Haoran Jang

Haoran 17


EconomicEffects of Opium on British Colonial China





Anexact date, when opium became introduced in China is not knownhowever, there seems to have been some local production of opium asearly as in the 11thcentury A.D. prior to 19thcentury, China imported a large portion of its opium and until thelast centuries of the past millennium, the drug became too expensivefor popular use. The introduction of opium to China may be tracedback to the British encroachment of the territory in the 18thcentury. There were varied trends that had increasingly made itdifficult for England or the Britons to balance their trade with theEast. Scholars note that first, the British increasingly adopted teaconsumption, in which case there was an immense demand for tea fromChina. Essentially, Britons introduced opium to China in an effort toenhance the balance of trade and particularly to have the capacity topay for the tea they obtained from China. Whether or not this motivewas achieved in the long-term and short-term is questionable. Thispaper will introduce the topic on opium in china when it wasintroduced in china who introduced it and what was the motive. Afterintroducing the topic, literature review on the topic will bediscussed this will provide an analysis of the topic by otherauthors. Then, the paper will discuss the importance of opium toeconomic historians, legalization of opium, opium wars, and theeconomic effects of opium on the British.

Opiumhas been one of the most potent drugs in both the contemporary andconventional human societies. It is produced from poppy plant, withits primary narcotic agent being morphine. Poppy plant’s sap, whichis rich in morphine, is obtained from cuts or incisions that are madein the flower’s bulbous portion, with the harvesting of the sapbeing a considerably labor intensive process. Given its potency, itgoes without saying that it has had immense effects on thepopulations, where it is produced and marketed. This is the case forAsian countries, particularly China where the effects of opium werenot only felt in the productivity of the population (andsubsequently, the economy), but also played a key role in what istermed as the opium wars.

Inthe 18thcentury, China became home to a sophisticated culture and richhistory. Amid other remarkable accomplishments, China became the homefor the invention of gunpowder, kites, and movable type. Besides,China perfected the production of tea, silk, and porcelain. However,18thcentury was the start of the end of imperial China. Britain and otherEuropean nations desired badly to trade with China due to her silk,porcelain, and tea. Nevertheless, China did not want anything to dowith the Europe, but Britain became successful in reaching agreementsthat engaged China in trade. The British came to introduce opium inChina in 1825 and Chinese started being addicted to the drug, despiteits long term use in the country for medicinal purposes. Although theemperor outlawed the use, possession, and trade of opium, its profitswere so huge that led to the development of an illegal trade (Slack64). The aim of this paper is to discuss the importance of opium toeconomic historians, legalization of opium, opium wars, and theeconomic effects of opium on British colonial China.

Thereason for choosing this topic is because I had many questionsregarding the trade of opium in China, which would be answeredthrough doing a research on the topic. For instance, I heard throughthe news that there were opium wars as a result of the opium trade inChina since I wanted to know more about the wars, I chose this topicfor research. Another reason for choosing this topic is because Ineeded to understand in a better way the trade of opium. I used tohear of opium trade and wondered how a drug could be traded so, inorder to understand the trade, I chose this topic.


Accordingto Deming, opium revenues to the British were perceived as necessaryin diminishing the cost of imperialism however, the British came upwith policies that were designed to minimize domestic opiumconsumption and instead focused all the production on trade withChina (Deming 6). Deming further argues that the best explanationthat could be given for the British neglecting the development of thelocal opium market while expanding the Chinese opium market isbecause the Chinese market could serve better Britain’s economicinterests through earning the same vast streams of revenue while atthe same time mitigating Britain’s trade deficit with China. Thiscan be seen as being true since the measures enforced by the Britishcould be seen as the colonial authorities’ attempt to obtainforeign currency, mostly from China. Thus, the British discouragedlocal consumption and encouraged opium exports with this chiefreason. Maintaining of a healthy balance of trade was to serve aconvincing state interest to Britain since it helped in protectingthe strength of the Britain’s currency, which entailed the sourceof the country’s power. It is indicated that the interest rate wasremarkably high such that all opium produced was devoted to export toChina this wholly benefitted the balance of trade of Britain. Thisis because balance of trade has a direct association with thestrength of currency. The opium trade was a way of fixing the problemof the trade deficit with China, which contributed to Britain’sworld visible trade balance (Deming 10).

