Financing Market-Oriented Reforestation: Securitization of Timberlands and Shareholding Practices in Southwest China, 1750–1900

Introduction

Timber produced in southwest China, especially Guizhou and Hunan provinces, became increasingly important in meeting the bourgeoning demand in the Lower Yangzi Delta beginning in the seventeenth century.¹ The process accelerated after the strengthening of civil administration in areas dominated by the Miao ethnic group in the early eighteenth century. The development of the timber industry in western Hunan and southeastern Guizhou was facilitated by improved water transportation, which connected this region directly to the Yangzi River system and promoted economic exchange between the natural resources of the southwest and the handicraft production centers in the east. The Chen Guan Customs Station, sitting on the Yuan River in Chenzhou prefecture, Hunan, levied transit taxes on the timber exported from this area closest to its source. Based on taxation data collected from the First Historical Archives, I estimate the value of timber passing through Chen Guan to be 327,229 taels in 1730, 424,556 taels in 1751, and 803,726 taels in 1801, or 2.5-fold growth in 70 years.²

The prosperous timber trade quickly exhausted the natural forests. By the second quarter of the nineteenth century, virgin forests had virtually disappeared along the river valleys, except in a few inaccessible enclosed districts.³ However, in some areas that were adjacent to timber markets or easily accessible by river transportation, potential profits from timber trade motivated market-oriented tree plantations after the natural vegetation was depleted. The Hunan-Guizhou border area continues to be an important source of timber even today thanks to the widely practiced tree planting.⁴

In his pioneering study on the forest management systems in Chinese history, Nicholas K. Menzies posed the key question of what were the contributing factors for forest management to take place despite general conditions of deforestation.⁵ Although his study was conducted at a time when the large numbers of local genealogies and contractual documents that are available to us today had not yet been discovered and published, he was able to propose a set of plausible conditions for durable plantation to take place based on scattered evidence. At the center of these necessary, though not sufficient, conditions are the market demand for forest products and the capacity to enforce the boundaries on access to the resources.⁶ While excessive demand for forest resources has always been blamed as a major factor leading to the exhaustion of natural forests, the market's demand for an increasingly scarce resource could also translate into considerable profit to be made from managed forests and motivate long-term investment. Indeed, as early as the twelfth century, the development of plantation forests in the Southern Song dynasty was interlinked with the growing urban markets, which left a market-oriented legacy for forest management in South China.⁷ During Ming-Qing times, in the mountainous areas connected to Jingdezhen, wealthy lineages and entrepreneurs cultivated fuelwood to supply the imperial kilns.⁸ Planting of cunninghamia and camphor was practiced in Fujian to supply the well-established timber marketing system in the Min River system.⁹

While affirming the importance of market demands and regulated access in motivating forest management, the current study goes further to examine how private endeavors at tree cultivation could be practical in the long term. Even when lured by the potential profit from a thriving market, small households could be easily put off by several risks involved in this endeavor. Setting aside potential risks of fire, theft, and harvest failures, the time required for tree growth, normally 30 years before maturing enough to be valuable as timber, was a severe challenge.¹⁰ Timber cultivation could not have become so widely practiced if the liquidity problem associated with the long-term nature of tree growth was not solved. The central question for this study is what sorts of institutional solutions, either formal or customary, were in place in this private, rural, and small-household-based economy to make long-term tree cultivation plausible, profitable, and sustainable. To put it in more general terms, it was a classical...