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Abstract
The cement and coal-briquette manufacturing enterprises founded by Chinese capitalist Liu Hongsheng (1888–1956) during the 1920s and 1930s illustrate the potential of perspectives from the field of energy history to enrich our understanding of the interface between business and environment in modern China. Through his involvement in coal marketing and distribution during the early twentieth century, Liu Hongsheng promoted and profited from China's nascent transition to an energy regime powered by fossil fuels. With the establishment of his cement and coal-briquette companies, Liu also devised ways to profitably reuse and exploit by-products from his coal businesses as a source of energy for other forms of industrial production. More broadly, this analysis of the ecological linkages among Liu Hongsheng's business ventures situates them in relation to the interlocking systems of technology, infrastructure, energy sources, and institutions that facilitated the initial emergence of fossil-fueled economic growth in China during the interwar period.
Acknowledgments
This paper was first presented at the workshop “Rethinking Business History in Modern China” held in Hannover, Germany in June 2014. The author is grateful to the workshop organizers, Klaus Mühlhahn and Hajo Frölich, as well as Elisabeth Köll and the other participants for their insightful comments. Sherman Cochran generously read and commented on an early draft, Yonglue Xue provided invaluable research assistance in preparing the piece for publication, and the two anonymous offered crucial suggestions for revision.
Notes on Contributor
Micah Muscolino is Associate Professor of Chinese History at the University of Oxford and Jessica Rawson Fellow in Modern Asian History at Merton College. His most recent book is The Ecology of War in China: Henan Province, the Yellow River, and Beyond.
Notes
1 Sherman Cochran, Encountering Chinese Networks: Western, Japanese, and Chinese Corporations in China, 1880–1937 (Berkeley: University of California Press, 2000), 147.
2 An outstanding example of work in this growing field is Astrid Kander, Paolo Malanima, and Paul Warde, Power to the People: Energy in Europe over the Last Five Centuries (Princeton, NJ: Princeton University Press, 2014). Pioneering forays into Chinese energy history are Victor Seow, “Carbon Technocracy: East Asian Energy Regimes and the Industrial Modern, 1900–1957″ (PhD diss., Harvard University, 2014); Shellen Wu, Empires of Coal: Fueling China's Entry into the Modern World Order, 1860–1920 (Stanford, CA: Stanford University Press, 2015).
3 For overviews of this literature see Robert Gardella, Jane Kate Leonard, and Andrea Lee McElderry, eds., Chinese Business History: Interpretive Trends and Priorities for the Future (Armonk, NY: M.E. Sharpe, 1998); Chi-Kong Lai, “Chinese Business History: Its Development, Present Situation, and Future Direction,” in Franco Amatori and Geoffrey Jones, eds., Business History Around the World (Cambridge: Cambridge University Press, 2003), 298–316; Madeleine Zelin and Andrea McElderry, eds., “Special Issue: Business History in Modern China,” Enterprise and Society 6, no. 3 (Sept. 2005). Several excellent business histories about Liu Hongsheng, upon which this essay seeks to build, largely focus on the same set of questions. See Cochran, Encountering Chinese Networks; Parks Coble, Chinese Capitalists in Japan's New Order: The Occupied Lower Yangzi, 1937–1945 (Berkeley: University of California Press, 2003); Kai Yiu Chan, Business Expansion and Structural Change in Pre-war China: Liu Hongsheng and His Enterprises, 1920–1937 (Hong Kong: Hong Kong University Press, 2006); Sherman Cochran and Andrew Hsieh, The Lius of Shanghai (Cambridge, MA: Harvard University Press, 2013).
4 These assumptions are fundamental to the discipline of industrial ecology, which investigates flows of energy and materials through industrial and consumer systems. A good introduction is offered by Robert U. Ayres and Leslie W. Ayres, eds., A Handbook of Industrial Ecology (Cheltenham, UK: Edward Elgar Publishing, 2002).
5 Shen Zuwei, “Shehui huanjing yu Liu Hongsheng qiye jituan de xingcheng” (Social environment and the formation of Liu Hongsheng's enterprise group) in Zhang Zhongli, ed., Zhongguo jindai chengshi qiye, shehui, kongjian (Enterprise, society, and space in China's modern cities) (Shanghai: Shanghai kexueyuan chubanshe, 1998), 106–10.
