A Political and Economic History of China: Part 17: The First Opium War

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7 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff discusses China’s first Opium War with Great Britain, an event that still evokes resentment in the collective Chinese mindset and which marks the start of China’s “century of humiliation.

British cannons rout outdated Qing war junks from afar

After one failed (1793) and one abortive (1816) British attempt at free trade with China, the Qing dynasty was happy to continue with the status quo: selling tea, silk, and porcelain by the shipload to Britain while severely limiting the import of western goods.

By the 1820’s the Jiaqing emperor had died and his son, the Daoguang emperor, was now dealing with the persistent problems of government corruption and a treasury beleaguered by embezzlement.

Despite correctly identifying internal problems and well-meaning attempts to end imperial graft, history records both Jiaqing and Daoguang were ineffective rulers who acted more by slogan and rhetoric than good policy. Thus, with the depleted treasury problem still unsolved, Daoguang sought to refill imperial coffers with openly protectionist trade policies, exporting Chinese goods to Britain while strictly controlling British imports.

Both Britain’s parliament and citizens, however, were not happy to maintain the status quo which meant running ever larger trade deficits—deficits they believed were being artificially generated by Chinese government intervention.

During Lord Macartney’s 1793 embassy Britain was still somewhat captivated by the exoticism of China’s kingdom and culture while awestruck by its sheer size. Although Britain was probably the preeminent military power in the world, there was still a degree of deference towards imperial China and the Qianlong emperor’s rejection of Macartney’s overtures was accepted as a disappointing but not earth shattering failure.

Besides, by the time Macartney returned Britain found herself at war with France again, so there were more pressing matters to attend to.

By the 1820’s British views on China had hardened.

Emerging victorious from an existential struggle with Napoleon, Britain had become a global hegemon. Since 1793 its already powerful navy had advanced by leaps and bounds both in size and technology. Britain had also witnessed the Qing navy’s struggles subduing simple Chinese pirates for nearly a decade, exposing major weaknesses in China’s military capabilities.

In other words Britain was no longer willing to accept no for an answer and sought to rebalance trade whether the Qing liked it or not.

Famously, the instrument of Britain’s balanced trade policy would be the export of Indian opium.

The Correspondent would like to point out that the Qing made far more missteps than Britain in the years leading up to and during the Opium War (1839-1842), but what the British mistakes lacked in quantity they made up in quality. The open policy of churning up opium shipments to China—dumping chests of the narcotic at Lintin Island (in the Pearl River delta) for Chinese distributors to then smuggle inland—was condemned by many British even in the 1830’s.

Granted, there were attempts to rationalize the opium policy, for Britain was addicted to its own Chinese import: tea. The numbers were staggering.

From 1725 to 1805 tea imports from China grew by 10,000 percent to 24 million pounds annually. Parliament had mandated the East India Company maintain a one-year tea reserve for national emergencies, and by 1839 tariffs on tea imports constituted 8% of Britain’s tax revenue.

Meanwhile, Chinese had been smoking opium for centuries before the British ever arrived, and while it was technically illegal to do so in China, the law in practice was unenforced.

Thus some British viewed the opium habit lying somewhere between that of tea and gin (Platt) and believed they were, after all, only fulfilling Chinese consumer demand while trading one country’s addiction for another.

RESISTANCE

Prior to the 1800’s opium smoking was a habit for the Chinese wealthy classes and idle rich. But as the British East India Company upped its shipments into China, effectively flooding the market, the price fell precipitously and soon everyday citizens were consuming the drug.

On a side note, it’s worth mentioning that American ships also got in on the opium trade. The U.S. government held no position on the subject of opium shipments halfway round the world, and American activity was small compared to that of the British (at its peak just shy of one-fifth the market), but enterprising American traders pursuing large profits did participate in the shipment of opium to China as well.

By the 1830’s the Daoguang emperor became alarmed at reports that his own officials were incapable of doing their jobs due to addiction and he cracked down hard on the drug trade, sending a hard nosed policeman by the name of Lin Zexu to Canton to clean up the problem.

Even as word of Lin’s arrival spread throughout Canton, Qing officials had already arrested some western traders and threatened to kill them if the British did not 1) surrender their opium already present in the region, and 2) refrain from exporting any more. 

In response Charles Elliott, the Chief superintendent for British trade in China and himself morally opposed to the opium trade, feared the possible execution of British subjects but could not convince traders to hand over such valuable stashes of the drug (for they would incur huge financial losses). So he made in hindsight a fatal mistake that would spark a war: guaranteeing all shippers would be reimbursed by the British government for the value of the opium surrendered. Once the traders happily handed over the opium it officially became property of her majesty’s government.

Only one more mistake was needed to consummate the bilateral sleepwalk into war: Lin Zexu ordered the opium seized and burned, sending a fortune up in smoke.

Once word got back that her majesty’s property had been destroyed, Parliamentary anger induced a declaration of war, not so much over the burned opium's monetary value but rather national honor. The Chinese had to be “taught a lesson” about the consequences of stealing and destroying British government property.

There was spirited debate about war both in Parliament and the press, with a loud minority of the public criticizing the entire policy of turning China into a nation of drug addicts as un-Christian and inexcusable, but in the end national honor won out and war was on.

THE OPIUM WAR: A GLANCE

The Correspondent is no expert on the individual battles that followed over the next three years. However it’s clear the end result was a rout. 

The British blocked Chinese harbors and maritime trade at will and Qing military forces, particularly the navy, were no match for British technology. The Royal Navy successfully confined the conflict to seaborne confrontations, sinking countless Qing junks with ease, and even the few land battles (usually seizing islands) were overwhelmingly British victories.

