Where Western companies would stay ahead of Japan and other Asian economies in the twentieth century would be advanced machinery, high tech, and capital. Thus, at the time when Japan was beginning to beat its Indian and British competitors in the China market, it was undertaking heavy capital loans in London and other Western cities for its military and economic expansion. In the view of one study, "the Japanese war expenditure [for the Russo-Japanese War] was largely financed by the support of Anglo-American financiers, [and] from 1900 to 1913 Japan's large capital imports comprised over 20% of total foreign government loan issues in London. The Anglo-Japanese Military Alliance of 1902 doubtless eased these huge capital transfers, but their success derived from the way the Japanese, in contrast to the Chinese, had modernized their currency.

     The modern fate of Japanese and Chinese silver currency underlines this tale of continuity with a Western twist. From the opening of Japan to foreign trade in 1858 until its conversion to the gold standard in 1897, Japanese silver once again flowed out of the country. At first it was traded as bullion. Then from 1870 it was minted into silver yen coins, which won wide appreciation in East and Southeast Asian markets due to their high silver content and high quality workmanship. Not surprisingly, these silver coins won a particularly warm welcome from Chinese, who, still suffering a shortage of silver, melted and demonetized so many of these coins that when Japan recalled them to ease its switch to the gold standard only 9% of the total Japanese issue between 1870 and 1897 were reacquired.

     Meanwhile, it would take the Chinese government almost a century before it was able, at least officially, to modernize its traditional bimetallic system by introducing a paper currency in 1935. Throughout the nineteenth century, it failed to resolve the shortage of silver and a drastic decline in Yunnan copper production. The new copper cash it issued was only partly determined by the government's domestic production, virtually all its new silver came from abroad, and this new paper money circulated outside of government regulation for the first third of the century and then outside of effective government control for the other two-thirds. It also played no part in fostering the growth of more complex means of commercial credit, such as silver notes or cash notes, native bank orders, bank drafts, and, in Ningbo, a transfer account system. These means were initiated and managed by merchants, to the extent of accounting perhaps for more than a third of all Chinese money in circulation by the early nineteenth century, all without ostensible government involvement.