friendship with France and the growing rivalry between Britain and Germany. By 1895 Germany was competing with France for Russia's favour, and British statesmen hoped to negotiate with the Russians to demarcate spheres of influence in Asia. This situation enabled Russia to intervene in northeastern Asia after Japan's victory over China in 1895. In the negotiations that followed, Japan was forced to make concessions in the Liaotung Peninsula and Port Arthur in southern Manchuria. The next year, Sergei Witte used French capital to establish the Russo-Chinese Bank. The goal of the bank was to finance the construction of a railroad across northern Manchuria and thus shorten the Trans-Siberian Railway. Within two years, Russia had acquired leases on the Liaotung Peninsula and Port Arthur and had begun building a trunk line from Harbin in central Manchuria to Port Arthur on the coast. At the same time Great Britain occupied Wei-Hai-Wei, and Germany Kiaochao. In 1900, China reacted to foreign encroachments on its territory with an armed popular uprising, the Boxer Rebellion. Russian military contingents joined forces from Europe, Japan, and the United States to restore order in northern China. A force of 150,000 Russian troops occupied Manchuria to secure its railroads. After the suppression of the rebellion, Russia did not withdraw its troops from Manchuria. Consequently, friction grew between Russia and Japan, and the latter opened hostilities at Port Arthur in January 1904, without any formal declaration of war. In counterpoint to the Japanese strategy of gaining rapid victories to control Manchuria, Russian strategy focused on fighting delaying actions to gain time for reinforcements to arrive via the long Trans-Siberian railway. In January 1905, after several unsuccessful attacks which cost them 60,000 troops killed and wounded and an eight-month siege, the Japanese captured Port Arthur. In March, the Japanese forced the Russians to withdraw north of Mukden, but were unable to pursue the Russians because Japanese troops suffered heavy casualties. Because strategically the possession of the city meant little, the final victory was dependent on the navy. In May, at the Tsushima Straits, the Japanese destroyed Russia's last hope in the war, a fleet assembled from the navy's Baltic and Mediterranean squadrons. Theoretically, Russian army reinforcements could have driven the Japanese from the Asian mainland, but revolution at home and diplomatic pressure forced the tsar to seek peace. Russia accepted mediation by United States president Theodore Roosevelt, ceded southern Sakhalin Island