However even in war the Qing once again miscalculated and made a series of fatal, almost comedic mistakes. Against the advice of their own officials in Canton, the Beijing imperial court actually *welcomed* a war with the British that they thought they would win.

In the decades before the war (not years, decades), Royal Navy officers happily demonstrated British military technology to coastal Qing officials. This was not an attempt to intimidate China, but rather to convince them that free trade and the import of British manufactures would benefit the Qing. We know their attempts failed as successive emperors rejected free trade and attempted to keep Europeans out of China instead of embracing western technology as Japan would do starting in the 1850’s.

Qing officials in Canton accordingly relayed reports of British military capability to Beijing, recording that...

“Without any wind, or even a favorable tide, they [steam vessels] glide along against the current and are capable of fantastic speed... Their carriages are mounted on swivels, enabling the guns to be turned and aimed in any direction.”

In other words, Beijing was warned for years by their own people that the British could not be subdued militarily.

Yet when war started the Daoguang emperor’s orders to the field wreaked of delusional fantasy: “After prolonged negotiation has made the barbarians weary and exhausted, we can suddenly attack them and thereby subdue them.”

Of course all such attempts ended in failure with many Chinese lives lost, yet the Qing sent a magnanimous offer of British surrender to Queen Victoria:

“You savages of the further seas… defy and insult our mighty Empire… If you submit humbly to the Celestial dynasty and tender your allegiance, it may give you a chance to purge yourselves of your past sins.”

Local Qing officials who had warned Beijing for years of the futility of war with Britain were frustrated by their out of touch superiors who lived a thousand miles away in the bliss of alternate reality.

Even Henry Kissinger summates that “Centuries of predominance had warped the Celestial Court’s sense of reality. Pretension of superiority only accentuated the inevitable humiliation.”

By 1842 the Qing finally realized they had been outmatched from the start and sued for peace. The result was the Treaty of Nanjing, the first of what Chinese would refer to as nearly 70 years of “The Unequal Treaties.”

At Nanjing the British won the opening of four new trading ports up and down the Chinese coast (Shanghai, Ningbo, Fuzhou, Xiamen), a concession they had coveted since Lord Macartney’s first request was turned away half a century earlier.

Britain also won what would be the first of many rounds of monetary war reparations, the right to construct Christian churches and permanent residence in treaty ports (the so-called “foreign concessions”) and legal extraterritoriality for its citizens. Some of these terms irked local Chinese citizens who came to view them as symbols of imperial domination.

But most famously of all the British won the right to open a fifth trading port near Canton, but under full British control, free from the corruption of the Canton System. Naval surveyors had already identified a deep harbor near a rocky island inhabited by only a few fishing villagers. Locals called the island “Hong Kong” ("Xianggong" in Mandarin, both meaning “fragrant harbor”), and the British were awarded a lease into perpetuity where they established their first Chinese colony.

This barren island, devoid of natural resources, nearly uninhabited, and administered by Great Britain quickly grew into a modern shipping and commercial center in stark contrast to the backwardness of declining Qing cities on the mainland.

Pro-LGBT Apple Investing in Indonesia, Where Gays Are Publicly Caned

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Tim Cook in... Jakarta?

Cautious Rockers might remember Apple’s condemnation of North Carolina’s “bathroom bill” that mandated biological males can’t use women’s restrooms in government buildings. Apple slammed the “hate bill,” froze its plans for a giant business campus outside Raleigh, and signed with 67 other companies supporting a lawsuit urging the Justice Department to block the legislation.

This week the San Francisco Bay tech giant announced it’s investing more in Indonesia and eyeing the country for a new manufacturing factory. Read at:

https://www.reuters.com/technology/apple-ceo-says-looking-into-possibility-building-manufacturing-facility

Indonesia is a country that doesn’t recognize gay marriage, criminalizes public display of LGBT grooming or behavior, and whose courts sentence gays to public canings that draw large crowds. See court sentencing "offenders" and caning at:

https://www.youtube.com/watch?v=CimhmVB_-vY

https://www.youtube.com/watch?v=Uw2jNOAM1Fk

ps. Another Bay Area tech giant, Google, went further by boycotting North Carolina altogether… all while having operated a major software development office in Djakarta for years. And Facebook also operates an office in Djakarta, citing its 115 million-strong Indonesian user base, whose "hate" they evidently have no problem with. See offices at:

https://blog.google/around-the-globe/google-asia/10-years-google-indonesia/

https://www.youtube.com/watch?v=4cMTfb3TB4A

https://asia.nikkei.com/Business/Facebook-opens-new-office-in-Indonesia

A Political and Economic History of China, Part 16: British Diplomacy Tries and Fails Again in 1816

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7 MIN READ - After an overseas vacation in the former freest economy on earth and the current freest economy on earth (hint: both are dealing with very close and increasing Chinese assertiveness), the Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff continues reporting on the decline of China's last dynasty—this time rejecting western free trade overtures for a second time.

Lord William Pitt Amherst's diplomatic mission also fails

After the Jiaqing emperor (r. 1799-1820) executed Heshen, the most corrupt official in Chinese history, he spent the next decade trying to repair the imperial neglect accumulated under his father. His treasury had been emptied by embezzlement, major rebellions were widespread, and his military was dilapidated.

After replacing his top military officials Jiaqing finally quelled the Miao and much larger White Lotus (1794-1804) rebellions at enormous cost, but the mobilization of Qing forces inland left a vacuum for a new maritime rebellion of Chinese pirates who unified in defiance of the dynasty.

The Qing hadn’t possessed a formidable navy since the Kangxi emperor subdued Taiwan in 1683, and its junks were routinely defeated by pirate forces. When the pirates added western merchant ships to their targets Britain became aware of the growing problem and offered assistance to the Qing government, proposing the Royal Navy lay its guns upon pirate ships as well.

