- In 1890s, British commercial and financial interests challenged by other powers. Actual size of British trade with China was small and investment was only 1% of total investment abroad.
In 1895, China was defeated by Japan. China agreed to pay Japan £30 million as part of peace agreements, only possible to be paid through borrowing. Frantic scramble to lend China money it needed, in return for ports, railways, banks, mining rights and control of customs revenues. Britain took control of some ports, Hong Kong and 2800 miles of railway concession. China was divided into spheres of influence with Britain controlling Yangtze valley – the commercial heartland.