6 Lucas Reijnders, “The Cement Industry as a Scavenger in Industrial Ecology and the Management of Hazardous Substances,” Journal of Industrial Ecology 11, no. 3 (2007): 15–25. See also Hendrik G. van Oss and Amy C. Padovani, “Cement Manufacture and the Environment Part I: Chemistry and Technology,” Journal of Industrial Ecology 6, no. 1 (2002): 89–106; Hendrik G. van Oss and Amy C. Padovani, “Cement Manufacture and the Environment Part II: Environmental Challenges and Opportunities,” Journal of Industrial Ecology 7, no. 1 (2003): 93–127.
7 Pierre Desrochers, “How Did the Invisible Hand Handle Industrial Waste? By-product Development before the Modern Environmental Era,” Enterprise and Society 8, no. 2 (June 2007): 348–74.
8 Cochran and Hsieh, The Lius of Shanghai, 69. Founded in 1877 with Chinese owners, KMA was taken over by British management in 1900 and in 1912 became a Sino-British joint venture. Cochran, Encountering Chinese Networks, 150.
9 Chan, Business Expansion and Structural Change, 25, 27–8.
10 Cochran and Hsieh, The Lius of Shanghai, 69.
11 Quoted in Cochran and Hsieh, The Lius of Shanghai, 69–70.
12 Chan, Business Expansion and Structural Change, 128.
13 Shanghai shehuikexueyuan jingji yanjiusuo, ed., Shanghai ziben zhuyi dianxing qiye shiliao: Liu Hongsheng qiye shiliao, shang ce, 1911–1931 (Historical materials from Shanghai capitalism's typical enterprises: Historical materials from Liu Hongsheng's enterprises, part 1, 1911–1931) (Shanghai: Shanghai renmin chubanshe, 1981) (hereafter abbreviated LHSQYSL, part 1), 5.
14 LHSQYSL, part 1, 5.
15 LHSQYSL, part 1, 5–6.
16 On chijiangcha, see Frederic Wakeman, Jr., Policing Shanghai, 1927–1937 (Berkeley: University of California Press, 1995), 16.
17 LHSQYSL, part 1, 5–6.
18 Cochran, Encountering Chinese Networks, 150–1; Chan, Business Expansion and Structural Change, 27–9, chap. 4 passim.
19 Cochran, Encountering Chinese Networks, 151.
20 Albert Feuerwerker, “Industrial Enterprise in Twentieth-Century China: The Chee Hsin Cement Co.,” in Albert Feuerwerker, Rhoads Murphey, and Mary C. Wright, eds., Approaches to Modern Chinese History (Berkeley: University of California Press, 1967), 304.
21 LHSQYSL, part 1, 156.
22 LHSQYSL, part 1, 155.
23 J. Morgan Clements, “The Cement Industry of China,” Weekly Review of the Far East 20, no. 12 (May 20, 1922): 454–5.
24 LHSQYSL, part 1, 155–7. On the Chinese economy during this period and Shanghai's role in it, see Marie-Claire Bergère, The Golden Age of the Chinese Bourgeoisie, 1911–1937 (Stanford, CA: Stanford University Press, 1989); Thomas Rawski, Economic Growth in Prewar China (Berkeley: University of California Press, 1989); Wen-Hsin Yeh, Shanghai Splendor: Economic Sentiments and the Making of Modern China, 1843–1949 (Berkeley: University of California Press, 2007).
25 LHSQYSL, part 1, 157.
26 As of 1919, the three existing Chinese-operated cement works produced 1,000,000 barrels and two Japanese-run cement works in China produced 300,000 barrels. Imports amounted to 700,000 barrels. China's estimated total demand for concrete came to over 2,000,000 barrels, so imports and domestic output fell far short of these needs. Shanghai shuini chang, ed., Shanghai shuini chang qishi nian (Shanghai cement works, 70 years) (Shanghai: Tongji daxue chubanshe, 1990), 3.
