From beyond the graves, a ghost must be having his last laugh at the merchants and investors who ignored his sober verdict about the mainland market nearly 150 years ago. In 1853, 10 years after Shanghai and four other Chinese cities were prised open to foreign residence and trade by the British, a certain Mr Mitchell - an assistant magistrate in Hong Kong - wrote a report on the prospects of China trade for the colony's governor, Sir George Bonham. Mitchell's conclusion was unpalatable to most British traders: the market was grossly over-rated as its sheer size touted by the merchants was a figment of their imagination. Historian Frances Wood, in her book No Dogs And Not Many Chinese - a description of treaty port life in China from 1843 to 1943 - quoted Mitchell as saying: 'When we opened the seaboard provinces of this country to British trade 10 years ago, the most preposterous notions were formed as to the demand that was to spring up for our manufacturers. 'Our friends in Manchester and even their counterparts on the spot . . . seem to have all gone mad together upon the idea of an open trade with 'three to four hundred millions of human beings . . . a third of the human race'. Mitchell went on to describe how Sir Henry Pottinger, chief superintendent of trade and first Hong Kong governor, told British traders that he had opened up a whole new world to their trade, so vast 'that all the mills in Lancashire could not make stocking stuff sufficient for one of its provinces'. The magistrate's bleak verdict, as history noted, had few supporters among the British merchants who, on the basis of their mistaken belief, were to exert greater pressure on China to open up more parts of the country to foreign trade, with dire consequences on future Sino-British relations. Pottinger's hyperbole rather than Mitchell's sober conclusion holds sway even to this day - except perhaps for an interlude stemming from the shock over Guangdong International Trust and Investment Corp's (Gitic) collapse - and is likely to prevail. Most foreign traders, investors and bankers were still fixated with the sheer size of the country's population, now expanded to nearly 1.3 billion - and its supposedly limitless market - until their rude awakening from the troubles associated with its trust and investment companies. Much of the illusion about the mainland was created by heads of some multinational companies. Either because they wanted to please their host to win contracts or they were firm believers of Pottinger's optimistic assessment, they would sing excessive praises about the country's economic progress and importance. During a visit to Shanghai about 18 months ago, for instance, the chief executive of a leading stock exchange went over the top when he punctuated his short speech with phrases such as 'your great country', 'your great companies' and the like. Now, as investors and banks in Asia begin to take stock of regional prospects, including those of the mainland, sobriety has prevailed for the time being. International Bank of Asia chief executive Mike Murad said his bank, burnt by the Gitic collapse, would halt lending to the mainland until lenders were given sufficient protection and legal recourse for their loans. Other banks have also reduced lending. Will such caution continue? Not likely. When sentiment picks up - and it will when the Asian financial whirlwind blows over - excessive optimism about sheer size of the mainland market will prevail. Mitchell will again spin in his grave and utter: 'These people just never learn.'