While just prior to the 1911 Xinhai Revolution, the Chinese central government and the British took the lead in financing the Shanghai-Hangchou-Ningbo Railway, local communities along the line, who were left out the loan diplomacy, interfered with the operation of capital invested locally and prevented the implementation of construction contracts.
　The most important point to note about the relationship between these three parties after the outbreak of the Revolution is that local authorities, in the midst of increased autonomy from the central gov-ernment, developed multilateral, direct loan negotiations with various other foreign capital interests, thus infringing on the diplomatic authority of the central government and making it more difficult to implement the British-Chinese agreement. This led to a complicated international problem over railway concessions, pitting the British, which sought to centralize the loan negotiations to protect its pre-Revolution concessions, against Japan, the United States and Germany, which saw an opportunity to invest in China after the Revolution, when local governments approached them for loans.
　In order to combat its new competitors, the British helped the Chinese central government to centralize the loan negotiations and build a consensus with great powers to prevent local governments from negotiating their own loans. The final solution, which was reached due to such efforts, was the nationalization of the Railway, which involved the British government compensating local communities operating the railway companies by purchasing their shares, in addition to the implementation of other economic measures. In other words, the British altered their concession policy from merely applying pressure through international diplomacy to directly compensating local communities.
　It was in this way that the three parties involved in the railway concessions became entangled internationally, prompting a shift in British foreign policy and thus realigning their tripartite interrelationship from a political/diplomatic dispute over financing to an economic dilemma over who would bear the burden to pay for railway nationalization.

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