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History of China and Japan Author: Siddhartha Guha Ray
1

HISTORY

Subject : History
(For under graduate student)

Paper No. : Paper - VIII

History of China & Japan  

Unit No. & Title : Unit- 1

History of China

Topic No. & Title : Topic - 2

China as an Informal Colony

Lecture No. & Title : Lecture - 3

Increasing western Economic
Interests

Script

During the decades following the Convention of Peking

(1860), the Western powers were successful in
consolidating their political and economic power in China.
After the Opium Wars, a large number of Chinese ports
were opened to the foreigners. Such open ports came to be
known as the Treaty Ports. The Treaty Ports were converted
into enclaves of the Western powers. The Western powers
History of China and Japan
2

in fact began to control the economy of these enclaves,

leading to some sort of Enclave Economy in the coastal
areas of China.

The British and the French governments started giving lease

of land in the Treaty Ports to their own citizens. In return
for enjoying the lease, the British and the French citizens
used to pay a nominal ground rent to the Chinese
government. The special advantages enjoyed by the
foreigners in the enclaves of China were called
“Concessions”. The British concessions had grown up in
seven of them i.e. in Canton, Amoy, Chinkiang, Kiukiang,
Hankao, Tientsin and Nuchang while French concessions
were in three – in Canton, Hankao and Tientsin. In addition
there was the international concession in Shanghai. By
applying the extra-territorial rights the Western powers
would try their subjects according to their own law.
Gradually the foreigners introduced their own tax system,
police and municipal administration. Chinese sovereignty
virtually disappeared from the enclaves of China. But the
Ching dynasty still continued as the official rulers of China.
According to Fairbank, “Thus China’s sovereignty, without
History of China and Japan
3

being destroyed, was put largely in abeyance in the foreign

quarters of the major ports”. The noted Sinologist Jean
Chesneaux observed, “The Chinese government had
virtually no control over these enclaves, since the
provisional institutions that the foreigners created to run
them at the time of Opium Wars had developed and gained
strength over the years”.

The international concession in Shanghai, formed in 1863

by the fusion of the British and American concessions, was
administered by a municipal council elected each year by
foreign landowners or lease holders whose estate or lease
exceeded the value of 500 taels. An annual general meeting
of the electors would determine the policies of this
miniature government. The council levied taxes, and its
activities were managed by three departments; public
works, finance and police. Chinese residents of Shanghai
were not represented at the annual general meeting,
although heavy taxes were imposed on them.

The French concession was organized on similar lines, which

was run by a municipal council elected by foreign residents.
History of China and Japan
4

The council was empowered to form a police force, to levy

taxes, and to maintain public works. The Chinese were
denied the right to vote and they could not contest
elections. They, however, were subject to heavy taxation.
The political structure of foreign life in China was not limited
to concessions but included the foreign law courts, the
foreign postal service, and above all, the organization of
customs.

To quote Jean Chesneaux, “In a number of important

geographical and administrative sectors, foreign authority
had replaced or was added to the authority of the Chinese
state”.

The issue of controlling the tariff policy of China by the

foreigners appeared to be a clear case of encroachment
against Chinese sovereignty. In 1861, an Englishman
named, H.N. Lay, became the inspector general of imperial
customs who was replaced by another Englishman, Robert
Hart, in 1863. Hart was directly responsible to the Chinese
Foreign Ministry. In every important port Hart appointed
well paid customs commissioners and all of them were
History of China and Japan
5

foreigners. The Commissioners in ports were supposed to

be under the supervision of the customs superintendent, a
Chinese local official, but in reality only Hart’s authority
counted.

Establishment of control by the Western powers in the

Treaty Ports led to an expansion of foreign trade in China.
Trade was still the chief economic activity of Westerners in
China. After 1860 more ports were opened to the foreigners
in China, as a result of which the zone of operations for
foreign merchants increased considerably. The Zhifu
Convention of 1876 allowed foreign ships in some ports of
the middle Yangtse basin, although they had not been
formally opened.

Between 1870 and 1880 steam navigation appeared not

only on the coastal routes but also on Chinese inland
waterways. In 1885 there were eleven large British and
American steam navigation firms in Shanghai and Hong
Kong. Jardine and Matheson and Butterfield and Swire, the
two biggest among them, had offices in both ports. Steam
navigation helped to increase the volume of foreign trade in
History of China and Japan
6

China. In 1868 the Shanghai Chamber of Commerce, purely

a British organization, financed an expedition to explore the
economic possibilities of the upper Yangtse.

