Summary:
In 1901, the Qing government was forced to sign the “Boxer Protocol” with western countries to pay 450 million “haikwan tael” of silver (the “Boxer Indemnity”). The research on the Boxer Indemnity is quite rich, but there are still some shortcomings. Previous studies are mainly based on traditional data and historical research methods, the application of new historical materials and new methods needs to be extended. Most studies treat the Boxer Indemnity as a separate event and are limited to commenting on the event and its impact, comparisons with other international indemnities of the same era and analysis of its connection with the global economic and financial markets are lacking. This paper studies the Boxer Indemnity and its impact from the perspective of debt. Based on previous research results and related materials, this paper compiles a flow chart of the Boxer Indemnity payment, and concisely explains the payment process of the Boxer Indemnity. Furthermore, from the perspectives of currency purchasing power and international comparison, it analyzes the equivalence of the Boxer Indemnity to the proportion of economic aggregate and government fiscal revenue, the value of the Boxer Indemnity and its historical influence in public finance, banking, currency and other aspects. The research findings of this paper include the following. First, the principal of the Boxer Indemnity is equivalent to 4.33 times of the Qing government's fiscal revenue in 1903. However, through the arrangement of debt repayment, the actual amount of the indemnity paid each year gradually decreased in its percentage to the fiscal revenue, avoiding the direct bankruptcy of the Qing government. Second, converted to the 1900 International dollar (Geary-Khamis Dollar) by the purchasing power parity, the Boxer Indemnity accounted for about 2.1% of China's GDP in 1900. In addition, due to the global depreciation of silver in the second half of the 19th century, the proportion of the Boxer Indemnity to the total indemnities in modern China is significantly lower when converted to the purchasing power of rice than in its silver amount. Third, compared with the domestic and foreign debt interest rates of the Chinese government at that time and the long-term sovereign debt interest rates of major countries around 1900, the 4% interest rate of the Boxer Indemnity is at a moderate level. Fourth, compared with Germany's war indemnity after World War I, the principal of the Boxer Indemnity is far lower in its proportion to the total national economic volume. However, China's actual payment each year is higher in its proportion to the fiscal revenue than that of the German indemnity. Unlike the German indemnity, the repayment of which produced unprecedented hyperinflation and exerted a great impact on the German history thereafter, the Boxer Indemnity did not bring hyperinflation to China. The main reason is that China did not have a real central bank and government credit paper money at the time, and the government could not relieve the fiscal pressure by issuing paper money indiscriminately, but the impact of the indemnity on China's financial system was more long-term. At last, the Boxer Indemnity had profound impact on China's finance, banking and currency. In terms of fiscal taxation, the Chinese Maritime Customs Service, which was managed by foreigners, took advantage of the Boxer Indemnity to expand its power, monopolized China's most important source of tax revenue and became “the second fiscal authority” independent from the Chinese government. In the financial market, foreign banks further strengthened their financial privileges and market advantages by handling the Boxer Indemnity business, and established their status as “recessive central banks” in China. In particular, the power expansion of the HSBC and the Citibank is the most obvious. In terms of currency, the Boxer Indemnity did not change the “old system” of China's chaotic currency system, but gave birth to a “new cycle” and “new crisis” in currency circulation, which became an important fuse for the Shanghai “rubber wave” (financial crisis) in 1910. Based on the above findings, this paper shows that the debt settlement of war reparations in modern history was not only dominated by political and diplomatic situations, but was also closely related to the transnational operations of financial institutions, especially banks. The economic impacts of war reparations depend not only on the total repayment amount, but also on the ability to govern the economy and the fiscal and financial systems.
王信, 张翼, 魏磊. 庚子赔款的债务化偿付及其影响[J]. 金融研究, 2021, 488(2): 133-152.
WANG Xin, ZHANG Yi, WEI Lei. The Debt Repayment of the Boxer Indemnity and Its Impacts. Journal of Financial Research, 2021, 488(2): 133-152.
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