Accordingto Sheng and Shaw, although there were strict regulations from theChinese government, foreign trade still expanded in the late 18thcentury and early 19thcentury. Europeans used to buy tea, spices, silk, and porcelain fromChina, but found it hard to sell their products in return. The chiefcommodities bought imported from Britain prior to the opium wars weremetal products, woolen fabrics, and cotton. Nevertheless, the valueof British commodities imported into China between 1781 1nd 1793amounted to approximately 20% of the value of tea exported by Chinato Britain. As trade developed, Britain found that they had a tradedeficit trading with China. With this finding, the British weredesperate to find a commodity that could help in balancing the tradedeficit opium facilitated this balance (Sheng and Shaw 194).Therefore, the British could not have introduced the opium into Chinaif there was a balance in the trade amid Britain and China, but sincethere was a trade deficit and the opium did well in the market, theBritish did not have otherwise other than introducing the commodity.

Thebalance of trade for the Britons was becoming positive or ratherrunning in surplus after the introduction of the opium. So profitablewas the trade such that the Britons were willing to go to war withChina so as to safeguard its trading rights and prevent theelimination of the trade by the Chinese government. Nevertheless,this caused conflicts with the Chinese government, something that wasundoubtedly financially taxing (Sheng and Shaw 196). In addition, itwas considerably difficult and expensive to run the opium operationsin the country. The situation was worsened by the introduction of thedrug into Britain as the same effects that it had on the Chinesepopulace were replicated on the British citizens.

Importanceof Opium to Economic Historians

Thereare varied elements that make opium considerably crucial to economichistorians compared to other commodities that may be traded such asrubber and sugar. Key among them, however, is the highly addictivecharacteristic. Indeed, the psychological and physical dependencethat the drug triggers in a large number of users (Polachek53). Opium, as a commodity, incorporates the potential or capacityfor economic gain particularly for the producers and loss for theconsumers that is way beyond the potential of a large number ofother commodities.

Nevertheless,a minimum of three broad themes come up clearly in researchpertaining to the commodity’s economic history. Key among them isthe persistent utilization or consumption of the drug in theaccumulation of wealth and power, particularly at the state level. Inaddition, research is dominated by the clash between ethical andeconomic interests in the determination of the role that the drugplays in the society (Polachek59). Lastly, there is the theme pertaining to the inefficacy ofvarying drug control strategies and regimes in eliminating orlowering the negative social and health consequences pertaining tothe expansive consumption of the drug, alongside its effects ontoday’s management of use of addictive substances particularly foropium and its derivatives.

Ethicalvs. economic interests

Perhapsthe most interesting theme pitted economic interests against ethicalinterests. As a result of the addictive aspects of the drug coupledwith the relative inelasticity pertaining to the consumption and theminimum fluctuations of its price, the drug was considered a reliablerevenue source particularly by the Asian colonial governments.However, there were ethical questions pertaining to theappropriateness of the drug for taxation or even as a legal commoditygiven it was strongly addictive. In other words, the ethicalquestions were whether the state should depend on the revenue derivedfrom selling products that were demonstrably resulting in economicand physical ruin for some of the subjects (HanesandFrank56). Further, there were questions whether, even in instances wherethe state does not directly benefit from the sale of the product, itshould allow the use of the same by the subjects. Nevertheless, it isnoteworthy that Asia or Chinese consumers were simply colonies ratherthan subjects of the Britons, in which case the British had no qualmsusing it for economic and political gains (Polachek66).

Keypartners of the British in the opium trade were the Japanese, who notonly sold opium to Asian countries such as China, but also launchedpersistent attacks against China. Indeed, they used the Britishtechniques such as bombing civilians in Shanghai and used opium andits derivative drugs such as heroin in Manchuria (HanesandFrank72). This not only increased the revenues or profits that theJapanese derived from the trade but also incapacitated the Chinese,thereby reducing their capacity to resist.

