Qianzhuang

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Qianzhuang (Chinese: 錢莊; Wade–Giles: ch'ien-chuang) were local independent Chinese banks in the early modern period, as distinguished from the nation-wide bank networks headquartered in Shanxi province called the "Shanxi banks" (票號, piaohao). Also known by a variety of regional names, such as qiansi (錢肆), qianpu (錢鋪), yinhao (銀號), duihuan qianzhuang (兌換錢莊), qiandian (錢店), qianzhuo (錢桌), duidian (兌店), qianju (錢局), yinju (銀局), or yinpu (銀鋪) in Mandarin Chinese, and translated as money shops, native banks, private Chinese banks, or old-style banks in English, qianzhuang banks first sprung up during the Ming dynasty but greatly expanded during the Qing dynasty. Unlike the Shanxi banks, the qianzhuang tended to have much more risky business practices.^[1]

These institutions first appeared in the Yangzi Delta region, in Shanghai, Ningbo, and Shaoxing. The first qianzhuang can be traced to at least the mid-eighteenth century. In 1776, several of these banks in Shanghai organised themselves into the banking guild known as the Qianye Gongsuo.^[2] In contrast to piaohao, most qianzhuang were local and functioned as commercial banks by conducting local money exchange, issuing cash notes, exchanging bills and notes, and discounting for the local business community. Qianzhuang maintained close relationships with Chinese merchants, and grew with the expansion of China's foreign trade. When Western banks first entered China, they issued "chop loans" (彩票, caipiao) to the qianzhuang, who would then lend this money to Chinese merchants who used it to purchase goods from foreign firms. During the latter half of the 19th century the qianzhuang worked as intermediaries between Chinese merchants and foreign banks. Unlike the Shanxi banks the qianzhuang survived the fall of the Qing dynasty because of their close relationships with foreign banks. The qianzhuang have always been a true financial service provider for Chinese agribusiness and commercial households. The control of deposit and loan risk in the qianzhuang business model is a concentrated expression of the localisation advantages of qianzhuang.

It is estimated that there were around 10,000 qianzhuang in China in the early 1890s.^[3][4] There were several financial crashes which occurred in China during which a large number of qianzhuang closed, the largest of these occurred in the years 1883, 1910, and 1911. By and by the traditional qianzhuang banks were being replaced by modern credit banks in China, particularly those residing in Shanghai. This would continue to happen well into the Republican period. The last qianzhuang banks were nationalised in 1952 by the government of the People's Republic of China.^[5]

During the 1990s qianzhuang made a come back in mainland China, these new qianzhuang are informal financial companies which are often operating just within the edges of what is legal. The government attitude towards these new qianzhuang isn't that much different from their attitude in the 1950s.