In the sphere of foreign trade, opium was still very

important, as were cotton fabrics. Import of yarns
remarkably increased as this was widely used by the
Chinese artisans for weaving. Purchases of metal and
metallurgical products by the Chinese also increased, as
these were required in building modern industries. Import
of paraffin doubled as it proved very useful for lighting in
coastal areas as well as interior China. Tea and silk were
China’s principal exports. But soon China began to lose her
foreign markets for tea and silk. Indian tea and Japanese
silk posed a stiff competition for the Chinese products.
Foreign trade in China was vulnerable and was severely
affected by the economic crisis of 1865-66, and by the
slump of 1871-73. Foreign intervention led to a stagnation
of the Chinese economy. Fairbank, however, argued that
poverty and conservatism of the Chinese society were also
responsible for recession in trade.
History of China and Japan
7

The Chinese coolie traffic was still flourishing. It was highly

profitable for the recruiting agencies and shipping
companies. Coolies were recruited as workers in China
“under contract” and they were sent to Latin America and
the Caribbean islands. The coolie traffic was active in
Macao, Canton, and Amoy.
Taking advantage of the coolies’ ignorance and naiveté, the
Western recruiting agents made them sign a contract, kept
them in barracks where their wretched food was deducted
from their future salaries, and then packed them into cargo
boats.

A section of the Chinese bourgeoisie became rich on the

spoils of war, misappropriation of military funds, internal
trade duty or likin, and speculation. This particular section
of bourgeoisie, who amassed huge wealth within a short
period, came to be known as the compradors. The opening
of the Chinese ports after the Opium Wars saw a huge
influx of foreign capital in China. The compradors emerged
as the helping hands of the foreign investors. The
compradors were contractual employees of foreign trading
firms who handled the Chinese side of their business.
History of China and Japan
8

According to Fairbank, “The compradors bridged the

cultural, linguistic, and institutional gap between East and
West”. By working in foreign trading firms they could
acquire quick wealth. They also acted as brokers in the
purchase of foreign goods. Then they became
entrepreneurs. Compradors generally invested in business
with a high rate of interest: money lending, real estate,
banks, and traditional exchange offices. Mao Tse Tung, the
Chinese communist leader, wrote in his article, ‘Analysis of
the Classes in Chinese Society’, “The Comprador Class are
wholly appendages of international bourgeoisie, depending
on imperialism for their survival and growth”. By
maintaining close ties with the foreigners and helping them
in imperialist plunder the compradors in China emerged as
a wealthy section of the society.

The compradors profited directly from the expansion of

foreign trade with the restoration of peace after brutal
suppression of the Taiping Revolt (1850-64), from the new
privileges obtained by the foreigners in 1860, and from the
rise of industry in the West. Between 1864 and 1875, the
volume of external trade in China increased from 110 to
History of China and Japan
9

140 million customs taels a year and in 1887 it rose to 190

million. Yet in 1865 legal commerce (excluding opium
smuggling) suffered a deficit. From 1876 onwards deficit
became a permanent feature in China’s external trade and
it went on increasing. The wealth accumulated by the
compradors therefore made a large hole in national
resources.

With the increase of economic activities of Western powers

in China, in fact, two Chinas came into existence. In the
words of Jean Chesneaux, “Two Chinas were thus
juxtaposed. There was the China of the open ports, which
was becoming Westernized and the China of the interior,
where the gentry and government mobilized their strength
against the spectre of the popular revolts, neglecting all
other problems”. Due to this duality, historians face
enormous difficulty in evaluating the real effects of foreign
activity in China. Some historians are unequivocal in
speaking of complete domination by Western imperialism,
whereas others stress the “old, impenetrable China”.
History of China and Japan
10

By putting an end to the popular rebellions, the Chinese

government could avert a serious crisis. Moreover, the
foreigners had virtually no hold over Peking. Even their
economic penetration was still essentially commercial.
Although Western influence reached far beyond the open
ports and disrupted the life of some regions, it mainly
affected trade. The foreigners did not undermine the
subsistence economy from which China still drew its main
resources.

But the Sino-Japanese War of 1894-95 brought about a

sharp change of the existing situation. The war thoroughly
exposed China’s weakness and she suffered a humiliating
defeat by the small neighbouring country Japan. China was
forced to sign the Treaty of Shimonoseki (1895) with Japan.
China agreed to pay Japan 2000 million ounces of silver as
war indemnity. Along with other unfavourable terms and
conditions, China agreed to accept Japan’s right to set
factories on Chinese soil.

The right to open factories, demanded and secured by an

invader of China for the first time, signalized the fact that
History of China and Japan
11

export of capital was replacing the exports of goods as the

typical feature of world capitalism. Great industrial-financial
monopolies, maturing in Europe, America and Japan, were
slicing up the whole world into colonial spheres of
investment and exploitation. China could feel the full impact
of imperialism within the next few years. It brought her face
to face with the imminent prospect of partition, of
disappearance as an independent state.

The export of foreign capital to China, which now developed

on an immense scale, began not with factories but with
bank loans. Prior to 1895, Chinese indebtedness to foreign
banks had been negligible, but in the succeeding five years
the government borrowed over £50 million to repay its
indemnity to Japan. Of which, one part of this money was
lent by a Russo-French financial group, another by an
Anglo-German group. The security comprised the receipts
of the Chinese Customs and a number of internal transport
taxes. This meant that a large part of revenue of the
Customs, which was already foreign administered, did not
reach the Chinese government in Peking. Thus the Chinese
government was struck by enormous loss of revenue
History of China and Japan
12

leading to a serious fall in the income of the state. To make

up this loss of income, the Manchu rulers levied huge taxes
and the whole burden of enhanced taxation fell on the
people of China.

