1.3 The Canton System and early trade relations

The Canton System, established by the Qing Dynasty, strictly controlled trade between China and Western nations from 1757 to 1842. It confined Western traders to a small area in Canton, reflecting China's view as the "Middle Kingdom" and its reluctance to engage with foreign powers on equal terms.

The system relied on Cohong merchants as intermediaries, giving them significant control over trade. However, the opium trade's devastating effects on Chinese society and the growing tensions between China and Western powers ultimately led to the First Opium War, marking a turning point in Sino-Western relations.

The Canton System and Early Sino-Western Trade

Canton System for China-West trade

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• Qing Dynasty imposed regulations (1757-1842) controlled trade with Western nations
  • Restricted Western trade to port of Canton (Guangzhou)
  • Limited Western influence protected Chinese economic interests
• Western traders confined to small area in Canton called Thirteen Factories
  • Not allowed to enter city or interact directly with Chinese citizens
• Trade conducted through guild of Chinese merchants called Cohong
  • Cohong held monopoly on trade with Western merchants
• Canton System reflected China's view as "Middle Kingdom" reluctant to engage foreign powers on equal terms
  • Believed in superiority of Chinese civilization (Confucianism, advanced agriculture, technology)
  • Viewed trade as form of tribute from inferior nations (silk, porcelain)

Role of Cohong merchants

• Cohong was guild of Chinese merchants authorized by Qing government to trade with Western merchants
  • Acted as intermediaries between Western traders and Chinese officials
  • Collected taxes and duties on imported goods (cotton, clocks, silver)
• Cohong merchants worked closely with Western traders to facilitate trade
  • Provided services such as warehousing, transportation, translation
  • Some developed close personal relationships with Western traders (business partnerships, friendships)
• Cohong system gave Chinese merchants significant control over trade
  • Set prices and dictated terms of trade
  • Frustrated Western traders who felt system was unfair and restrictive (high taxes, limited access to markets)

Opium trade's impact on China

• Opium trade began in late 18th century as British merchants addressed trade imbalance with China
  • British East India Company imported opium from India to China
  • Opium illegal in China but demand high and trade highly profitable (addictive drug)
• Opium trade had devastating effects on Chinese society
  • Widespread addiction led to social and economic problems (poverty, crime, health issues)
  • Silver outflow from China to pay for opium destabilized Chinese economy (currency devaluation, inflation)
• Qing government efforts to suppress opium trade led to tensions with Western powers
  • Confiscation of opium stocks in Canton (1839) led to First Opium War
• Opium trade highlighted growing power imbalance between China and Western nations
  • China's inability to control trade undermined sovereignty exposed military weakness (outdated weapons, tactics)

Tensions before First Opium War

• Canton System and opium trade were major sources of tension between China and Western powers in early 19th century
  • Western traders resented restrictions of Canton System demanded greater access to Chinese markets (trade imbalance)
  • Qing government efforts to suppress opium trade angered British merchants who saw it as valuable revenue source
• Napier Affair (1834) highlighted growing tensions
  • British diplomat Lord Napier attempted to bypass Canton System negotiate directly with Chinese officials
  • Napier's actions violated Chinese protocol led to standoff between British and Chinese forces (naval blockade)
• Confiscation of opium stocks in Canton (1839) was immediate trigger for First Opium War
  • British government demanded compensation for seized opium and greater access to Chinese markets
  • Qing government refusal to comply led to outbreak of war (1840)
• First Opium War marked turning point in Sino-Western relations
  • China's defeat exposed weakness forced concessions to Western powers (Treaty of Nanking 1842)
  • War set stage for further Western encroachment and "century of humiliation" (unequal treaties, territorial losses)