The Jiaqing emperor considered the offer an insulting loss-of-face. Accepting help from the British would be tantamount to admitting Beijing was incapable of subduing its own pirates so the conflict dragged on. Ultimately the Qing “won,” but only by offering amnesty to any pirates who surrendered and making them naval officers who switched sides to fire upon remaining pirates.

The strategy worked. Distrust was sown between pirate factions, each suspicious that the other would betray them while calculating he who defected first stood a better chance of survival. Large numbers of rebels rushed to join the Qing side and the few remaining holdouts were handily defeated.

As the 1810’s began China finally seemed to be at peace within its own borders after sixteen years of rebellion. Jiaqing, seeing corruption divert so much money from military campaigns into graft, decided to downsize the armed forces. The Qing would still possess Asia’s largest army but the emperor, rightfully concerned about lingering embezzlement within his own government, chose to reduce opportunities for skimming by slowing the flow of funds for military purposes.

BRITAIN TRIES AGAIN

China might have been at relative peace in the 1810’s but trade conditions for westerners were still deteriorating in Canton.

The number of Canton guild-merchants (i.e. Hongs) was reduced, restricting competition even further and enhancing the power of corrupt local Qing officials to squeeze foreign traders for bribes.

Also, in a flat out embarrassment British and American ships were firing upon one another in Chinese waters and even near Canton Harbor, a spillover consequence of the ongoing War of 1812 that pitted U.S. guns against the Royal Navy and British East India Company—wherever they might meet in the world. While the two countries’ ships tried to stay out of each other’s way in Asia, both would intermittently show up in Canton at the same time and shooting would start, angering local Chinese officials.

British traders tried to explain they had no control over the Royal Navy, something the Chinese considered unbelievable. Unfamiliar with the difference between autonomous private traders and government warships, the Chinese considered British of both stripes part of the same barbarian clan and believed the “big-noses” were trying to trick them.

With Napoleon finally vanquished at Waterloo (1815) London wasted no time in sending a new embassy to smooth things over in Beijing, bringing with it a slightly more modest set of requests than Lord Macartney’s in 1793. The delegation leader (Lord) William Pitt Amherst would not seek an official British embassy in Beijing and his requests were reduced to two.

First, the British would inform the Jiaqing emperor of the corruption in Canton and ask for a new Canton System business contact who had direct access to the imperial court. The British believed the emperor was unaware of the trade barriers and graft that had become rampant and thought that upon learning of the rot in Canton Jiaqing would agree to resolve the impasse. In fact he was already aware of the situation in Canton.

Second, the British again sought freer trade, both expanding the number of Hongs its merchants could deal with and a loosening of restrictions on western goods, although the opening of additional trading ports would not be requested this time.

Since 1793 Britain had obtained new superpower status and a less deferential attitude towards the Qing dynasty, but Amherst was still conducting a diplomatic mission with considerably more modest requests for Beijing. It was hoped that the Qing court would be more receptive to the slimmed-down agenda upon which better relations could be built.

REALITIES

In practice the only success from the new embassy was British reconnaissance of the Chinese coast. Lord Amherst’s ships of line, after dropping the delegation onshore, took a more aggressive approach exploring and mapping the Chinese coastline and inlets, water depths, location of military installations, the economic conditions of coastal villages, and best estimates of the fighting capacities of Qing naval junks.

Other than that the Amherst embassy proved an unmitigated disaster.

First, no sooner had Amherst and his delegation come ashore than they were greeted by a reception party of Qing officials sent from Beijing to correctly prepare them for an audience with the emperor.

From the onset the Qing delegation stressed (again) the requirement to kowtow before the emperor, something that had clumsily held up the Qianlong emperor’s audience with Lord Macartney in 1793 but resolved itself with a compromise whereby the British would kneel on one knee.

This time Qing officials were more adamant, and the unpleasant negotiation dragged on for days instead of minutes. Amherst quipped that Macartney had not kowtowed so there was no need for him to either. Qing officials, clearly having prepared for this objection, claimed Macartney had indeed kowtowed.

Furthermore they said the Jiaqing emperor had witnessed it with his own eyes since he was present at the 1793 audience as crown prince. For Amherst to insist the emperor’s memory was faulty, while he himself was not there, would be a diplomatic insult.

In the end, after a very long back-and-forth tug of war that made the 1793 Macartney negotiation look like a nonevent, a compromise was reached whereby Amherst would kneel on one knee but then bow his head as many times as the emperor asked.

From there the Qing reception transported the British, their belongings and gifts upriver to Beijing by junk, deboarding in the afternoon. There was a 12-mile trek to Beijing and the party rested for dinner. But then, to Amherst’s surprise, his delegates were told they must keep trekking through the night as the emperor would receive them the next morning.

Believing this to be a ruse to keep them moving Amherst played along and his team reached Beijing’s city walls at sunrise only to find the main gates closed. So they had to walk around the city to the rear gates, the pace becoming frantically hurried. The lead Qing official, concerned about time, urged Amherst and three of his associates to walk ahead of the rest of the party who would catch up later.

Upon arrival Amherst was placed in a small waiting room, surrounded by Qing officials who he records stared and gaped at him and his assistants as if they were zoo animals on display for study. Amherst, exhausted from no sleep, dirty, and with his ambassador’s robe and uniform still trailing behind, asked for time to clean up and rest but was told the emperor was already on the throne waiting for him.

He refused to go into audience in such condition, but then a different Qing official—a duke—insisted he must. Eventually the duke seized Amherst’s arm, trying to force him up and the Englishman threw him off, alarming the surrounding officials. As tensions escalated in the tiny, claustrophobic room Amherst’s assistants leapt in front of him, hands on their swords, at which point he collected himself and ordered them to put away their weapons.

