Qing dynasty official Li Hongzhang (1823-1901) established the China Merchants Steam Navigation Company (Lunchuan zhaoshang ju) in 1872 in order to reclaim for China a share of the profits from steam shipping in Chinese waters that had been enjoyed by foreign shipping firms since the early 1860s.

The China Merchants Steam Navigation Company was the first of several ”officially supervised, merchant managed” (guandu shangban) industrial enterprises set up by Chinese officials in the late nineteenth century (e.g., Kaiping Mines, Shanghai Cotton Cloth Mill, and Hanyeping Coal and Iron Corporation, among others). The company was supervised by Li Hongzhang (as governor-general of Zhili Province and commissioner of the northern ports), and managed by former compradors with experience in steamship operations. Government support of the company consisted of an exclusive contract to carry the tribute grain (a yearly tax in kind) from the Yangzi Valley to the capital, as well as loans from government sources and monopoly rights that precluded the founding of rival Chinese steamship companies.

In its first decade, the China Merchants Steam Navigation Company competed successfully with foreign companies, extended routes to Japan and Southeast Asia, and purchased the fleet of the failing American Shanghai Steam Navigation Company. Although it remained one of the four most prominent shipping companies in China between the 1880s and World War II, the China Merchants Steam Navigation Company did not grow at the same rate as rival British and Japanese firms. After government official Sheng Xuanhuai (1844-1916) became China Merchants director-general in 1885, the merchant managers lost much of their autonomy and the company became increasingly subject to official exactions in the form of both routine corruption and the diversion of funds to other guandu shangban enterprises.

In 1911 the company’s board of directors voted to sever its official connection, and it operated as a private concern until the Nanjing regime of Chiang Kai-shek (Jiang Jieshi, 1887-1975) nationalized it in 1935, renaming it the National China Merchants Company (Guoying lunchuan zhaoshang ju). After 1949, the China Merchants’ mainland branches were incorporated into the state shipping company of the People’s Republic of China. The Hong Kong branch remained in business, becoming an important investor in mainland China’s special economic zones in the 1980s and 1990s.

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