Chapter 340: The Huaihai Economic Zone
It is said that the economic zone planned by the four Hechingen financial groups in the Far East, covering southern Shandong, northern Jiangsu, eastern Henan, and northern Anhui, is an economic depression. In reality, this is the result of natural disasters and man-made catastrophes over the years.
Man-made disasters are certainly the main factor. Since the Yellow River diverted its course during the Song Dynasty, its mouth has been in northern Jiangsu, and the area has continuously suffered from flooding. However, thanks to the Grand Canal, this region remained one of the most economically prosperous areas from the Ming to Qing dynasties.
In the early Qing Dynasty, like all unified dynasties, the government had the capability to manage the Yellow River. But now, the situation has deteriorated, partly due to the rise of sea transport. This region's decline was almost inevitable.
By the time the Hechingen financial group arrived, the Yellow River had already diverted for twenty years, and the flooding had subsided. The Taiping Rebellion and the Nian Rebellion had been suppressed, providing a good window for development. The Hechingen group arrived just in time to take advantage of the situation.
Without the continuous natural and man-made disasters, the Hechingen financial group would have found it difficult to enter this area. While the floods and military disasters caused immense destruction, they also destroyed the local feudal economic system.
For example, Huai'an Prefecture, once a crucial territory for the Hui merchants second only to Yangzhou during the Ming and Qing periods, was seized by the Hechingen financial group. However, this wasn't exactly "seizing," as the focus of the Hui merchants had already shifted to Songjiang Prefecture. With the Yellow River's diversion and the neglect of the Grand Canal, Huai'an lost its role as a major hub for north-south river transport. Coupled with the rise of sea transport and the influx of cheap foreign goods via the sea, it was inevitable that the Hui merchants abandoned the area. The Hechingen group merely played the role of the "final blow," forcing the Hui merchants to completely give up the region.
Similar to Huai'an, other places like Haizhou, Xuzhou, Jining, Yanzhou, Sizhou, and Fengyang were also affected. These areas overlapped with the activities of the Nian army. In 1855, the Yellow River broke its banks (east of Kaifeng), causing massive displacement of refugees in southern Shandong, northern Anhui, and northern Jiangsu. Many joined the Nian army, and their activity peaked. Both sides of the Huai River were filled with Nian soldiers. The Nian army's persistence was linked to the local economy being destroyed and the people losing their means of livelihood.
Ernst, who had previously been enthusiastic about the East African immigration project, had not noticed that the region covered by the Hechingen financial group was the very area that netizens in the past had imagined as the "Huaihai Province" on internet media. It was only when the Hechingen financial group planned to invest heavily in the Far East to address the economic crisis that he realized this.
When Ernst invests in a region, he likes to plan the area carefully. Typical examples are the Northern Industrial Belt of East Africa and the Lake Malawi Industrial Zone. Less typical cases include the investment areas centered around Berlin, Vienna, and Trieste. As for the United States, it's purely for the money — wherever the profit is high, capital flows there. Far Eastern investment, however, was not purely about economic profit. It was also influenced by Ernst's personal feelings. As long as it didn't conflict with interests, he was willing to help, maintaining a win-win situation where neither side loses.
Yanzhou Prefecture, Zaozhuang.
At this point, Zaozhuang was a village under Yanzhou Prefecture's administrative jurisdiction in Yixian County, a region with a long history. If you're unfamiliar with Yixian, the name Lanling might sound more familiar.
Although in the previous life Zaozhuang, Yixian, and Lanling were not considered the same by the local population, the location is generally in this area.
"Mr. Chen, I hope the local government can make things easier for us when we invest here," said Mark, the branch manager of Hechingen Bank in Yanzhou.
"Hehe, don't worry, your bank has traveled so far to invest in the Far East. As guests, we, as a great nation, will certainly extend our courtesy and won't let anyone delay your business!" replied Chen Shijie, the Shandong Provincial Magistrate, representing the Qing government, with a smile.
However, in his heart, he did not think much of it. If it weren't for the Hechingen financial group's shady practices, who would want to deal with these foreigners?