The audience with Jiaqing never took place.

Amherst headed back to his ship and Qing officials told a confused Jiaqing that the British embassy was not present due to illness. As it turns out Jiaqing had actually wished for a smooth meeting and, after several inquiries, began to suspect the Qing duke was lying to him to cover up real reasons for the British no-show.

As Amherst worked his way back he was chased down by an imperial courier with a letter from Jiaqing to Prince Regent George IV (George III was still king but now old, blind, and demented). In a face-saving move, the letter still blamed the British for the failed audience but relinquished the monarch of any responsibility, fingering the poor choice of Amherst instead. And in face-saving rejection the letter politely requested that, to avoid a repeat of such embarrassment in the future, the British monarch refrain from sending an ambassador to Beijing ever again.

Translation: don't bother us with any more barbarian diplomats.

One can only ponder how differently the history of Sino-British relations may have unfolded had the meeting gone forward as planned. At minimum future embassies may have been agreed upon, leading to intermittent communication that could have avoided later wars.

When Amherst returned home with news of his abject failure, reactions in Parliament and the British press were as hardened as ever. All of London’s requests had gone unfulfilled, its attempts to impress upon China the seriousness and power of the world’s greatest military and commercial nation having failed to even reach the emperor’s ears.

The one positive report in the papers was that Amherst had refused to kowtow (not surprising given he never met the emperor), thereby preventing a national humiliation and preserving British honor.

A few short years later Sino-British relations would fall even further. Such nationalistic themes and the issue of British honor would resurface, but under more weighty and combative circumstances.

Note: The Economics Correspondent credits much of the material in this article to Stephen Platt's book "Imperial Twilight: The Opium War and the End of China's Last Golden Age."

San Francisco Bay Role Reversal: Capitalism Works First, Socialism Destroys Later

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The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff recently witnessed a novel example of left progressivism canceling out capitalism even when the latter is allowed to work (at first).

Money down the drain: A Walmart self-checkout kiosk

Normally socialism destroys markets by seizing the means of production, draining individuals of incentive to work, invest, and innovate, and/or debasing the currency so that economic calculation becomes unreliable or even impossible.

In other words, the capitalist means of production doesn’t even function properly from the start.

Well last week I visited the Mountainview, CA Walmart, the closest any Bay Area government will “allow” Walmart to open a store near San Francisco (36 miles), and saw an example of capitalism working up front, just to be canceled out by socialism later.

I stood in a short line to use one of the self-checkout kiosks, and when one opened I walked over only to be welcomed by a Walmart employee manning the machine. She started picking items from my cart and checking them out with a handheld scanner.

I told her “Oh don’t worry, I can scan” and she replied “Customers aren’t allowed to scan their own items.”

This being the San Francisco Bay Area I instantly asked “Does this have something to do with theft? Or shrinkage?”

”Yes, that’s one way to describe it.”

”I get it, I live in San Francisco.”

“Oh, I hear it’s really bad over there. But yes, we’re supposed to scan all the items. The customers can’t do it anymore.”

I looked to my left and my right and all six self-checkout kiosks had a Walmart employee standing there scanning items by hand while the customers stood and watched them. It was a crowded scene.

Being Economics Correspondent and always thinking about how capital accumulation enables firms to achieve the same or greater output with fewer workers, I asked the cashier “Doesn’t it defeat the purpose to have a worker scan for customers at a self-scan register? The kiosks are supposed to save money.”

She said “I suppose so. But at least we’re all busy.”

So here we have a company doing what companies do in a capitalist economy: investing in technology… or “capital” (labor-saving tools and machines) only to about-face and pay the very workers the machines were meant to replace anyway—all because local Bay Area governments allow shoplifters to run wild in the name of social justice, wealth redistribution, and/or reparations.

A Political and Economic History of China, Part 15: Lord Macartney and the British Arrive

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7 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff chronicles the next step in the decline of China’s last dynasty: Rejecting trade overtures from Europe.

The Qianlong emperor receives the Macartney Embassy

So far we’ve discussed the peak of China’s last dynasty, the Qing, and the problems that signified the start of its decline in the late 1700’s: massive corruption within the government that literally bankrupted the treasury even as rebellions sparked throughout the country’s periphery.

As the Qing’s domestic problems surfaced a seemingly unimportant meeting occurred with a small delegation from Great Britain. The short diplomatic visit was considered insignificant by both the Qing court and the aging Qianlong emperor, but its conclusion would lead to large conflicts decades later, compounding China’s domestic challenges with new foreign ones.

THE MACARTNEY MISSION

During the late 17th century the great Qing emperor Kangxi opened four coastal ports for trading with foreign merchants: in Xiamen, Songjiang, Ningbo, and Guangzhou (known then to westerners as Canton).

By 1720 frictions between China and the Vatican over missionaries and Confucian rites frustrated Kangxi and he began limiting interaction with the west. In 1757 his grandson, the venerable Qianlong emperor, closed all the trading ports except one: Canton, ushering in the “Canton System” of protectionism.

The Canton System quickly proved a giant bottleneck for western trade. Business could only be conducted with a Qing-licensed guild of Chinese merchants who, wielding the power of the city’s trade monopoly, routinely squeezed Europeans for subsidies and bribes.

Western traders complained in turn to their governments about corruption in the Canton System and petitioned them to file diplomatic complaints, but the great European powers were distracted by more pressing matters. Great Britain and France were at war (1756-1763). Then Britain found herself at war with the breakaway American colonies (1775-1783). Shortly afterwards France overthrew its monarchy and plunged into the chaos of its own revolution (1789-1799).

