Instalment 3 (early 1890s)
Scene 1: Tianjin; Li Hongzhang’s office quarters
In Tianjin, Li Hongzhang meets with representatives from Great Britain, France and Germany to discuss possible loans.
Scene 2: At Zhang Zhidong’s, in a temple
After Zhang Zhidong has given his pupils a Confucian morality lecture, he asks a foreign-educated teacher to lecture on Western natural sciences.
Scene 3: At Li Hongzhang’s residence
Li Hongzhang is talking to Sheng Xuanhuai. The project of “donating money for coastal defence” (de facto the sale of official titles), which was proposed by Li, has been terminated as a result of Zhang Zhidong’s intervention. Li opts for the loan offer of the German Bank since Germany constructs the best war vessels. However, the loan does not make Li happy for he knows that it will be used to pay off the debts incurred during the construction of the Summer Palace. Moreover, in order to revenge Zhang Zhidong’s intervention, Li draws up a clever plan: he intends to encourage the Times reporter Morrison to write a critical account of Zhang’s Hanyang iron foundry. At the same time, Li also sends Sheng Xuanhuai, his advisor, to Beijing to convince the Chun Prince of the advantages a state-controlled privatisation of the Hanyang iron foundry would hold. In addition, Sheng is to collect capital to prepare for a take-over of the Hanyang iron foundry at a later stage.
Zhang Zhidong’s advisor, Gu Hongming (who is fluent in several languages), reads the Times article on Zhang Zhidong, which was written by Morrison, to Zhang. Zhang is very concerned because the iron foundry is only producing low-quality iron, and because the furnaces need to be replaced with new expensive furnaces. Moreover, he is vexed by the fact that Morrison criticises him for this in his article.
Weng Tonghe is making plans to discredit Li Hongzhang at the Imperial Court.
Zhang Zhidong’s subordinate Zhao Fengchang returns from Beijing without money. Rather, he brings bad tidings telling Zhang about the plans to privatise the Hanyang iron foundry.
At the Imperial Palace Weng Tonghe attempts to discredit Li Hongzhang. Weng contends that it is a disgrace to the court to have to sell official titles to the uneducated in order to lighten financial burdens.
Japan has modernised rapidly. High government and military officials inspect the Japanese navy together with the Tennô emperor. They report to him about the force of the Chinese Beiyang Navy, and thus the Tennô decides to contribute a tenth of his private wealth to the Japanese navy so that it may surpass the Chinese.
The Chinese Governor Yuan Shikai is amusing himself with Korean concubines and shows them the Chinese custom of foot-binding.
Li Hongzhang and Sheng Xuanhuai discuss measures to counter the Japanese armament.
In order to rescue the Hanyang iron foundry, Zhang Zhidong invites Sheng Xuanhuai to Hunan and gives him a stately welcome. With the help of Sheng and the money he has raised, the situation of the iron foundry can be improved now. However, Zhang is not aware that this had all been masterminded by Li Hongzhang. Zhang himself attempts to raise additional funds through writing obituaries and confiscating money from gambling joints.
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