27 LHSQYSL, part 1, 156.
28 Shanghai shuini chang, 3; LHSQYSL, part 1, 155–6.
29 LHSQYSL, part 1, 157; Ming Heng Chou, “China's Developing Cement Industry,” Rock Products 25, no. 2 (Nov. 18, 1922), 30; “Shanghai shuini gufen youxian gongsi zhi diaocha” (Investigation of Shanghai Portland Cement Company), Shangye zazhi (Business magazine) 3 (1928): 1. See also Bureau of Foreign Trade, China Industrial Handbooks Kiangsu (Shanghai: Ministry of Industry, 1933; repr., Taipei: Ch'eng-wen Publishing, 1973), 688.
30 LHSQYSL, part 1, 157.
31 Clements, “Cement Industry of China,” 455.
32 Rawski, Economic Growth in Prewar China, 182, see also 223–5.
33 Chan, Business Expansion and Structural Change, 31. The Shanghai Cement Company's other initial promoters had the same motive, as they included a number of coal distributors who had previously collaborated with Liu. Chan, Business Expansion and Structural Change, 78. See also Shanghai shuini chang, 4–5; “Shanghai shuini gufen youxian gongsi zhi diaocha,” 1. On the capitalization and management of the Shanghai Portland Cement Company prior to World War II, see Zhu Yingui, “Cong Shanghai shuini chang kan 1937 nian qian Zhongguo minjian ziben qiye jituan neibu de zijin wenti” (Looking at the capitalization problem within China's pre-1937 private capitalist enterprise groups through the Shanghai cement works), in Toshio Tajima, Zhu Yingui, and Jun Kajima, eds., Zhongguo shuiniye de fazhan: Chanye zuzhi yu jiegou bianhua (Development of China's cement industry: industrial organization and structural change) (Beijing: Zhongguo shehui kexue chubanshe, 2011), 55–73.
34 Desrochers, “How Did the Invisible Hand Handle Industrial Waste?,” 349–50. The “loop-closing” potential of the cement industry is frequently discussed in the industrial ecology literature. van Oss and Padovani, “Cement Manufacture and the Environment Part I”; van Oss and Padovani, “Cement Manufacture and the Environment Part II”; Reijnders, “Cement Industry as a Scavenger.”
35 LHSQYSL, part 1, 158.
36 van Oss and Padovani, “Cement Manufacture and the Environment Part I,” 104.
37 van Oss and Padovani, “Cement Manufacture and the Environment Part II,” 109.
38 LHSQYSL, part 1, 158.
39 North China Herald, March 15, 1924, 406. See also Shen bao (The Shanghai news), February 13, 1924; “Shanghai shuini gufen youxian gongsi zhi diaocha,” 1–2.
40 Chan, Business Expansion and Structural Change, 33.
41 Shanghai shuini chang, 10.
42 Bureau of Foreign Trade, 689.
43 Chan, Business Expansion and Structural Change, 82.
44 Chan, Business Expansion and Structural Change, 82.
45 Chan, Business Expansion and Structural Change, 85–6.
46 LHSQYSL, part 1, 34–5.
47 LHSQYSL, part 1, 166; Shanghai shuini chang, 7–8; “Shanghai shuini gufen youxian gongsi zhi diaocha,” 1. The price of gypsum (imported from Germany) was more than 10 times the cost of quarrying and transporting limestone to the cement works. Bureau of Foreign Trade, 689.
48 Bureau of Foreign Trade, 689.
49 LHSQYSL, part 1, 93; Shanghai shuini chang, 17–18.
50 LHSQYSL, part 1, 93; Shanghai shuini chang, 17–18.
51 “Report of Chung Shing Coal Tests in Power Plant” (January 31, 1933), Shanghai Municipal Archives (hereafter abbreviated SMA) Q414-1-532, 2, 5. Company engineers presented their analysis of the suitability of different types of coal in Tsung-shu Hsv [sic], “A General Formula for the Comparison of Coals Employed in Rotary Mills” (n.d. [1933]), SMA Q414-1-532, 15. Along with attaining sufficient raw materials at low cost, making efficient use of fuel always held high priority. In early 1931, the cement company overhauled machinery in each of its departments, including the coal mill. Works engineers recommended replacing steel plates on the coal mill's end wall with new ones that had smaller passing slits, which could catch finer particles and make it possible to use the smallest “grinding bodies.” As the report emphasized: “This would give an economical solution, as in particular small grinding bodies are the best to grind coal to coal dust, and we will have no wasted grinding bodies [any]more.” “Annual Overhaul of Machineries” (January 22, 1931), SMA Q414-1-239.
