The U.S.-China Trade Dispute: Rehashing the First Opium War
By Ian Morris
Board of Contributors
Ian Morris
Ian Morris
Board of Contributors
Liu Xiaoming, China's ambassador to the United Kingdom, addresses a crowd gathered in London's Trafalgar Square for a Lunar New Year celebration on Feb. 16, 2018.
(JUSTIN TALLIS/AFP/Getty Images)
Contributor Perspectives offer insight, analysis and commentary from Stratfor’s Board of Contributors and guest contributors who are distinguished leaders in their fields of expertise.
Many of the attitudes on display in the current trade dispute between the United States and China call to mind the sentiments that led to the First Opium War in the 1830s.
As China continues to gain stature on the global stage, the resulting shift in wealth and power worldwide will present just as many crises as the British Industrial Revolution did in the 19th century.
If Washington and Beijing fail to consider the motives and limitations of the other side, they may be doomed to repeat the same mistakes that brought the United Kingdom into conflict with China nearly 200 years ago.
The strategist Edward Luttwak likes to speak of the "autism of great powers," by which he means their inability to see issues from anyone else's perspective. Changing planes a few days ago in Chengdu in southwest China, I saw what he meant. On the front page of China Daily, I read the headline "Flexibility Needed on U.S. Trade Issues." The column that followed was almost painfully restrained. China, it seemed to be implying, was the only grown-up in the room, and the outcome of the negotiations with the United States would depend entirely on Chinese decisions. Li Daokui, a former member of the central bank's monetary policy committee, insisted that Beijing must "maintain a balanced frame of mind ... rather than be irritated by the White House's statements or the U.S. president's messages on Twitter."
On the front page of the China Daily's business section, however, the Chinese ambassador to London sounded very irritated indeed. "Unilateralism is on the rise, protectionism is rampant, populism is spreading," Liu Xiaoming lamented. "Trade protectionism is becoming a weapon in the hands of a certain country to provoke trade disputes that put the global economy at risk."
In the United States, discussions of the current arguments over trade overwhelmingly present the issues purely from a U.S. perspective, apparently forgetting that the Chinese view is just as important. Western analysts above all often seem unaware that trade with the West is one of the most sensitive issues in the modern Chinese identity. Every schoolchild learns that it was Western traders who shattered the Qing dynasty, China's last imperial government, ushering in the "century of humiliations," which ended only after Mao Zedong's victory in 1949. The view from Chengdu — or any other of China's booming cities, for that matter — is always suspicious that Westerners will try to bully China over trade. Contemporary arguments are merely the latest act in a longer drama, in which the West continues a tradition of exploiting China and denying it its rightful place in the sun. Chinese leaders cannot afford to take a purely transactional approach to trade negotiations with the United States, because they know that this is not how their citizens will see things. No government concerned with its own domestic survival can be seen as weak on trade with the West. The view from Chengdu matters.
How timely, then, that historian Stephen Platt has published a new book, Imperial Twilight, taking a fresh look at the beginning of modern China's trading relationships with the West in the infamous First Opium War of 1839-42. As recently as the 1990s, the First Opium War was rarely discussed in the West outside academic circles, and few English-language overviews of it were available for the general reader. As China's economy has boomed across the past quarter-century, though, awareness of the conflict's importance has grown, and today several excellent books describe what happened. What makes Platt's book stand out is that it focuses not on the war itself but on its background, and particularly on the personalities who turned a trade war into a shooting war. Many of the attitudes in the 1830s — both Chinese and Western — foreshadow those on display in recent years, and at almost every turn, the 19th-century actors provide striking lessons in how not to run a trade negotiation.
No Chinese government concerned with its own domestic survival can be seen as weak on trade with the West.
How It Started
The basic story is well-known. European merchants had disappointing experiences in China in the 17th century but found new paths to profit in the early 18th century. Tea was the most lucrative route, displacing silk as the biggest moneymaker before 1725. In that year, Britain's East India Company bought over 90 metric tons (100 tons) of tea; by 1805, the amount had grown to 1,814 metric tons. The volume became a problem, because the only item Chinese officials would accept in exchange for tea was silver, which the company had trouble providing in such quantities. Chinese merchants had little interest in exchanging their own silver for other British goods, and so the company steadily drained its reserves. Twice, in 1793 and in 1816, Britain sent embassies to try to convince the Chinese emperor of the excellence of British goods, in the hope of preserving the profits from the tea trade while ending the pressure on their silver. China rebuffed both efforts.
