Bad History: China’s Economic Policies and the Opium War

A long time ago, self-congratulatory citizens and academics of Western Europe and the United States would explain away the 19th-century assault on Qing Imperial sovereignty as a simple and sad story of the Emperor who said No.  Poor deluded Qianlong missed an opportunity to liberalize his trade policies and join the ‘comity of nations,’ when he dismissed the noble, upstanding diplomat MacCartney with a sniff, a wave, and a haughty letter to His Royal Majesty King George III boasting that, “Our Celestial Empire possesses all things in prolific abundance and lacks no product within its own borders. There was therefore no need to import the manufactures of outside barbarians in exchange for our own products.”

In other words, it was the Qing imperial arrogance, not European expansionism, which lay at the heart of the 19th-century wars between China and the West. This is, of course, utter horseshit.

The Qianlong Emperor wasn’t declaring a new policy, rather he was describing an economic reality: The Qing Empire at the end of the 18th century was a continent-sized trading network of markets and hubs, mines, farms, plantations, factories, merchants, banks, guilds, and relatively sophisticated systems of finance and credit.  International trade was flourishing through a variety of channels (very little of it as ‘tribute’) in a spiderweb of economic links which spanned from frontier trading posts in Central Asia to Chinese merchants and firms in Southeast Asia.

In such a system, European trade was a minute fraction of the overall domestic and international trade for the  Empire at the turn of the 19th century.  In his letter, the Qianlong Emperor does not reject the King’s demands because he is afraid of British goods affecting the economy of the Qing Empire, instead, the Qianlong Emperor is saying he could take their trade or leave it and, as such, the Europeans would be wise not to whine about the rules.

And this is where we turn to opium…because there’s never a bad time to do that, right?

In the mercantilist mindset of 18th century Europe, trade was a strategic competition between nascent nation-states — the goal was to have a favorable balance of trade vis-a-vis your trading partners.  Under these conditions, Europe’s commercial relationship with the Qing Empire was seen as untenable because of all the silver pouring into ‘Celestial Coffers.’  Opium provided the perfect product.  It was cheaply produced, in areas directly (or indirectly) under British control, and built its own customer base through use, abuse, and addiction.   By the time of the first Opium War in 1840, something like 1/6 of revenue for Great Britain was tied to the China trade in a trading system heavily reliant on the ability of British traders — first as licensees of the British East India Company and later in a private  capacity — to import and/or smuggle opium into South China.

But opium is only part of the story.  In the early decades of the 19th century as the Industrial Revolution changed patterns of production and exchange. Now the goal was less about balancing payments through trade in commodities but about finding markets for goods created in a system that required overproduction of manufactures.  Qing Imperial ‘intransigence’ took on a new significance as the siren call of the “China Market” began to call to the pocketbooks of British commercial interests.

The new mantra for British wannabe China traders: “China really wants to have trade with us, but the crusty old emperor and his mandarins keep holding them back,” went this tale of woe, “If only the Chinese people knew about the joys of free trade they would buy all of our wonderful goods and satisfy our commercial interests…and if they don’t know it (or don’t want to) well, a liberal application of force might be all it takes to get them to open up and buy our stuff.”

Which brings me to Forbes Magazine.  First of all, let me say that the Beijing bureau of Forbes turns out some of the best articles and posts on China and that Gady Epstein is not only a friend of mine but also one of the most thoughtful and insightful journalists working in Beijing.  I’m assuming that nobody on this side of the Pacific saw this piece of dreck before it went online.  But as bad history goes…this is somewhere between “bathing open-mouthed in camel dung” and “making a sex tape with a putrefying walrus carcass.”*

In the 16th century China was one of the leading nations of the world.  It was prosperous, economically self-sufficient and isolated.  European countries came to China to buy its tea, silks and spices and offered European industrial goods in exchange.  But, the Chinese emperor would have none of the European goods, which he outright banned.  Hence, gold and silver were the only acceptable medium of exchange.

A problem developed with this trade arrangement in that it was draining Europe of its gold and silver, i.e. its universally accepted currency.  In economic terms, this meant trade in Europe was slowing down due to a shortage of currency.

