China had lost the war with Japan because she was entirely without modern armament. While Japan went to work at once with all her energy to emulate Western industrialization, the ruling class in China had shown a marked repugnance to any modernization; and the centre of this conservatism was the dowager empress Tzu Hsi. She was a woman of strong personality, but too uneducated--in the modern sense--to be able to realize that modernization was an absolute necessity for China if it was to remain an independent state. The empress failed to realize that the Europeans were fundamentally different from the neighbouring tribes or the pirates of the past; she had not the capacity to acquire a general grasp of the realities of world politics. She felt instinctively that Europeanization would wreck the foundations of the power of the Manchus and the gentry, and would bring another class, the middle class and the merchants, into power.

There were reasonable men, however, who had seen the necessity of reform--especially Li Hung-chang, who has already been mentioned. In 1896 he went on a mission to Moscow, and then toured Europe. The reformers were, however, divided into two groups. One group advocated the acquisition of a certain amount of technical knowledge from abroad and its introduction by slow reforms, without altering the social structure of the state or the composition of the government. The others held that the state needed fundamental changes, and that superficial loans from Europe were not enough. The failure in the war with Japan made the general desire for reform more and more insistent not only in the country but in Peking. Until now Japan had been despised as a barbarian state; now Japan had won! The Europeans had been despised; now they were all cutting bits out of China for themselves, extracting from the government one privilege after another, and quite openly dividing China into "spheres of interest", obviously as the prelude to annexation of the whole country.

In Europe at that time the question was being discussed over and over again, why Japan had so quickly succeeded in making herself a modern power, and why China was not succeeding in doing so; the Japanese were praised for their capacity and the Chinese blamed for their lassitude. Both in Europe and in Chinese circles it was overlooked that there were fundamental differences in the social structures of the two countries. The basis of the modern capitalist states of the West is the middle class. Japan had for centuries had a middle class (the merchants) that had entered into a symbiosis with the feudal lords. For the middle class the transition to modern capitalism, and for the feudal lords the way to Western imperialism, was easy. In China there was only a weak middle class, vegetating under the dominance of the gentry; the middle class had still to gain the strength to liberate itself before it could become the support for a capitalistic state. And the gentry were still strong enough to maintain their dominance and so to prevent a radical reconstruction; all they would agree to were a few reforms from which they might hope to secure an increase of power for their own ends.

In 1895 and in 1898 a scholar, K'ang Yo-wei, who was admitted into the presence of the emperor, submitted to him memoranda in which he called for radical reform. K'ang was a scholar who belonged to the empiricist school of philosophy of the early Manchu period, the so-called Han school. He was a man of strong and persuasive personality, and had such an influence on the emperor that in 1898 the emperor issued several edicts ordering the fundamental reorganization of education, law, trade, communications, and the army. These laws were not at all bad in themselves; they would have paved the way for a liberalization of Chinese society. But they aroused the utmost hatred in the conservative gentry and also in the moderate reformers among the gentry. K'ang Yo-wei and his followers, to whom a number of well-known modern scholars belonged, had strong support in South China. We have already mentioned that owing to the increased penetration of European goods and ideas, South China had become more progressive than the north; this had added to the tension already existing for other reasons between north and south. In foreign policy the north was more favourable to Russia and radically opposed to Japan and Great Britain; the south was in favour of co-operation with Britain and Japan, in order to learn from those two states how reform could be carried through. In the north the men of the south were suspected of being anti-Manchu and revolutionary in feeling. This was to some extent true, though K'ang Yo-wei and his friends were as yet largely unconscious of it.

When the empress Tzu Hsi saw that the emperor was actually thinking about reforms, she went to work with lightning speed. Very soon the reformers had to flee; those who failed to make good their escape were arrested and executed. The emperor was made a prisoner in a palace near Peking, and remained a captive until his death; the empress resumed her regency on his behalf. The period of reforms lasted only for a few months of 1898. A leading part in the extermination of the reformers was played by troops from Kansu under the command of a Mohammedan, Tung Fu-hsiang. General Yuean Shih-k'ai, who was then stationed at Tientsin in command of 7,000 troops with modern equipment, the only ones in China, could have removed the empress and protected the reformers; but he was already pursuing a personal policy, and thought it safer to give the reformers no help.

There now began, from 1898, a thoroughly reactionary rule of the dowager empress. But China's general situation permitted no breathing-space. In 1900 came the so-called Boxer Rising, a new popular movement against the gentry and the Manchus similar to the many that had preceded it. The Peking government succeeded, however, in negotiations that brought the movement into the service of the government and directed it against the foreigners. This removed the danger to the government and at the same time helped it against the hated foreigners. But incidents resulted which the Peking government had not anticipated. An international army was sent to China, and marched from Tientsin against Peking, to liberate the besieged European legations and to punish the government. The Europeans captured Peking (1900); the dowager empress and her prisoner, the emperor, had to flee; some of the palaces were looted. The peace treaty that followed exacted further concessions from China to the Europeans and enormous war indemnities, the payment of which continued into the 1940's, though most of the states placed the money at China's disposal for educational purposes. When in 1902 the dowager empress returned to Peking and put the emperor back into his palace-prison, she was forced by what had happened to realize that at all events a certain measure of reform was necessary. The reforms, however, which she decreed, mainly in 1904, were very modest and were never fully carried out. They were only intended to make an impression on the outer world and to appease the continually growing body of supporters of the reform party, especially numerous in South China. The south remained, nevertheless, a focus of hostility to the Manchus. After his failure in 1898, K'ang Yo-wei went to Europe, and no longer played any important political part. His place was soon taken by a young Chinese physician who had been living abroad, Sun Yat-sen (1866-1925), who turned the reform party into a middle-class revolutionary party.