When things settled down Great Britain dispatched a mission to China to not only address the Canton System but also to establish an embassy, formal diplomatic relations, and a free trade agreement. The Macartney Embassy (named after its leader George Macartney) departed for China in 1792 carrying gifts of friendship including telescopes, artillery pieces, air pumps, pottery, chandeliers, watches, clocks and other specimens of western technology including a planetarium.

After the long journey by sea, anchoring off the coastal city of Tianjin, taking leased boats upriver to Beijing and caravan trekking by land, Macartney’s mission arrived in September 1793 at Chengde, the Qianlong emperor’s summer resort in Manchuria.

The opening chapter of what would become decades of awkward interaction between east and west—full of miscommunication, misunderstanding, and clashes of culture—was beginning.

AN UNCOMFORTABLE ENCOUNTER

Right from the outset the British reception hit a diplomatic snag. The Manchus insisted the delegation kowtow before the emperor (kneeling on all fours and touching their foreheads to the ground three times) which the British viewed as humiliating. After many restive back and forth negotiations—complicated by translators—Macartney agreed to kneel before Qianlong on one knee in the same manner he would kneel for his own king.

Sino-British relations were not off to a good start.

In fact historians view the much-discussed kowtow impasse a microcosm of differing worldviews that would frustrate both empires for decades to come. Britain believed itself now the most powerful nation on earth but, in the name of diplomatic courtesy, was offering to establish relations among equals with China. The Chinese believed they were the supreme power on earth—their emperor being the only “son of heaven”—and Britain just another second-rate state journeying to exhibit their deference to the emperor.

Worsening matters for the British was the presence of several other countries’ delegates at the same meeting, making the British seem (in Chinese eyes) like one vassal state among many coming to pay their respects. Granted, the westerners differentiated themselves by traveling a greater distance, but the Chinese also viewed them as tall, big-nosed, red-haired barbarians.

Despite the clumsy precession Macartney still had a mission to accomplish: to establish formal diplomatic relations, to open a British embassy in Beijing, to ink a free trade agreement, and in doing so address the Canton System’s corruption that had irked British traders.

Qianlong abruptly swept Macartney’s requests aside and sent him home packing. The British were told politely but firmly that China had no need for and no interest in diplomatic relations or trade. The Qing court considered the British visit a demonstration of tributary states prostrating themselves before the emperor, nothing more.

Even the complex mechanical devices and modern weapons the British brought were not enough to convince Qianlong he had anything to gain from intercourse with the west. While the Chinese were somewhat impressed by western devices, both the emperor and his court considered them also to be tribute and feigned complete disinterest. Besides, a few mechanical curiosities were hardly worth humiliating themselves by treating these primitive foreigners as equals. Qianlong, in what the Correspondent views as a shortsighted error (perhaps the result of his growing senility which Macartney noted in his journal), wrote to George III on western technology:

”I set no value on objects strange or ingenious, and have no use for your country’s manufactures.”

As the story of Qing relations with the West deteriorates the Correspondent will repeatedly point to Chinese attitudes of superiority with “nothing to be learned from the west” as a crucial mistake that would cost them, while benefiting a future arch-enemy—Japan, down the road.

THE MACARTNEY AFTERMATH

Macartney would leave the meeting empty handed other than a diplomatic letter from Qianlong to King George III. A link to the full text of the letter is included at the end of this article, but some of the passages reveal two key Qing attitudes, both of which would prove strategic mistakes.

1) The emperor’s tone was that of a supreme heavenly figure addressing a hoard of inferior barbarians. For example, Qianlong wrote to George III that:

”Hitherto, all European nations, including your own country's barbarian merchants, have carried on their trade with our Celestial Empire at Canton… … But your Ambassador has now put forward new requests which completely fail to recognise the Throne's principle to ‘treat strangers from afar with indulgence,’ and to exercise a pacifying control over barbarian tribes, the world over.”

…and…

“England is not the only barbarian land which wishes to establish trade with our Empire: supposing that other nations were all to imitate your evil example and beseech me to present them each and all with a site for trading purposes, how could I possibly comply? This also is a flagrant infringement of the usage of my Empire and cannot possibly be entertained.”

…and…

”In that event your barbarian merchants will have had a long journey for nothing. Do not say that you were not warned in due time! Tremblingly obey and show no negligence!”

Fortunately the British did not overreact (this time) to Qianlong’s belligerent tone, something we’ll discuss more in another column.

Meanwhile western science and machinery were riding high on the wave of the First, and later Second, Industrial Revolution and the Correspondent considers it a blunder for the Qing to adopt so dismissive an attitude towards a technologically superior power requesting friendly relations.

2) The Qing clearly wished to keep trade largely closed off from the west. In the spirit of mercantilism, which by this point Britain had thrown off in favor of Smithian free trade, China insisted on a fundamentally protectionist policy: happy to sell its goods to the barbarians while closing off its own markets to western products.

Sound familiar?

In the Correspondent’s opinion this was also a major misstep as western technology was already advancing rapidly beyond Chinese capabilities. By refusing to import western goods and ideas the Qing condemned China to fall hopelessly behind Europe and America in the ensuing decades.

A famous passage from Qianlong’s letter to George III reveals his position:

”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 produce. But as the tea, silk and porcelain which the Celestial Empire produces, are absolute necessities to European nations and to yourselves, we have permitted, as a signal mark of favour, that foreign hongs [merchant firms] should be established at Canton, so that your wants might be supplied and your country thus participate in our beneficence.”