Effectsof Opium on British Trade Balance

Asearlier stated, the importance of the opium trade primarily revolvedaround its capacity to increase or enhance the trade balance andfinance the Chinese luxuries that were finding their way in England.Even as the Chinese government repeatedly banned the consumption andproduction of opium, the East India Company, which was under theCrown’s charter, had monopoly as far as trade with China wasconcerned. EIC preferred selling its products at annual auctions tolicensed private firms in order to avert the possibility forjeopardizing the legal trades. The traders would then ship opium inspecially made, as well as heavily armed opium clippers, who weredelivered to fortified ships that were off the coast of SouthernChina (Baumler56). The opium traffic had immense economic importance for Britons.Indeed, EIC’s profits in auctions made an immense contribution torevenue of the British government, the traders themselves, as well asBritish India and British China government. Scholars note that in the1820s going forward, the trade balance between Britain and China waspositive or rather in surplus (Waley75). This is not surprising given that the money obtained from thesale of opium far exceeded the money paid for the Chinese tea.

Opiumas a Tool of Power

Opiumwas used by countries as a tool of gaining power. This was due to itsability to earn a lot of revenues. There are numerous examplespertaining to the utilization of the commodity as a tool for gainingstate power, particularly with regard to its role in trade relationsand as a source of revenue. It is noted that the trade in the drugwas perfectly beneficial to the Britons, in which case the efforts ofthe Chinese to interfere with the trade was seen as worth fightingagainst. Britons crashed China between 1856 and 1860 in what is knownas the Second Opium War, all in an effort to safeguard its right totrade with the country (Waley67). Essentially, the victory of the Britons ensured that England’saccess to Chinese opium market was unhampered and most importantlythat the Britons would persist in selling the one product in Chinathat managed to eliminate the trade deficit with the country(Beeching86). Essentially, the profits or revenue derived from the sale ofopium gave Britons more capacity to develop more lethal weapons thatcould be used in controlling its Asian interests, as well as theestablishment of other colonies. In using opium as a tool of gainingpower, Britons benefited the most because they were capable of makingtheir currency gain world recognition. When a currency has a greaterpurchasing power over other currencies, it is possible for thecurrency to control the direction of global trade. Therefore, thepower gained by the sterling pound depicted the power that theBritons had in controlling global trade.

Legalizationof Opium

In1836, the Chinese emperor held various Opium Debates amid individualsfavoring the legalization of opium and those seeking the suppressionof opium. Those legalizing opium claimed that the real problemsassociated with opium were organized crimes as well as silver drain,which was destroying the economy. They were of the opinion that thelegalization of opium and its taxation would become a source of vastrevenues. They also believed that opium prohibition enforcement wouldbe costly and reinforce the already dreaded lower bureaucracy inChina. On their side, moralists argued that disregard for thedoctrine was not a reason for repealing it and that its legalizationwould lead to everyone smoking it. Moralists held that opium was eviland it was the duty of the emperor to save individuals from the evil.Those on the legalization side were close to winning the debate, buta political faction came to thwart their initiative (Polachek 114).Following the Opium Debates, addiction through opium becameconsidered as a capital offense while the elimination of internaltrade emerged a chief priority of the Ching dynasty. The prohibitionof opium entailed a law that sought to condemn smokers of opium tostrangulation, while opium dealers were to be decapitated. However,the crackdown on internal trade never reduced the use of opium amove that made the emperor to turn his attention to foreigners thatbrought opium to China.

