ABSTRACT
The appeal of British free trade brought Europeans and Americans to East Asia to exploit opportunities that emerged due to weak government economic presence. The laissez-faire economy offered a market of free trade for expansion in business operations, proven by the fact that North German traders extended their market investments in Hong Kong and thrived in this emerging regional trade hub, despite that it was in the middle of the European recession in the 1880s. The economy of Hong Kong was developed with its market built under the influence of the British laissez-faire doctrine of free trade. In this system, arbitrage, exchange and conversion were the major activities that enlarged the credit web and generated large margins of profits. The situation of weak economic governance of the Kiautschou Gouvernement and government–merchant competition in Qingdao did not see improvements before the Chinese and German governments in Shandong began a dialogue of military and economic discussions.