Yet British traders had found another solution, almost as soon as the tea trade began. Unlike Chinese trade officials, who were interested only in silver, ordinary Chinese citizens had a taste for another British import: opium. In 1719, the novelist Daniel Defoe already could imagine Robinson Crusoe carrying a shipment of the drug from Siam to China, remarking that it was "a Commodity which bears a great price among the Chinese, and which at that Time, was very much wanted there." Fortunately for British merchants, the world's best opium came from Bengal, which came under British rule in the 1750s. By the 1820s, the silver that Chinese consumers were spending on opium more than matched the amount the British handed over to buy tea. Chinese consumers bought more than 900 metric tons of opium from British dealers in 1831 alone.
A Trade War With a Military Resolution
The relationship was splendidly transactional and made plenty of people rich. But there were two big problems: First, the trade was fueling a Chinese opium epidemic every bit as bad as the opioid epidemic plaguing the United States today, and second, opium was illegal in China. It was up to the Chinese government to decide what to do about these facts, and heated internal debates ensued. Some officials — particularly those who personally profited from the drug trade — argued that neither legality nor public health was important enough to warrant disrupting trade with the West. The best strategy, they proposed, was to ignore the issue. Meanwhile, some scholars — particularly those excluded from the inner circles of government — argued that morality outweighed profit and wrote essays urging the ruling elite to end the epidemic by simply shutting down all trade with the West. One member of this camp, Bao Shichen, produced a series of pamphlets in the 1820s trying to convince officials that it would be easy to win a trade war with the United Kingdom, which would quickly cave if cut off from Chinese tea.
By the 1820s, the silver that Chinese consumers were spending on opium more than matched the amount the British handed over to buy tea.
Still other experts insisted that the problem was not the opium itself but the deficit its purchase created. "To an individual it may seem like opium is a major problem while silver is a minor one," a scholar named Wu Lanxiu pointed out. "But from the perspective of the empire as a whole, it is opium that is minor. Silver is the major problem." From this standpoint, the solution was obvious: legalize opium and put a tariff on it, requiring Western traders to hand back some of the silver they were taking in. "By such means," Wu added, "we can trade in all the goods of the world but still keep our silver in our country. In [10] years, the economy will recover."
In the end, the emperor went for a different solution. He declared war on drugs, and in 1839 sent Lin Zexu to Guangzhou as his drug czar. Lin confiscated a staggering 1,542 metric tons of opium from Western (mostly British) merchants. The British drug cartel responded by pressuring the government back in London to demand that Beijing repay them the full street value of the lost narcotics. When the emperor refused, a squadron of the United Kingdom's most up-to-date warships descended on Guangzhou in 1840, brushing aside the Celestial Empire's junks and blasting its coastal towns into ruins. The one-sided war dragged on for two more years, until China gave in after the United Kingdom threatened to cut off its rice supply. That move would have meant starvation for thousands.
'If Only' History
The First Opium War is a horrifying tale of mistrust, misunderstanding and miscalculation, and Platt does a superb job in Imperial Twilight of bringing the central characters to life. We meet dreamers and idealists, such as the missionary Thomas Manning, whose obsession with opening China to British trade drove him to sneak into Tibet from India, armed with little more than a waist-length, jet-black beard and a dyspeptic Chinese interpreter, to engineer an audience with the 7-year-old Dalai Lama. At the other end of the spectrum, we get to know the mercenary British and American traders in Guangzhou who resorted to playing leapfrog at all hours of day and night to fill their time.
Some of Platt's villains, such as the Scottish drug lords William Jardine and James Matheson, are worthy of a soap opera, while others take the banality of evil to new depths. Lord Melbourne, the British prime minister, for example, unleashes the Opium War on China with apparently less thought than a modern head of state might put into a tweet. Platt offers pathos aplenty as Charles Elliot, the British superintendent of trade in Canton, comes to pieces under Chinese pressure in 1839, eventually beginning to doubt his own sanity. Good men do bad things, the best intentions pave roads to hell, and golden opportunities are missed. In short, Imperial Twilight is a ripping yarn.