Chinesegovernment tried to its level best to stop the opium trade, but itwas faced with challenges. Smugglers were more aggressive with thetrade scuffles with the authorities only heartened them. It wasdifficult stopping the opium trade because the Chinese authoritieswere not capable of bringing smugglers to justice since Chineseofficials continuously accepted bribes and sometimes officials wereaccomplices (Rowntree 27). The Chinese government made its lasteffort by closing off its country to the foreigners. Opium was achief point of foreign contact therefore, in 1839, Lin Tseh-Sen wasassigned by the emperor the position of imperial commissioner chargedwith the responsibility of getting China out of the opium problem.Since Commissioner Lin was anti-opium already, he started immediatelyto use coercion against the Britons in Canton. He acted throughseizing the opium of the Britons and destroyed it with nocompensation. Although the British became outraged, they did not stopthe trade in fact, they fought their way and brought more opium toCanton. After approximately 129 years of opium prohibition in China,opium became legalized in 1858. The legalization of opium was basedon the reasoning that 8% tax would aid in solving financial woes.

Responseof the Chinese Government

Thereare varying opinions pertaining to the response of the Chinesegovernment to the increasing trade of the drug in the country. Somescholars note that right from the beginning, the Tang Dynasty thatwas in power at that time opposed the importation of the drug to theterritory and engaged in active discouragement of its use throughstigmatization of immorality of the individuals that were using it(HanesandFrank74). Nevertheless, the Britons saw it merely as a product that was indemand in the country and perceived no correlation with morality ordeficiency of the same. Nevertheless, the Chinese were afraid thatthe British government may be increasingly difficult to deal withcompared to the private British merchants, in which case in late1830s, they ended up suspending the delivery of products to shipsthat were flying the British flag. Scholars consider this the Chinesegovernment way of indicating that the British government was usingthe drug so as to control trade pertaining to every other good(Beeching46). Further, the Chinese started destroying British factories whoseoperations were in close proximity or propinquity to the coast. Thisis what, eventually, triggered the opium wars where the Britonscompletely destroyed China and refused to recognize the position ofthe government regarding the immorality of the utilization of thedrug.


TheFirst Opium War

WhenCommissioner Lin became appointed as the person having theresponsibility of taking China out of the opium problem, he usedforce against the Britons in Canton. He used to seize and destroytheir opium without compensation. This angered the Britons and onlymade their trade more thriving the British fought their way to theport and brought more opium for trade. Seeing this, the Chinesegovernment responded to the actions of the British by stoppingshipments of food to the ships belonging to the Britons and throughpoisoning their water supplies. British sailors killed a Chinesevillager, but Captain Eliot refused the trial of the sailors underthe Chinese law. Due to these actions, Commissioner Lin responded byhaving Chinese junkships attack British ships however this only didmeager harm. China progressed asserting its superiority throughsending letters to Great Britain warning the Britons of theirdownfall in case they disobeyed China. After this, the Britonsresponded by having more warships sent to canton, where theydestroyed Lin’s army. Lin made a lie to the emperor by indicatingstunning overwhelming of the British and providing short deadlinesfor the conclusion of the opium trade. Finally, the British came tocapture strategic points along the coast and surrounded andobstructed canton, which made Chinese to surrender. With the defeatof the Chinese, in 1842, the Treaty of Nanjing became signed andended the first opium war.

TheNanjing Treaty positioned the British at an advantage since it gaveHong Kong to the British as well as opened new ports to the Britishtrade (Canton, Shanghai, Ningpo, and Amoy Foochow). The treaty alsorestricted Chinese from trying any British sailor using the Chineselaw and gave Great Britain the title of the most favored nation intrade. In addition, the Chinese became forced by the treaty to paythe Britons an indemnity of $21 million. In the treaty, opium was nota principal focus the British negotiators urged the Chinese toconsider legalization and taxation of opium in order to lessen theirfinancial woes and obtain control over trade. However, the emperordisagreed indicating that nothing could induce him in derivingrevenue from a vice and a commodity that would cause misery to hispeople (Rowntree 71).

Afterbeing faced with a defeat, most self-seeking officials put the blameon the Commissioner. The bravery of Lin and his tough policy for theopium problem made him become a sacrificial scapegoat for thecatastrophe. Due to his actions, Commissioner Lin became dismissedand was exiled to Xing Jiang, an area in Northern china that isbarren. Apart from signing the Nanjing Treaty in 1842, China was alsoforced to sign, in 1843, the Treaty of the Bogue. Following thesigning of the Nanjing Treaty, France and the United Statescomplained that Great Britain had been given a lot of control overthe trade by the treaty amid China and the west. Thus, thesecountries demanded to have similar privileges and since China did notwant to risk another war involving the west countries, China signedthe degrading and cruel Treaty of Wanghsia with the U.S. in 1844 andthe Treaty of Whampoa with France the same year. The irony of thematter was that none of the treaties that resulted from the opiumwars mentioned anything to do with opium trade.

