Over the past two generations a fundamental change has taken place in the scholarly understanding of the commercial world of late imperial China. Lasting from the Song (960–1279) to the end of the Qing dynasty (1644–1911), this millennium of Chinese history had long been judged a period of decline, its initial economic breakthroughs never fulfilling their promise. The commercial and technological innovations of the eleventh and twelfth centuries were thought to have given way to economic stagnation and cultural conservatism, as the enterprising peasantry and merchants of south China lost out to the prerogatives of Confucian scholar-officials and their state-sponsored culture in the Ming (1368–1644) and Qing dynasties. Tested by a highly competitive examination regime and thereafter sheltered by a host of privileges, these scholar-officials acquired and retained an unrivalled hegemony that was cultural, political, and, some would add, economic. When China suffered a severe economic downturn during the nineteenth and twentieth centuries, the once-admired stability of the Qing regime was criticized for its backwardness, and the late imperial economy of these scholar-officials’ rule was condemned for its stagnation.

Since the profits from pawnbrokers’ loans fell into relatively few hands, many Huizhou merchants came to rely on commercial partnerships, the formal and informal, to expand their pool of investment capital and the operation of their businesses. Chapter 5 investigates in detail the development of three distinct varieties of these partnerships for both Ming and Qing merchants in general and for Huizhou merchants in particular. Attention is paid to the distinctive principles of each of these types of commercial partnership, which seem to have grown out of specific regional conditions in China and the commercial needs of its itinerant merchants both before and during the Ming. In addition, this chapter explains the Huizhou merchants’ solutions to such common problems of business governance as bankruptcy and a merchant’s access to his committed investments during the contracted period of investment