Peking – Hankow: financing and building the first major railway line in Imperial China, 1899-1905
At the turn of the 19th – 20th century, three of the BNP Paribas Group’s […]
Long before it established its countrywide network in France, the Comptoir d’Escompte de Paris (CEP) opened an office in China. For more than a century and a half, the various banks that preceded the Group were able to cope with the tribulations that punctuated modern history in China. But their presence, in various forms, also demonstrated that they understood the country’s enormous potential and were able to build lasting economic and financial relationships.
Political and economic instability in China led CNEP to revise its expansion strategy in all of Asia.
Starting from the end of 1872, a violent crisis shook the economy of South Asia. A decline in the price of silver bullion affected trading with Europe and depreciated profits that could be transferred to countries using a gold standard. The CEP network’s profits collapsed in 1873.
During the following decade, Comptoir National d’Escompte de Paris (CNEP), which also suffered from the economic and political tribulations in the country, imposed a series of openings and closings on its branch offices. Impacted by the degradation of silver bullion, confused by the consequences of the war between China and Japan in 1894-1895, and concerned about the crisis that had been going on since the end of 1889, CNEP decided to withdraw from the Far East.
After the closing of the Yokohama office in Japan in 1893, Banque de l’Indochine took over the CNEP office in Hong Kong in 1894, and transferred all of its staff in its own network; the Hankou and Shanghai offices were handed over to the Russian-Chinese bank in 1895.
CNEP’s “physical” departure from China was carefully planned and in no way final: the Comptoir continued to have a strong economic and financial influence, but was no longer in the front line. At its initiative, and with the support of Crédit Industriel et Commercial, Banque de l’Indochine came into being on 21 January 1875, with the two establishments sharing the capital of the new financial institution. The purpose of this institution was to issue currency in two French colonies, namely Cochinchine and French India (Pondichéry). This privilege was granted by the French government for 20 years, and the bank was authorised to give loans and practice discounting, operating as a bank of issue and a commercial bank.
With new offices in Hong Kong (1894) and Shanghai (1899), Banque de l’Indochine, “the daughter of Comptoir d’Escompte de Paris”, enabled it to maintain a key position in China, which had become one of the main exchange markets for the bank. But it also became an obligatory passage for rice imports from Indochina and Siam, as well as cotton yarn from Europe and India. In return, the exportation of Chinese silks and tea to Europe intensified.
In the 1890s, when CNEP withdrew, Banque de l’Indochine expanded its network. This period marked the beginning of a vast international roll-out of the Comptoir, which within the space of 15 years would abandon China.
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