Thefirst opium war concluded with China having complete humiliation,going down into a semi-colonial and semi-feudal state, whichcontinued into WW1. Despite the importation of opium being notlegalized in the treaties signed during the first opium war, thetrade of opium increased at an increasing rate 6 million pounds in1838 to 7.5 million pounds in 1850, to 12 million pounds in 1853. Itwas not until the second opium war the trade of opium becameofficially legalized (Stockwell, 116).

TheSecond Opium War

Thiswar broke out in 1856 the war became instigated by Canton officialsboarding the “Arrow”, which was a vessel, accused of piracy,ripping down a British flag. Great Britain accused the Chineseofficials of disobeying the extraterritoriality provision in theTreaty of Bogue since they engaged in searching the “Arrow”. Inresponse, British ships hit the city (Beeching 214). Just like in thefirst opium war, the Britons easily won the second opium war. Afraidof losing an opportunity of having their share of the booty, Franceused the murder of a missionary as their version of joining thesecond opium war. After being defeated by the joint forces of theGreat Britain and France, China accepted the signing of the Treaty ofTientsin in 1858. It was this treaty that officially made trading ofopium legal. The treaty also required China to open up ten more portsfor trade. The Tientsin Treaty allowed foreign legations in Beijingopened Yangtze River to the foreign merchants permitted Christianmissionary activity, and required China to pay 6 million taels ofsilver as a means of indemnifying the winners.

Sincethe provisions of the Tientsin Treaty were remarkably harsh, theChinese government refused in ratifying the treaty. As a result, theFrench and British soldiers of approximately 17,500 resumed theirhostilities by the invasion of the Chinese capital in 1859. TheChinese capital became destroyed, after which, China became coercedto sign the Treaty of Peking. The provisions of this treaty was thatChina was to abide by the earlier Treaty of Tientsin relinquishKowloon to the Britons, and allow missionaries to buy land and put upchurches freely in China. Besides, the treaty required China to payan indemnity of 2 million taels to France and another 4 million taelsof silver to the British. The Treaty of Tientsin had no reference tothe opium trade however, it opened a legal trade that favored theBritish.

Consequencesof the Opium Wars

Oneof the consequences of the opium wars is that they forced China inopening up its doors to trade although the terms were unfavorable.Forcing China to open up its doors to trade sunk the nation into asemi-colonial and semi-feudal state. Besides, the opium wars madeChina become a devastated country by the end of the 19thcentury due to the indemnities that it was coerced to pay and illegaltrade that it was forced to tolerate. These weakened the country,making it a devastated nation (Sheng and Shaw 195). There were alsosome social unrest that became exhibited by various peasant uprisingssuch as the White Lotus peasant revolt and the Taiping Rebellion.Corruption and government mismanagement that resulted in politicaldecline, economic insolvency and military impotence were alsoconsequences of the opium wars. To the Chinese people, the long senseof superiority became shattered the effect of the opium wars on thesociety, polity, and economy were long-lasting and up to this daythey affect the perception of China in the globe.


Oneof the economic impacts of the opium wars is that they made China toopen its doors to global trade. The wars made China to openapproximately 15 ports for foreign trade, while the import dutiesbecame lowered drastically from 65% to 5% (Sheng and Shaw 197). Through the abolition of the system of government controlled tradingfirms and allowing of treaty ports, freight traffic and overseastrade boomed. It was not possible for local handicrafts to competewith industrialized produced imports. The local embryonic industriesin the trading ports suffered first. In seeking survival, theseindustries had to reform. In the transition period, unemployment roseas home businesses tumbled. However, there was a positive unintendedconsequence as a result of the opium wars. As time went by, Chinesefirms started to adapt and later evolved to survive and develop thisstimulated the development of capitalism in China. Overseascapitalism played a vital part in the disintegration of the socialeconomy of China on one side, it undermined the foundation ofChina’s self-sufficient natural economy and destroyed thehandicraft industries in the peasants’ homes and in cities on theother side, it quickened the growth of the market economy in thecountry.