Rejected and disappointed, Macartney began the long trip back to England. However he took the land route to Beijing, through the Grand Canal to the Yangtze river, and then again over land to Canton. During the long journey he recorded observations on the standing of the Qing dynasty which proved prescient:

“The Empire of China is an old, crazy, first-rate Man of War, which a fortunate succession of able and vigilant officers have contrived to keep afloat for these hundred and fifty years past, and to overawe their neighbours merely by her bulk and appearance. But whenever an insufficient man happens to have the command on deck, adieu to the discipline and safety of the ship. She may, perhaps, not sink outright; she may drift some time as a wreck, and will then be dashed to pieces on the shore; but she can never be rebuilt on the old bottom.”

Some historians speculate Macartney wrote his words out of bitterness, lashing out at an empire that had sent him home empty-handed. Others argue during his mission Macartney did not limit himself to diplomacy alone and also practiced shrewd firsthand scrutiny.

The Correspondent believes the latter story is more convincing. Even as a visitor Macartney detected early cracks in the Qing’s foundations—before even the Qianlong emperor himself did. Today we know Qing officials were already robbing the imperial treasury blind during Macartney’s visit, and the first of many domestic rebellions began just one year after he left.

Macartney reported back that the majestic and imposing Qing dynasty had already peaked and was embarked on a downward trajectory. His mission returned home a diplomatic failure, but Britain would try again several years later.
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Full text of Qianlong's letter to George III available at:

https://china.usc.edu/emperor-qianlong-letter-george-iii-1793

A Political and Economic History of China, Part 14: The Most Corrupt Official in Chinese History Bankrupts the Qing Dynasty

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6 MIN READ - Given China’s multi-millennial tradition of government corruption, for anyone to earn the distinction of “irrefutably most corrupt official in Chinese history” is quite an achievement. In this column the Cautious Optimism Economics Correspondent describes how a single government minister became one of history’s richest men by completely draining the Qing dynasty’s treasury by 1799.

Qing Grand Councillor and Revenue Minister Heshen

Last post we discussed Qianlong, the longest reigning monarch in Chinese history (de facto r. 1735-1799) who is still viewed by some as one of the middle kingdom’s greatest emperors.

Two-plus decades ago when the Correspondent first read about Qianlong (pronounced “chien-long”) the emperor’s reputation was deemed stellar with history books making only passing mention of a few missteps late in his life.

Since then Qianlong’s reputation has declined among historians, in the Correspondent’s opinion for good reason. As we’ll see, completely avoidable mistakes not only inaugurated the early decline of the Qing but also signified the opening chapter of what would become two centuries of backslide and prostration for China.

We’ve already discussed his multiple wars, the “Ten Great Campaigns,” many of which were failures yet ultimately cost the Qing treasury over 150 million taels in silver.

However the monetary cost of the Ten Great Campaigns would prove minor compared to one domestic blunder Qianlong would make in his final years.

PAGAENTRY

One Qianlong vulnerability that would open the door to Qing decline was his love of pomp and grandiosity.  

Qianlong’s grandfather and father, the great Kangxi and Yongzheng emperors, strongly subscribed to (their words) “good government,” a “moral” imperial court, and “virtue” among officials with both emperors authoring edicts emphasizing constant vigilance against corruption while extolling the Confucian principle of leaders earning and maintaining the trust of their subjects.

Kangxi’s attitude regarding good governance was partly demonstrated on his royal excursions.

Kangxi embarked on several “grand tours” of southern China to inspect firsthand his dominions outside the Forbidden City. Although he brought an imperial entourage for security reasons, he preferred whenever possible to mingle incognito among the common people and listen to their candid thoughts about Qing rule.

By contrast Qianlong would have none of this discreetness. His tours were enormous, grandiose affairs where he reveled in large crowds bowing before his royal caravan. Modesty is a character trait Qianlong did not inherit from his ancestors and his vanity would ultimately cost the Qing and all of China dearly.

Later in life, an aging and venerable Qianlong began to lose interest in day-to-day state affairs. His favorite empress had just died leading him into desolation and apathy. He retreated into art, calligraphy, poetry (he’s said to have written 40,000 poems, more than all poets of the Tang dynasty combined) and earthly pleasures.

In 1772 a still-despondent Qianlong spotted a low-level imperial guard stationed at the Forbidden City’s gates. Heshen (pronounced “huh-shun”) was a young and ambitious Manchu who impressed Qianlong with his intelligence. Heshen was also an expert flatterer and within two years the 24-year old was appointed to a high-level cabinet post.

There are unconfirmed rumors that there may have been more than flattery involved, for Heshen was said to be a strikingly handsome man with a sibling resemblance to Qianlong’s recently deceased favorite consort, but there’s no question that he charmed the emperor into a career fast track.

Soon Heshen was placed in charge of the Ministry of Revenue. Older, more deserving officials resented being leapfrogged by the young Heshen, but knowing he was the emperor’s favorite they dared not complain.

From the Ministry of Revenue Heshen was in complete control of the Qing empire’s finances. Using his political influence he appointed loyal subordinates and began embezzling state funds on an astronomical scale. Senior Qing officials and even the crown prince, the future Jiaqing emperor, plainly saw Heshen’s brazen robbery but were forced to remain silent given his standing with the emperor.

Heshen also stole openly, as did his ministers, and after seeing them do so long enough with impunity other officials began stealing openly as well. Over the course of nearly twenty-five years corruption wormed its way into all levels of government including everyday peasants being squeezed by provincial bureaucrats. All the while the aging Qianlong was apathetic to the rot spreading through the empire, leaving Heshen to effectively run the government for over two decades.

FUNDS TO SUPPRESS REBELLION

Between corruption and steeper taxes imposed to fund the Ten Great Campaigns, majority ethnic Han Chinese resentment towards the Qing resurfaced. Back in 1644 Han Chinese were hardly thrilled about the new alien conquerors running their country but eventually accepted Manchurian authority under the enlightened administration of Kangxi and Yongzheng.

