How the West destroyed the economy of imperial China, dragging the Celestial Empire into a series of conflicts and "scams"

2024 Author: Richard Flannagan | [email protected]. Last modified: 2023-12-15 23:55

The Chinese Empire is generally viewed as economically inferior to the European imperial powers. However, for most of its history, imperial China was significantly wealthier. Even after establishing relations with the West, he ruled the world economy, occupying a dominant position in global trade networks, being one of the richest countries in the world until a certain moment that shook his economy.

Prior to the establishment of large-scale trade relations with the West in the seventeenth and eighteenth centuries, China has consistently ranked as one of the largest economies in the world for the past thousand years, rivaling India for the title. This trend continued into the Age of Exploration, when European powers sailed eastward. While it is well known that the expansion of the empire brought great benefits to the Europeans, what is perhaps less widely known is that trade contacts with the West were to increase China's dominance of the world economy over the next two hundred years.

The West's interest in the newly discovered wealth of the East should have been very lucrative for the Chinese empire. Europeans developed a taste for Chinese goods such as silk and porcelain, which were produced in China for export to the West. Later, tea also became a valuable export commodity. It proved to be particularly popular in the United Kingdom, where the first tea shop was opened in London in 1657. Initially, Chinese goods were very expensive and only available to a select few. However, since the 18th century, prices for many of these goods have fallen. Porcelain, for example, became available to the newly emerging commercial class in Britain, and tea became a drink for everyone, rich or poor.

There was also an obsession with Chinese styles. Chinoiserie swept across the continent and influenced architecture, interior design and gardening. Imperial China was viewed as a complex and intelligent society, much like Ancient Greece or Rome. Decorating a home with imported Chinese furniture or wallpaper (or imitations made domestically) was a way for the newly wealthy merchant class to declare their identity as mundane, successful, and wealthy.

To pay for these goods, the European powers were able to turn to their colonies in the New World. The beginning of Chinese trade in the 1600s coincided with the Spanish conquest of America. Europe now had access to huge reserves of silver in the former lands of the Aztecs. Europeans were able to effectively participate in the form of arbitration. Silver of the New World was abundant and relatively cheap to obtain, huge reserves were available, and most of the mining was carried out by slaves. However, in China, its cost was twice as high as in Europe. The massive demand for silver in China was driven by the monetary policy of the Ming Dynasty. The Empire experimented with paper money since the eleventh century (being the first civilization to do so), but this scheme failed due to hyperinflation in the fifteenth century. As a result, the Ming Dynasty switched to a silver-based currency in 1425, which explains the huge demand for silver and its overvalued value in imperial China.

The yields in the Spanish territories alone were immense, accounting for eighty-five percent of the world's silver production between 1500 and 1800. Huge amounts of this silver flowed eastward from the New World to China, while Chinese goods flowed to Europe in return. The Spanish silver pesos minted in Mexico, the real Real de a Ocho (better known as eights), became ubiquitous in China as they were the only coins the Chinese accepted from foreign merchants. In the Chinese Empire, these coins were nicknamed "Buddhas" because of the similarity of the Spanish king Charles with a deity.

As a result of this economic growth and a long period of political stability, imperial China was able to grow and develop rapidly - in many ways it followed a similar trajectory with the European powers. Between 1683 and 1839, known as the High Qing era, the population more than doubled from one hundred and eighty million in 1749 to four hundred and thirty-two million by 1851, supported by continued peace and the influx of new world crops such as potatoes, corn and peanuts. … Education was expanded and literacy rates increased for both men and women. Domestic trade has also grown tremendously over this time period, and markets have emerged in rapidly growing cities. A trading or merchant class began to emerge, filling the middle section of society between the peasantry and the elite.

This massive influx of silver supported and stimulated the Chinese economy. From the sixteenth to the mid-nineteenth century, China accounted for twenty-five to thirty-five percent of the global economy, invariably ranking as the largest or second largest economy.

As in Europe, these newly wealthy merchants with disposable income patronized the arts. Pictures were exchanged and collected, literature and theater flourished. A Chinese scroll of a white horse shining in the night is an example of this new culture. Originally painted around 750, it depicts Emperor Xuanzong's horse. In addition to being a fine example of Han Gang's horse art, it is also marked with stamps and comments from its owners added as the painting passed from collector to collector.

The downturn in Imperial China's economy began in the early 1800s. The European powers became increasingly unhappy with the huge trade deficits they had with China and the amount of silver they were spending. Therefore, the Europeans made an attempt to change their trade with China. They strove for trade relations based on the principles of free trade, which were gaining strength in the European empires. Under such a regime, they could export more of their own goods to China, reducing the need to pay with more silver.

