Canton System (1757–1842)

The Canton System (1757–1842) was a complex foreign trade policy enforced by China's Qing dynasty throughout much of the eighteenth and nineteenth centuries. Under the Canton System, trade with foreign merchants was restricted to the southern port city of Guangzhou, which was known to outsiders as Canton. By the seventeenth century, Western interest in Chinese trade was growing rapidly. Wary of alien influences, however, the Qing dynasty sought to exert as much control as possible over the trade process and the activities of foreign merchants. To that end, the Qing appointed merchant firms tasked with overseeing foreign trade and made Canton the only city where such trade was allowed to take place. Although this arrangement was a successful and advantageous one for the Qing, it quickly frustrated foreign traders who wanted a less restrictive trade relationship with China. Ultimately, increasing Western demand for access to other Chinese ports and the strain placed on the Chinese government by the First Opium War (1839–1842) led to the collapse of the Canton System and the beginning of open trade with China.

Background

European interest in establishing trade ties with China dates back to the early seventeenth century. Around 1624, the Dutch began trading with China through Taiwan but eventually lost that avenue when China launched its effort to seize control of Taiwan in 1662. Subsequent Dutch attempts to establish direct trade with China ultimately proved futile. Starting in the 1670s, the English also attempted to establish a trade relationship with China through Taiwan, but their efforts, like those of the Dutch, met with little success in the end. The first signs that open trade with China might be possible did not appear until after China finally took full control of Taiwan in 1683. Once the Taiwan issue was settled, the Qing dynasty began taking a greater interest in conducting direct trade with foreign merchants, and several Chinese ports, including Canton, were open for business.

As the first foreign merchant ships starting arriving in Chinese ports around 1690, new trade arrangements began to be developed. In most cases, foreign ships that docked at Chinese ports had to negotiate terms with Chinese officials before they could commence trade. Each time a given ship returned to a certain port, these terms had to be renegotiated. Usually, the terms involved import and export tariffs and various other charges and fees. Although this was not free trade in the truest sense, it was a major step forward. Over time, as the terms of trade negotiated at Chinese ports began to settle into precedent, Canton emerged as the most favorable trade location for foreign merchants and quickly became China's leading trade port.

By the 1750s, Chinese trade relations with foreign merchants had expanded considerably. As trade grew, however, so did concerns about the rising number of foreigners who were making their way into the country. Worried about the influence that the influx of foreigners might have on Chinese culture, Qing officials moved to place firmer restrictions on trade and traders. Their most important decision as part of this effort was to make Canton the only Chinese port where foreign merchants could conduct trade. With this, the Canton System officially took effect.

Overview

China's move toward the Canton System started decades before Canton was designated as the country's only foreign trade port. In the years following the reopening of Chinese trade in 1684, the Qing government began taking steps to improve the administration of its trade policies. Believing that maritime trade was lucrative and too politically delicate to leave in the hands of provincial officials, the Qing sent its own supervisors to port cities to oversee trade business. Initially, many of these officials were from the Board of Revenue and were referred to by foreign merchants as the hoppo. Later, the hoppo were replaced by officials from the Imperial Household Department. These officials controlled Chinese trade and were responsible for levying the appropriate taxes.

While the hoppo and other government officials formally controlled trade, the actual business of trade was operated by a monopoly of private Chinese companies known as hong merchants. This monopoly, which usually consisted of around twelve hong merchants, paid for special permits that allowed them to conduct trade with foreign merchants and were organized into a guild called a co-hong. In exchange for the profits they earned through their trade monopoly, co-hong members were required to assume responsibility for the actions of foreign merchants while they were in China during the trading season, which ran from October to January. In this way, the Qing effectively used the co-hong to ensure that foreigners stayed in line and did not disrupt the traditional Chinese way of life.

As the Canton System took hold, the British emerged as China's top foreign trade partner. At the helm of Britain's trade relationship with China was the East India Company, a powerful entity that specialized in East and Southeast Asian trade. Under the Canton System, trade between the East India Company and the various co-hong companies involved a host of intermediaries that included sellers and buyers, translators, money changers, and clerks. Over time, these intermediaries evolved into an influential merchant class of sorts that ultimately had a transformative effect on China's emergence as a modern nation.

Although the British were pleased to be doing business in China, they also were eager to expand their operations into other parts of the country. Determined to limit foreign influence on Chinese culture and concerned about Britain's growing demands for greater access to additional Chinese ports, the Qing took decisive action. Although such a restriction was already unofficially in place, the Qing formally announced that Canton was the only Chinese port open to foreign traders in 1757. Around the same time, they also enacted a number of new regulations that further burdened British merchants. Some of these regulations included a ban on foreign women and fireworks and various new constraints on merchants' personal freedoms. While British traders begrudgingly accepted these restrictions and limitations for decades to come, their frustrations with China's unwillingness to cooperate grew over time, as did their desire to expand their trading operations. As it happened, one of Britain's biggest imports into China was opium, an addictive substance that severely upset China's economic and social well-being. In 1839, China's effort to stop the opium trade led to the First Opium War. When the British subsequently emerged from the war victorious in 1842, they were finally able to force China to abandon the Canton System and open five new ports for foreign trade.

Bibliography

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