Now the animosity returned worse than ever. Secret societies were established to resist the Qing and open rebellion broke out in the 1790’s—most notably the southern Miao Rebellion in 1795 and the much larger White Lotus Rebellion in 1794.

By 1796 Qianlong was 84 and showing signs of dementia. Not to outshine his grandfather he officially abdicated after 60 years, one year short of Kangxi’s reign, but still held de facto power thereby leaving his son emperor in name only and allowing Heshen’s embezzlement to continue.

When domestic unrest shook the empire Heshen requested more funds to quell the revolts, reporting back to Qianlong that he was suppressing the insurrections with ease. In fact he simply pocketed the money while rebellion spread unchecked throughout the empire. Once again the emperor’s son was fully aware of Heshen’s corruption but could do nothing while his father was alive.

Qianlong finally died in 1799 at age 87. The Jiaqing emperor, having at last secured real power, arrested Heshen within a week. An investigation uncovered the extent of his embezzlement had surpassed anyone’s wildest estimates. An inventory of Heshen’s estate discovered multiple mansions with nearly 3,000 rooms, over 10,000 acres of land including farmland and animals, ownership of several banks and pawnbrokers, enormous hoards of gold, silver, precious jewels, and rare art, 24 beds made of solid gold and countless foreign mechanical devices including hundreds of novel European clocks.

The final tally of his fortune was calculated at 1.1 billion taels of silver. To place this number in perspective, Qianlong’s Ten Great Campaigns had cost the treasury 151 million taels. 1.1 billion taels also approximated 15 years of Qing government tax revenues—fiscal receipts for the most populous country in the world (China had 330 million people compared to 10.5 million in Great Britain and 49 million across the entire British Empire).

Given that we know the silver content of a Qing dynasty tael (1.3 ounces), the silver content of a 1799 U.S. dollar, and the silver equivalent of the British pound (which was on a de facto gold standard until 1797), it’s also possible to approximate Heshen’s fortune in western terms.

Staring with 1.1 billion taels of silver, a back of the napkin calculation yields an estimate of $1.5 billion compared to US nominal GDP of $447 million in 1799.

Heshen had embezzled more than three times the GDP of the United States.

Of course using U.S. GDP in 1799 is a bit misleading because the American economy, with only sixteen states, was much smaller back then. Instead we can compare Heshen’s fortune to a much larger country with three times the USA’s population.

In pounds sterling equivalent Heshen had embezzled 20% more than the GDP of Great Britain.

Discovering the scale of the larceny, the Jiaqing emperor had Heshen’s estate confiscated and ordered his execution by slow slicing. But since Heshen had married into the royal family—his son had married Qianlong’s favorite daughter—Jiaqing instead granted him the dignity of hanging himself with a silk rope.

Jiaqing would soon learn he needed every penny from the Heshen estate firesale, for he inherited imperial power to discover the Qing treasury had been completely emptied by theft. He also inherited an empire beset by unchecked rebellion across its periphery, a dilapidated military long starved for funds, and endemic corruption at every level of government.

It’s understandable that after so many decades running the enormous Qing empire Qianlong grew weary of governing and wished to retire from affairs of state. But the wise decision would have been to abdicate earlier and transfer power to his son who was eager to assume responsibility in earnest. 

Instead Qianlong clung to power for decades longer—to his last dying breath—and allowed China to backslide into bankruptcy during his old age.

Jiaqing would rule China from 1799 to 1820. As the 19th century commenced Beijing’s dire fiscal position would precipitate major frictions and conflict with many trading partners—most notably Great Britain—when the Qing embraced protectionist trade policies to refill its emptied coffers. 

But that’s a subject for another column.

A Political and Economic History of China, Part 13: The Great Qianlong Emperor and the Pinnacle of the Qing Dynasty

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6 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff discusses the peak and first declining years of China’s last dynasty: the Qing.

Modern China (black border) and the Qing dynasty's maximum extent

The Economics Correspondent has already written about the declines of several Chinese dynasties: the Qin, Han, Tang, Song, Southern Song, Yuan, and Ming. But the decline of the Qing will take several posts… and for good reason.

Not only does the fall of the Qing take us into the early 20th century, not only does it foment the conditions that would produce decades of revolution, invasion, and civil war ending with communist victory in 1949, but the dark days of the Qing’s decline still linger in the minds of many Chinese (quite bitterly I might add).

And today, to stir the up the flames of nationalism and anger against the USA and UK, CCP propaganda openly blames China’s “century of humiliation” (approx. 1839-1949) entirely on western imperialism.

The Correspondent’s task, therefore, is not only to chronicle the details of the Qing’s decline, and not only to agree where the West played a part in China’s fall from power, but also to point out where the Qing dynasty brought both itself and China down—a subject that isn’t discussed very much within China and, whenever mentioned by westerners, frequently generates a lot of angry nationalist backlash and resentment.

But we’ll start with the historical record.

PASSING THE TORCH

The dominant figure in the story of the Qing’s pinnacle is the great Qianlong emperor (pronounced “chien-long”).

Yes we've just discussed another great emperor in two previous articles, Kangxi, but the first half of the Qing was fortunate to have three consecutive great emperors—Kangxi, Yongzheng, and Qianlong—who collectively ruled for 138 years.

Kangxi held the throne for 61 years (1661-1722) and Qianlong for another 60 (late 1735-early 1796). However out of respect Qianlong abdicated one year short of surpassing his grandfather. Still, he held the real power for the three more years before his death while the crown prince ruled in name only. Therefore Kangxi officially held the throne for longer than any emperor in Chinese history, but Qianlong held de facto power even longer.

