Economic Dualism: The Case of China 1840–1937

A persistent argument in condemning foreign economic intrusion in China (1840–1937) is that the “traditional” or the “indigenous” sector of the economy was “hampered,” “disrupted,” or even “ruined.” It is maintained that the handicrafts, small mines, native banks, junks, and coolie carriers were all helplessly depressed because of competition from their counterparts in the modern sector of the economy, which was an outgrowth of external trade and foreign investment in China. Some have argued that the supposed decline in the traditional sector was a net loss to China, since the limited development in the modern sector was not large enough to offset losses in the traditional sector, or that gains in the modern sector were primarily reaped by countries which traded with or invested in China. Others have taken a more moderate view: that the net effect of foreign economic penetration in China cannot be ascertained, because gains and losses in the two sectors cannot be compared quantitatively. But in either case there is the assertion that there was a decline in the traditional sector.