The hidden impact of the 1931 post-Wanpaoshan riots: Credit risk and the Chinese commercial network in colonial Korea

One of the unintended consequences of the Wanpaoshan Incident of 1931 was the mass departure of Chinese residents from colonial Korea. When hundreds of Chinese were either killed or injured in the aftermath of the Wanpaoshan Incident, many fled Korea and abandoned their businesses. The sudden departure of so many Chinese then triggered a collapse of retail outlets for imported goods and a financial crisis in colonial Korea. A system of credit risk-sharing to finance the distribution of imported goods had emerged through the Chinese commercial network, but the sudden inability to collect payments after the ethnic riots spread financial instability throughout the colonial economy. The capital shortage that followed affected not just the Chinese community, but also Japanese and Korean small to medium-sized businesses that had difficulties finding low-interest loans. This study examines the crucial role of the Chinese commercial network in colonial Korea and discusses their impact on the colonial retail and finance sectors.