Furthermore, Western diplomats began forcing railway

loans on China. These were to be spent on construction
materials and rolling-stock from the loaning country, with
repayment guaranteed by a lien on railway property and
income. For example, the North China railways had been
built on the proceeds of British loan of 1898 and the
railways were mortgaged to British financiers until 1944.
Russia secured the ownership of a railway in Manchuria. But
Czarist Russia did not have much capital to invest. Hence
the money to build the railway was borrowed by the Czar
from French financiers. Paris supplied the cash and St.
Petersburg supplied the security – i.e., the means of
political and military pressure on China to make the
business both profitable and safe.

The Sino-Japanese War of 1894-95 thoroughly exposed

China’s inherent weakness, which encouraged the Western
History of China and Japan
13

powers to exploit the resources of China and also to take

advantage of China’s large market. They began to grab
territorial footholds on the Chinese territory and looked for
the partition of the country.

Germany used the killing of two missionaries as a pretext to

seize the great North China harbour and naval port at
Kiaochow Bay, in March 1897. The Germans then forced
China to sign a treaty in March 1898, and secured leasehold
on the eastern Shantung peninsula for 99 years, i.e., until
1997.
After three weeks of signing the treaty with Germany, China
had to submit to the pressure of Czarist Russia. Russia
forcibly secured the lease of the naval base of Port Arthur
and the commercial port of Dairen, for a period of 25 years.
In fact, earlier Russia prevented Japan from annexing these
two ports. Just after five days, Britain took over the naval
stronghold of Weihaiwei in China and claimed that she
would hold it as long as Russia recognized a French sphere
of influence in the South China bay of Yunnan and
Kwangchowwan. On 10th April 1898, France leased the
territory of Kwangchowwan in Kiangsi for 99 years, with the
History of China and Japan
14

right to build a naval station, fortifications and a garrison

there.

By preparing to slice up China among themselves in the

scramble for power, the European countries defined their
respective “spheres of influence” on Chinese soil. The
Yangtse valley was allotted to Britain, Manchuria and
Mongolia were given to Czarist Russia. Britain and France
both secured their stronghold over French Kwangtung; the
British also enlarged their possessions in Hong Kong. In
June 1898, they obtained a 99-year lease in north Jiulong
peninsula and the neighbouring islands, thus adding 376
square miles to the 29 square miles of the original Hong
Kong colony. All these territorial gains by, the Western
powers were accompanied by railway concessions and the
right to invest in several enterprises in China.

The scramble for concessions in China by the Western

powers produced far-reaching results in the history of
modern China. According to Fairbank, “It inaugurated a new
and more ominous phase of the treaty system, because
‘spheres of influence’ were plainly part-way steps toward
History of China and Japan
15

making China into a congeries of outright European

Colonies”. Up to this time the trading powers led by Britain
had dominated China’s foreign trade, ports of access, and
internal waterways. Now, Germany and Russia came
forward to establish their dominance over a large part of
China with new railways, mines, industries, and seaports.
The leased territories and railway zones, governed and
policed by foreigners in Manchuria and Shantung, were
converted into quasi-colonial areas, much more extensive
and more menacing to China’s integrity than the old treaty-
port concessions. In reality, imperialism gave a staggering
blow to the Ching Empire and threatened its very existence.
Imperialist activities perpetrated by the Western powers in
China paved the way for both the Reform Movement (1898)
and the Boxer uprising (1900).
History of China and Japan
1

HISTORY

Subject : History
(For under graduate student)

Paper No. : Paper - VIII

History of China & Japan  

Unit No. & Title : Unit- 1

History of China

Topic No. & Title : Topic - 2

China as an Informal Colony

Lecture No. & Title : Lecture - 3

Increasing western Economic
Interests

SUMMARY

The Treaty System converted China into a semi-colonial

status. Foreign enclaves mushroomed everywhere in the
Chinese mainland, which divided China into spheres of
influence. These enclaves began to be controlled by the
foreigners in every respect thereby subverting the
domination of the Ching rulers. These enclaves became
highly advanced, westernized and developed as opposed
History of China and Japan
2

to the other parts of China, which remained agricultural,

backward and feudal. . But the Ching dynasty still
continued as the official rulers of China. According to
Fairbank, “Thus China’s sovereignty, without being
destroyed, was put largely in abeyance in the foreign
quarters of the major ports”. The noted Sinologist Jean
Chesneaux observed, “The Chinese government had
virtually no control over these enclaves, since the
provisional institutions that the foreigners created to run
them at the time of Opium Wars had developed and
gained strength over the years”.

With the Treaty of Shimonoseki, economic exploitation of

China intensified. China was forced to take foreign loans to
pay war indemnity and to construct railways. Following
Japan’s policy of setting up factories anywhere in China,
the imperialist investors made inroads. Under the pretext
of railway development they drained China’s wealth.
Besides, there was coolie trafficking and heavy taxation
that burdened the common people. The aristocracy and
the common people showed their disapproval towards the
History of China and Japan
3

government by way of the Reform Movement of 1898 and

Boxer Rebellion of 1900.