Westerncapitalism largely transformed the Chinese economy as overseastrading flourished. In outsourcing work they perceived unprofitableor could not tackle, Western merchants motivated local businessfirms. Commencing at the trade ports, particularly Canton andShanghai, there was an emergent new social class, the comprador. Thissocial class involved Chinese that became engaged in foreign trade.Some of these Chinese became agents and middlemen so as to facilitatethe importation and exportation of commodities, while others set upwarehouses to facilitate the selling of imported goods and purchasingof commodities for export. As time progressed, the comprador merchantbecame recognized as a social force. In the 1880s, the price of silkand tea soared, which made most farmers leave the production of foodcommodities and started producing silk and tea. Transactions acrossvarious economic groupings increased significantly following theopium wars therefore, silver was not in a position to hold thedemand for currency in circulation. From 1853, the monetary systemchanged from silver to paper money. Gradually, China changed from aself-sufficient and self-reliant economy to a market economy.

Socialand political Consequences

Priorto the opium wars, Commissioner Lin had risked his life, when headvised the emperor that China needs to modernize its defense throughacquiring European ships and guns. However, adapting the Westerntechnologies was not sufficient since China had to undergo throughsome political changes. A few political reforms became enacted forexample, the Hundred Days Reform (Sheng and Shaw 198). Although theChinese government prevented the growth of other social classes, theopium wars led to the development of capitalism social class.Although China had lost its ports such as Hong Kong to the British,it learned its lessons after the opium wars and as time progressed,it was in a position to regain its sovereignty as it grew stronger.

TheEconomic Effects of Opium on British Colonial China

Theopium trade in the British colonial China had different effects. Itis believed that the opium trade led to experiencing of the 1830srecession in China. During this time, the balance of trade had alsoturned against China. Individuals blaming the opium trade for thisproblem argue that the opium trade drained a lot of silver from thecountry leading to economic slowdown (Polachek 104). Anothereconomic effect that opium had on the British colonial china was thatit led the country to developing capitalism. Although the Chinesegovernment was against the development of capitalism, opium trade ledto opium wars that forced the country to open up for foreign trade(Sheng and Shaw 197). Foreign capitalism influenced the Chinese indeveloping capitalism. Besides, the opium trade helped China to growin business and trade. As more ports opened up to the foreigncountries, the country was capable of adapting to their mode ofbusiness and trade, which helped China grow in business and trade. Anegative effect of the opium on the British colonial China was thatit led to the destruction of handicraft industries that wereimportant to the country’s economy.


Theintroduction of opium to China may be traced back to the Britishencroachment of the territory in the 18thcentury. Britain and other European nations desired badly to tradewith China due to her silk, porcelain, and tea. Nevertheless, Chinadid not want anything to do with the Europe, but Britain becamesuccessful in reaching agreements that engaged China in trade. TheBritish came to introduce opium in China in 1825 and Chinese startedbeing addicted to the drug, despite its long term use in the countryfor medicinal purposes. The introduction of the opium in China can belinked with both positive and negative effects on China. Positiveimpacts that can be associated with the opium entails opening up theChinese economy to world trade and growth of businesses. Besides,opium led to the introduction of the money system rather than the useof silver. On the other hand, the opium led to the closing ofhandicraft industries that were of immense importance to the Chineseeconomy. Great Britain has been depicted to benefit enormously fromthe opium trade this extends from the revenues it received from theopium, indemnifications it received from China, and trade statusaccorded through treaty. It is undeniable that opium had devastatingeffects on the Chinese populace particularly as a result of theaddictive nature of the drug and the reduction of their productivity.The effects of the opium can still be felt today by differentChinese.


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