The concept of free trade was unacceptable to the Chinese. Those European merchants who were in China were not allowed to enter the country itself, everything was limited to the port of Canton (now Guangzhou). Here, goods were unloaded into warehouses known as the Thirteen Factories and then handed over to Chinese intermediaries.

In an attempt to establish this free trade system, the British sent George Macartney as an envoy to Imperial China in September 1792. Its mission was to allow British merchants to operate more freely in China, outside of the Cantonese system. After sailing for almost a year, the trade mission arrived in Beijing on August 21, 1792. He traveled north to meet with Emperor Qianlong, who was on a hunting expedition in Manchuria, north of the Great Wall of China. The meeting was to take place on the emperor's birthday.

Unfortunately for the British, Macartney and the emperor were unable to come to an agreement. The emperor categorically rejected the idea of free trade with the British. In a letter to King George III, sent along with Macartney, Qianlong stated that China possesses everything in abundance and does not lack goods within its own borders, and that it does not need to import goods from outside barbarians.

Since free trade was not possible, European traders sought a replacement for silver in their trade with China. This solution was found in the supply of opium. The East India Extremely Powerful Company (EIC), which dominated trade in the British Empire, maintained its own army and navy, and controlled British India from 1757 to 1858, began importing Indian opium into Imperial China in the 1730s … Opium has been used medicinally and recreationally in China for centuries, but was criminalized in 1799. After this ban, EIC continued to import the drug, selling it to local Chinese traders who distributed it throughout the country.

The opium trade was so lucrative that by 1804 the trade deficit that worried the British had become a surplus. Now the flow of silver has been reversed. Silver dollars received as payment for opium flowed from China to the UK via India. The British were not the only Western power to enter the opium trade. The United States supplied opium from Turkey and controlled ten percent of the trade by 1810.

By the 1830s, opium had entered mainstream Chinese culture. Smoking opium was a common pastime among scientists and officials, and quickly spread throughout the cities. In addition to spending its new disposable income on art, the Chinese commercial class also sought to spend it on illicit substances that became symbols of wealth, status, and a free life. Successive emperors tried to curb national dependence, but to no avail. Workers who smoked opium were less productive, and the outflow of silver was extremely alarming. This continued until 1839, when Emperor Daoguang issued a decree against foreign imports of opium. In June, an imperial official, Commissioner Lin Zesu, seized and destroyed twenty thousand British opium chests (worth about two million pounds sterling) in Canton.

The British used Lin's destruction of opium as a belli casus, starting what became known as the Opium War. Naval battles between British and Chinese warships began in November 1839. HMS Volage and HMS Hyacinth routed twenty-nine Chinese ships while evacuating the British from Canton. A large naval force was dispatched from Great Britain, arriving in June 1840. The Royal Navy and British Army were far superior to their Chinese counterparts in terms of technology and training. British forces occupied the forts guarding the mouth of the Pearl River and advanced along the waterway, capturing Canton in May 1841. Further to the north, the Amoy fortress and the port of Shapu were taken. The last, decisive battle took place in June 1842, when the British captured the city of Zhenjiang.

With the victory in the Opium War, the British were able to impose free trade on the Chinese, including in opium. On August 17, 1842, the Nanking Treaty was signed. Hong Kong was ceded to Great Britain, and five treaty ports were opened for free trade: Canton, Amoy, Fuzhou, Shanghai and Ningbo. The Chinese also pledged to pay reparations in the amount of twenty-one million dollars. The British victory demonstrated the weakness of the Chinese empire in comparison to modern Western fighting strength. In the coming years, the French and Americans will also impose similar treaties on the Chinese.

The Nanking Treaty marked the beginning of what China calls the Age of Humiliation.

It was the first of many "Unequal Treaties" signed with European powers, the Russian Empire, the United States and Japan. China was still nominally an independent country, but foreign powers wielded great influence over its affairs. Much of Shanghai, for example, was taken over by the International Settlement, a business run by foreign powers. In 1856, the Second Opium War broke out, ending four years later with decisive victories for Great Britain and France, sacking the capital of Imperial China, Beijing, and opening ten more Treaty Ports.

The impact of this foreign domination on the Chinese economy was great, and the contrast with the economies of Western Europe, in particular the United Kingdom, was striking. In 1820, before the Opium War, China accounted for over thirty percent of the world economy. By 1870, that figure had dropped to just over ten percent, and at the start of World War II it was only seven percent. As China's share of GDP fell, Western Europe's share rose - a phenomenon called by economic historians the "Great Divergence", reaching thirty-five percent. The British Empire, the main beneficiary of the Chinese Empire, became the richest global entity, accounting for fifty percent of world GDP in 1870.

Continuing the topic of the Middle Kingdom, read also about how ten ancient Chinese inventions changed the world and why many of them are still used.