Between the two venerable emperors was Kangxi’s son, the Yongzheng emperor.

Serious Chinese academic scholars never tire of reminding the public “don’t forget about Yongzheng” because, at only thirteen years on the throne, his reign was relatively short and tends to be overlooked.

The Correspondent is not going to spend much time on Yongzheng because, while he implemented many important reforms, there aren’t many fireworks in his story.

In a nutshell Yongzheng was an extremely hard working emperor who focused ceaselessly on stamping out corruption and improving China’s economy. Scholars point out when Qianlong succeeded his father he was handed the perfect hand of cards: a smoothly running kingdom with a strong economy and low corruption. Ethnic Han Chinese even began to view the Manchus, initially hated as alien conquerors, as legitimate rulers of the empire.

Unfortunately Yongzheng made the same mistake with his health that the salient emperor Qin Shi Huang had made back in 210 BC: drinking an elixir of immortality that contained mercury. In the 1,945 years that had passed since Qin Shih Huang’s death medicine had still not yet recognized mercury’s dangers so Yongzheng died in 1735 at age 56.

One last Yongzheng reform was the creation of a new procedure to determine his successor. Yongzheng had seen disputes erupt over not only his own succession, but countless times throughout Chinese history where brothers assassinated one another, went to war, or forged wills to inherit power. Hence he developed the “Secret Designation of the Crown Prince” system whereby his choice for heir to the throne was written down on several documents which were locked in different sealed boxes, and the boxes were stored for safekeeping by trusted officials in different locations—as well as one kept by Yongzheng himself.

After Yongzheng died the secret designation boxes were opened and the documents all matched: Yongzheng’s fourth son would take the throne peacefully as the Qianlong emperor. 

QIANLONG

As we’ve already mentioned Qianlong was handed the equivalent of a royal flush in poker when he took power. And for several decades he ran the empire quite effectively.

His most notable accomplishments included opening up land in the northeast Manchurian homelands to Han Chinese farmers who in turn ballooned food production to new heights. In the century from 1700 to 1800 the Chinese population increased by 106%, from 160 million to 330 million.

Qianlong also re-annexed the remote Xinjiang region into the empire. The Correspondent has already chronicled details of how China ruled over Xinjiang for nearly four on-again, off-again centuries during the Han (202 BC-220 AD), Tang (618-907), and Yuan (1279-1368) dynasties. Link to that entry at:

http://www.cautiouseconomics.com/2023/10/china-history02.html

In the 18th century the Qing was actually invited into Xinjiang by a warring Dzungar Mongol khan named Amursana (1755). 

Amursana was losing a power struggle with a rival khan and promised to serve as a vassal governor to China if the Qing would help him win the conflict. The messy details of the Qing’s entry into Xinjiang are also in the comments link, but China has stayed in the region ever since. 

With the annexation of Xinjiang Qianlong expanded China’s already extensive borders to the widest expanse ever in the country’s long history.

A map is included with this article comparing present-day China’s geographic size (black border) to its Qing maximum (all dark and light brown regions). 

As the Qing’s decline accelerated in the 19th and early 20th centuries neighboring states began to chip away at China’s exterior, taking territories in what is now Mongolia, pieces of Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, Pakistan, India, Nepal, Bhutan, Burma, Laos, Vietnam, and Taiwan.

THE TEN GREAT CAMPAIGNS

Hence the subject of border territories brings us to Qianlong’s first great blunder: he waged far too many wars at home and against his neighbors—known as the “Ten Great Campaigns”—which proved incredibly expensive.

Three of the great campaigns took place in Xinjiang (1755-59) which we’ve already touched on. There were two military campaigns in the western mountains of Sichuan province (1747-49, 1771-76), one suppression of an aboriginal Taiwanese revolt (1787-88), one campaign against Burma (1765-69), one in Vietnam (1788-89), and two against Nepal (1790-92).

Of the ten campaigns, only five could be considered successful with Burma and Vietnam being unambiguous military disasters. The Correspondent once read (but he can’t remember where) that China has fought wars with Vietnam 22 times and lost 18 of them, most recently in 1979.

After losing the Qing declared victory before packing up and going home. However the cost of the ten campaigns was enormous at an estimated 151 million silver taels. To put this into perspective Qianlong’s grandfather Kangxi had reformed the economy and boosted the imperial treasury’s reserves from 15 million taels in 1668 to 33 million taels in 1722. Qianlong burned through nearly five times that amount for wars alone.

To finance his military expeditions Qianlong ordered taxes raised steeply across the empire which created much resentment. Han Chinese who had tentatively accepted Qing rule due to the good economy reversed course after the burden of higher taxes. Many resumed hating the alien Qing when they were also squeezed by the return of corrupt government officials (a lot more on that in the next chapter).

Although many Han Chinese weren’t prepared to openly rebel, the final years of Qianlong’s reign marked the founding of many “secret societies” or underground resistance groups plotting to overthrow the Qing.

Although we’re getting a little ahead of ourselves, once the Qing was overthrown in 1912 the secret societies lost their original raison d’etre and turned to organized crime, transforming themselves into the famous mafia “triads” of the 20th century. One famous secret society, the Green Gang of Shanghai, was frequently recruited by Chiang Kai-Shek to do his dirty work including the violent purge of Chinese communists in 1927.

After 1949 the CCP cracked down hard on the triads which continued to operate out of British Hong Kong, Macau, and Taiwan. But once China reopened its economy the triads reestablished a mainland presence. There are even rumors of triads working hand-in-hand with CCP government officials today.

Nevertheless, an interesting piece of trivia is most of the notorious 20th and 21st century Chinese triads were started as anti-Qing societies during the earliest years of the dynasty's decline.