Of course, Hechingen's investments in the Far East couldn't avoid the local government, and the Qing government's tendency to respond better to force than softness was well known. Therefore, after the East African government stepped in, they obtained the "Imperial Sword" in the capital, and only then did large-scale development in the Far East begin.
The East African government didn't have such great influence, and actually, it was a joint effort with German and Austro-Hungarian merchants. In the name of the three nations — East Africa, Germany, and Austria-Hungary — they pressured the Qing government to relax restrictions. Germany and Austria-Hungary were represented by their merchants, but the East African government primarily led the initiative.
Germany was too busy dealing with internal issues and had no time to focus on overseas matters. They were focused on ensuring that France would never recover, while the Austro-Hungarian envoy was stationed in Japan, rarely staying in the Far East.
Hechingen was a German financial group, and together with other German merchants operating in the Far East, it naturally represented German interests. Therefore, the Prussian envoy was once again invited by Hechingen.
An East African ambassador, a German envoy, and the German merchant community together represented German merchants' interests in the Far East. This pressure on the Qing government solved the issue, as the Qing government, wary of world powers, knew better than to ignore it. The psychological scars left by Britain and France were still fresh in their minds, and dealing with Russia in the north alone was enough trouble.
Along with the East African-led economic cooperation, although there were elements of coercion, the Qing government was given enough face. They were allowed to take a 50% stake and collect taxes. While they had no management rights, this profit and tax share was certainly substantial.
As for how much the imperial court would invest, that entirely depended on their financial capacity. In the end, the Qing court, which was notoriously tight-fisted, didn't invest but allowed Hui merchants with semi-official business status to take a 30% stake, while Shanxi merchants funded the remaining 20%. Together, they developed the "Huaihai Economic Zone."
The Huaihai Economic Zone spans four provinces and is rich in coal resources, particularly in southwestern Shandong and northern Anhui, where there are large coal mines. Since the entire world was in the steam age and the Far East market was huge, developing the coal industry was a safe bet.
Zaozhuang was the first place Hechingen intended to invest in. The textile industry, being the easiest to enter, was already confirmed to be in Jiaozhou. As for coal mining resources in the Huaihai region, they were abundant, so the Hechingen group planned to begin by developing the coal mines in Zaozhuang.
Located not far from Weishan Lake, Zaozhuang had convenient transportation. The startup capital would come from Hechingen Bank, but construction would be handled by an Austrian coal mining company. Equipment would be imported from Germany, ensuring that the interests of East Africa, Germany, and Austria were all covered.
However, the name "Zaozhuang" was a bit too modest. At that time, Zaozhuang was still just a small town (influenced by the outflow of the local population due to East African immigration). They decided to rename it "Lanling" after its ancient name to reflect the new city's aspirations. As for the original Lanling town, they could only apologize.
The newly planned Lanling City would replace the original Zaozhuang town and become a new industrial city based on coal mining. The importance of the coal industry to industrialization at that time is unquestionable. Once coal mining began in Lanling City, relying on Weishan Lake and river transport, it could serve the entire Huaihai Economic Zone.
Lanling City was just the starting point. In the future, coal mines in Jining, Linyi, Huaibei, Zibo, Heze, and even as far as the Anhui Huainan region might be developed.
Meanwhile, the Qing government organized manpower to organize and dredge the roads and canals within the Huaihai Economic Zone. The food needed for these projects would be supplied at cost by East Africa to the Qing government, with both parties sharing the future profits.
The tax system within the Huaihai Economic Zone was also unified as per East Africa's request, modeled after the German Customs Union. Some heavy taxes and local protectionism were eliminated, ensuring the free flow of people and goods throughout the entire Huaihai Economic Zone.
The Qing government's central authorities were happy to see this, as the local tax system had already been corrupted. But as rulers, they didn't want to make any major changes. Let East Africa take on the unpleasant task of reform.
Of course, the Qing government also kept an eye on East Africa. This was the reason why Chen Shijie, the Shandong Provincial Magistrate, personally stepped in. He had once been an aide to Zeng Guofan and participated in the suppression of the Taiping Rebellion and the Nian Army. Thus, this time, he was tasked with monitoring East Africa on behalf of the central government. The cooperation between both sides took place in an atmosphere of mutual distrust.
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