In China’s economic history, Shanxi merchants (JinShang) were a prominent business group since the Song Dynasty, more than 1000 years ago, but they reached their peak during the Ming and Qing dynasties with a symbol of establishing Shanxi Guild Halls around the country. They creatively initiated the first banking institutions (Piaohao) in China in the early 19th century, which was the prototype of China’s modern finance
industry.89 They have been regarded as one of the five prominent merchant groups in Chinese history together with Zhejiang merchants, Canton merchants, Anhui merchants and Suzhou merchants.90
Shanxi province enjoyed a long history of business investment. The trade emerged in the southern part of Shanxi even before the Qin Dynasty (221-206 BC). According to accounts of the period: "The market starts at midday, when people from all directions meet together with all kinds of commodities. People trade with each other until everybody gets what he or she wants."91 After centuries of development, the rise of Shanxi merchants could be dated back to the "Kai Zhong Policy" in Ming Dynasty,92 in which government officials commissioned merchants to transport food supplies. Besides, Shanxi had rich mineral resources, while the handicraft and manufacturing industries also achieved considerable scale, which provided a substantial base for the merchants' development. At the same time, due to the dense population in southern Shanxi, merchants had to travel to other parts of China to gain their living. As a result, Shanxi merchants could be found all over China. Around the year of 2000, there was a saying in Beijing that "Most of the rich merchants in Beijing come from Shanxi." Business competition became ever more furious over time. So in order to strengthen their own power, Shanxi merchants began to organize into merchant groups. Although Shanxi merchants emerged as a regional group during the Ming Dynasty, yet it was during the Qing Dynasty that they particularly flourished, with
89 More details about the history of Shanxi merchants and their initiative in Chinese finance, see 黄鉴晖:山西
票号史, 1998.
90 China Central Television created an eight-episode documentary about Shanxi merchants in 2006, which is
also mentioned in GSP’s interview on 15/05/2012.
91 Source from A Brief History of Shanxi Merchants, http://www.chinaculture.org/gb/en_madeinchina/2006-
02/20/content_79460.htm, last log in on 10th April, 2016.
the set-up of the guildhall as a symbol. The guild hall was designed for the communication and connection of Shanxi people at the beginning; later it became an organization of self- protection for the merchants.93
Shanxi merchants became one of the, if not the most, successful and powerful merchant groups in China in Qing Dynasty. The development of business not only brought people wealth, but also changed the traditional belief of "He who excels in study can follow in the career of an official." The saying went that, "It's better to have a connection in a teahouse than to have a large amount of money" and "To be a government official is not as good as to work in a teahouse or bank."94 Teahouses and banks were both hot industries at that time.
In the Qing Dynasty, Shanxi merchants were listed at the top of merchant groups in China, with a good reputation in Asia and even Europe. They were excellent especially in three industries: camel teams, ship teams, and draft banks.
The history and business culture of Shanxi merchants have left today’s Shanxi NCC great heritage and legitimacy to inherit, especially in Qing Dynasty, the institution of Shanxi guildhalls around China have set up a great model for today’s Shanxi NCCs to follow. In history, Shanxi guildhalls as an organization of self-protection for Shanxi merchants have played a great role in connection and communication among Shanxi merchants doing business in different places; and they also functioned as a platform to build up links with Qing’s officialdom (Zhu, 2010). However, they were different from other merchant groups from East China or South China. Shanxi Guildhalls were not enthusiastic about promoting democratic revolution in late Qing China, but sponsored the Qing government to repress the revolutionary movement and peasant uprisings.
Shanxi merchants in history had showed strong state links as it had unusual mutual trust relationship with Qing governments. These links had been demonstrated in several aspects. First, they approached Qing officials, partnership with them in a special political and business collusion and monopolised several key industries due to the privilege given by Qing Government, Second, they sponsored the military spending of Qing government and worked as a main tool for Qing Government to implement their fiscal policy. Third, the profits Shanxi merchants had achieved were not being used to investment or reproduction,
93 The main points here source from Zhu Ying, “ 商会与近代中国” and “近代中国商人与社会”, “近代中国
商会、行会及商团新论”.
94 See more details in A Brief History of Shanxi Merchants, in Zhu Ying, The Merchant Groups and
but returned to their hometown to repair their houses or buy land. Therefore, as the feudal government went to collapse, Shanxi merchants could not be able to sustain their prosperity and also declined.