52 “Report of Tests of ‘Elephant’ Brand Cement” (January 19, 1933), SMA Q414-1-532, 10.
53 “Xuanyao danyong Yuesheng xie huo heyong Hongji yu Huashui xie zhi bijiao” (Comparison of rotary kilns using only Yuesheng coal dust and using a mixture of Hongay and Huashui coal dust) (June 12, 1933), SMA Q414-1-532, 12.
54 Shanghai shehuikexueyuan jingji yanjiusuo, ed., Shanghai ziben zhuyi dianxing qiye shiliao: Liu Hongsheng qiye shiliao, zhong ce, 1931–1937 (Historical materials from Shanghai capitalism's typical enterprises: Historical materials from Liu Hongsheng's enterprises, part 2, 1931–1937) (Shanghai: Shanghai renmin chubanshe, 1981) (hereafter abbreviated LHSQYSL, part 2), 91–2.
55 LHSQYSL, part 2, 92.
56 LHSQYSL, part 2, 92.
57 “Gongwuke baogaodan di 651 hao” (Works department report #651) (August 28, 1933), SMA Q414-1-519, 18.
58 This investigation also noted, however, that the lower price of Japanese cement placed Chinese factories at a serious disadvantage. Bureau of Foreign Trade, 690.
59 Chan, Business Expansion and Structural Change, 41.
60 As Parks Coble has shown, Liu Hongsheng's cement factory halted production on August 16, 1937, when Longhua fell under Japanese control. An attempt was made to protect the cement works by registering it as a German company, but workers and management fled when Japanese bombers attacked on October 27. The Japanese military seized the facility, entrusting management to two Japanese companies. In July 1938 its operations resumed. After producing only 25,485 metric tons of cement in 1939, the company produced almost 67,000 in 1940. Although Liu Hongsheng had already relocated to Sichuan, in 1942 the Japanese authorities pressured those of his family members still in Shanghai to sign a “rental” arrangement with the Japanese companies operating the plant. Even after Pearl Harbor, the company's cement output remained at nearly 52,000 tons in 1943 and more than 48,000 tons in 1944. Coble, Chinese Capitalists in Japan's New Order, 184–5, 190–1.
61 Chan, Business Expansion and Structural Change, 33; LHSQYSL, part 1, 35.
62 Bureau of Foreign Trade, 666.
63 LHSQYSL, part 1, 232–3.
64 LHSQYSL, part 1, 232–3.
65 The briquette company ultimately established its first factory in Pudong in a warehouse at one of Liu Hongsheng's wharves. LHSQYSL, part 1, 232–3; Bureau of Foreign Trade, 666, 670.
66 Chan, Business Expansion and Structural Change, 33.
67 The China Coal Briquette Company's first factory utilized a diesel engine of 46 horsepower and a motor of two kilowatts, the second a diesel engine of 210 horsepower and a motor of two kilowatts, and the third had three motors of 50 kilowatts each. Bureau of Foreign Trade, 667, 669–70.
68 By 1932, some 100,000 tons of Hongay coal dust were sold in Shanghai at a price of 9.5 taels per ton to manufacture coal briquettes. Bureau of Foreign Trade, 671, 672–3.
69 Bureau of Foreign Trade, 666–9.
70 Bureau of Foreign Trade, 671.
71 Other estimates placed annual production at more than 200,000 tons. Bureau of Foreign Trade, 670–1.
72 Bureau of Foreign Trade, 672.
73 Chan, Business Expansion and Structural Change, 40. See also LYSQYSL1, 241.
74 Robert Marks, China: Its Environment and History (Lanham, MD: Rowman & Littlefield, 2011) offers an authoritative synthesis of existing literature on China's environmental history but does not touch on this trend, which is indicative of the state of the field as a whole.
75 Although their benefits for environmental protection are overstated, instructive examples of such entrepreneurial practices can be found in Pierre Desrochers and Colleen E. Haight, “Squandered Profit Opportunities? Some Historical Perspective on Industrial Waste and the Porter Hypothesis,” Resources, Conservation and Recycling 92 (2014), 179–89. See also Desrochers, “How did the Invisible Hand Handle Industrial Waste?,” passim.
76 The term is derived from Kander, Malanima, and Warde, Power to the People, 8–9.