History of Banking in China：Government Banks
After the launch of the Self-strengthening movement, the Qing government began initiating large industrial projects which required large amounts of capital. Though the existing domestic financial institutions provided sufficient credit and transfer facilities to support domestic trade and worked well with small-scale enterprises, they could not meet China's new financial demands. China turned to foreign banks for large scale and long term finance. Following a series of military defeats, the Qing government was forced to borrow from foreign banks and syndicates to finance its indemnity payments to foreign powers.
A number of proposals were made by a modern Chinese banking institution from the 1860s onwards. Li Hongzhang, one of the leaders of the self-strengthening movement, made serious efforts to create a foreign-Chinese joint bank in 1885 and again in 1887.
The Imperial Bank of China (中国通商银行), China's first modern bank, opened for business in 1897. The bank was organised as a joint-stock firm. It adopted the internal regulations of HSBC, and its senior managers were foreign professionals. After the proclamation of the Republic of China, the bank changed its English name to the Commercial Bank of China in 1912. The name more accurately translated its Chinese name and removed any link to the Qing Dynasty.
In 1905, China's first central bank was established as the Bank of the Board of Revenue(大清户部银行). Three years later, its name was changed to the Great Qing Government Bank (大清银行). Intended as a replacement for all existing banknotes, the Da Qing Bank's note was granted exclusive privilege to be used in all public and private fund transfers, including tax payments and debt settlements. Da Qing Bank was also given exclusive privilege to run the state treasury. The Board of Revenue that controlled most of the central government's revenue transferred most of its tax remittance through the bank and its branches. The government entrusted the bank with the transfer of the Salt Surplus Tax, diplomatic expenditures, the management of foreign loans, the payment of foreign indemnities, and the deposit and transfer of the customs tax in many treaty ports.
Photo of the first meeting between government officials and businessmen of Board of Revenue
Note of Board of Revenue
Following the Xinhai Revolution of 1911, Daqing Bank was renamed the Bank of China. This bank continues to exist today.
Another government bank, the Bank of Communications (交通银行), was organised in 1908 by the Ministry of Posts and Communications to raise money for the redemption of the Beijing-Hankou Railway from Belgian contractors. The bank's aim was to unify funding for steamship lines, railways, as well as telegraph and postal facilities.