This clearly intolerable situation was remedied when the Europeans found a trade product that the Chinese people wanted, opium.  This too was banned as an import by the emperor, but as with all such illicit goods, smuggling on a massive scale occurred.  When the emperor began a serious crack down, European ships of war appeared on China’s coast to break the ban resulting in the opium wars.  Too late did the emperor discover that there were European goods he needed, modern tools of war.

Where to begin, where to begin, where to begin…how about in 1800 when, China was still one of the leading nations of the world, if not number one by any standard of ‘development.’

Then there’s the problem of “modern weapons.”  The Qianlong Emperor sent his letter in 1793, and as I wrote in an early installment of the Bad History Series:

As for the other conflicts, the Qing did have their troubles, troubles not helped by sending the same General Sun of the Vietnam debacle to handle military finances in campaigns against the gurkhas of Nepal. (This was Qianlong’s “you’re doing a heckuva job, Brownie” moment.) There is no doubt that military preparedness was at an all-time low, but lack of MODERN FIREARMS was not the problem. In fact, the Qing were able to conquer so much of Xinjiang, Tibeτ, and Mongolia in large part because they used modern cannons and firearms against people like the Zunghar Mongols who were relying on spears and bows. It was the Qing use of cannon that made them so formidable against the preceding Ming Dynasty and sent the last Ming emperors scrambling in the early 17th century to overturn their “no foreign firearm manufacturing” edict just as the forces of Nurhaci & Sons were helping themselves to everything north of the Great Wall.

It was not until the fruits of the industrial revolution began to sweep through the British military (beginning about three decades AFTER the Qianlong letter) that British technology could play a decisive role in a military encounter with the Qing. Most notably, the use of steam-powered gunships gave the British a huge tactical advantage along the Chinese coast. Of course Qianlong didn’t know about these in 1793, Robert Fulton wouldn’t launch his first steamship until ten years later. The Qianlong Emperor was an arrogant and pompous jackass at times, but let’s not fault the man because the crystal ball was broken.

Second, and really it’s more like 1C, Qianlong did not ban British (never mind foreign) goods from the Qing Empire, that’s just plain wrong.  While it’s true that European traders had to conduct their business within the context of the “Canton System,” many fortunes were made in the China trade.

Third, The Forbes article, in theory, is about China and the gold market, so the author feels the need to lump gold in with silver as the currencies flowing into China during the bad old days of the early 19th century.  Actually, almost all of the trade with China was conducted in silver.

In short, not only is the author’s history bad, the whole point of this ill-conceived juxtaposition of past and present is seriously flawed.

Finally, using the Opium War to harangue the current Chinese administration over trade policy is not only bad history but in bad taste.  The Qing government had every right to ban the import of opium and to set conditions by which trade was conducted within the empire.  The effects of the war, and the subsequent treaties and imperialist aggression against the Qing Empire, caused enormous and unnecessary suffering.

For a government so exasperated with the Qing Empire’s failure to see the rationality of commerce and comity between equal and sovereign nations, the British (and the Americans, and the French, and the Russians, and the Germans, and the Japanese…) seemed awfully eager to impose conditions on the Qing court that undermined the sovereignty of the Empire.

That said, the lessons of the Opium War are not without their value in understanding the current stormy climate in China’s relations with the West.   Right or wrong, the Chinese government (and, frankly, many Chinese people) feel that the constant barrage of criticism of trade, human rights, etc. coming from those same nations which a little over a century ago were still imposing — with guns ready — unequal treaties on China to be just more of the same but in a velvet glove.

Now I think many observers can see the enormous difference between, say, an article in the Guardian supporting Liu Xiaobo and the actions of opium traders lobbying parliament into declaring war on the Qing Empire…but neither can we entirely fault the Chinese if some people see this as a distinction without a difference.   And articles like the Forbes piece do little to assuage such paranoia.

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*Though still above such categories of utter atrociousness as “Sharing hygiene products with Lyndsay Lohan,” “Having your back waxed by Genghis Khan,” “The Dallas Cowboys 2010-2011 Season,” and “History as done by the Chinese State Media.”