Yet many new markets have been characterized by high price volatility, variable trading conditions and occasional ’crashes’. Chinese markets are no exception to these trends. Drawing on a range of primary and secondary sources, including a collection of weekly share lists of the early market and later of the stock exchange from The North China Herald, Arthur Thomas examines the financial evolution of Shanghai and the contribution of the major western banking institutions which financed the early import and export trade. Opening chapters provide an account of the commercial activity of the area, the genesis of the share market, its organizational development and dealing methods, and the leading brokers and broking firms in Shanghai. The latter part of the book chronicles the behaviour of the market and the influences which produced periodic booms, crises and slumps, culminating in the final collapse of the market with the arrival of war in 1941. The late 1980s witnessed the re-emergence of the Chinese market with ’experiments’ in Shanghai and Shenzhen. These emerging experimental stock markets grew rapidly with considerable potential in their early years, but they have also been prey to high volatility and difficulty in building up a developed financial infrastructure. Western Capitalism in China explores the fluctuations in the fortunes of the Shanghai Stock Exchange and points to favourable future potential, with the possibility of a major market consolidation in the future. W. A. Thomas lectures in the Department of Economics and Accounting at the University of Liverpool.