But its powerful thesis is what makes the book so interesting for readers today. "It is important to remember just how arbitrary and unexpected the outcome of this era really was," Platt says. The war was "not part of some long-term British imperial plan. ... Neither did it result from some inevitable clash of civilizations." Rather, it was the individuals who drove everything — which explains why Imperial Twilight is overflowing with such colorful characters. In the age-old debate over the historical roles of very important persons and vast impersonal forces, Platt comes down firmly on the side of the former. He speculates:
"If Charles Elliot had not let his panic get the best of him when he so dramatically overreacted to Lin Zexu's threats. Or if Lin Zexu himself had been more open to working with, rather than against, Elliot; if they had cooperated on their shared interest in bringing the British opium smugglers under control ... we might be looking back on very different lessons from this era."
And just in case we misunderstand his message, Platt closes with a coda on the business relationship between the Chinese merchant Houqua, possibly the richest man on earth in the 1830s, and the American John Murray Forbes, which "had always been informal, based on trust and affection." If a few of these VIPs had made different choices, Platt implies, everything could have been different — and better.
Imperial Twilight is a masterpiece of what I like to call the "if only" school of history, which holds out the tantalizing prospect of a world that, with wiser decisions, could have been made perfect. Edmund Morgan's magnificent American Slavery, American Freedom is a classic of the genre, insistently hinting that if a few people in 17th-century Virginia had chosen differently, the cancers of slavery and racism would never have entered the U.S. bloodstream. So too, in a different way, is Niall Ferguson's book The Pity of War, arguing that the United Kingdom could have avoided entering World War I. The war then would have been a European conflict but not a global one; the British Empire would have survived; and fascism and communism never would have taken off.
In the right hands — like those of Platt, Morgan and Ferguson — this kind of exploration produces superb history, explaining why actors acted as they did, while also showing that they did not have to do so, and could in fact have made a better world. Yet I so often end up feeling that the narratives the authors provide not only fail to bear out their theories, but in fact reveal that vast impersonal forces still constrain the choices of VIPs in ways they can rarely understand, let alone control.
Recognizing the Past in the Present
In the early 19th century, Britain's Industrial Revolution was upsetting the balance of global power, just as China's takeoff is doing in the early 21st. It was not inevitable that Britons would use their financial and military muscle to exploit the shifts in 1840, but the revolution constantly threw up situations where bullying was a tempting option — and where China's rulers were tempted to overreact and push back, to defend what they thought the commercial and diplomatic balance ought to be. We might think of each crisis as a roll of the dice. In 1802, 1808, 1814, 1816 and 1831, arguments over trade and respect brought the United Kingdom and China to the brink of violence, but diplomacy and compromise headed off conflict each time. Platt is right that cooler heads could have prevailed in 1839, too; on the other hand, however, hotter heads could equally well have prevailed at any time. And even if 1839 had passed peacefully, crises would have just kept coming. British merchants would have kept pushing to open China to their trade. (In 1859, in fact, their demands would bring on a second shooting war.) Compromises would not have satisfied the Jardines and Mathesons. The likelihood that no British government would ever have decided violence was its least bad option seems vanishingly small.
Vast impersonal forces still constrain the choices of VIPs in ways they can rarely understand, let alone control.
Imperial Twilight seems to me to hold two lessons. The first is that as the East-to-West shift in wealth and power of the early 19th century goes into reverse, the early 21st century will present just as many crises as Platt's story documents. Platt is surely right that character matters and that the particular decisions of the politicians and businessmen at the center of the 19th-century crises were crucially important. The same will almost certainly be true in the 21st century. Even so, character was and will be only one among many forces at work, and regardless of how this year's crisis ends, more will probably follow as China continues to gain stature in the world and U.S. governments debate how best to respond. If history is any guide, these crises will only get worse, and the risk of violence will only increase.
Second, individuals in the 1830s based their actions as much on their sense of history and identity as on careful calculations of self-interest. The same will almost certainly be true in the current decade. The view from Chengdu matters, and the surest way to repeat the mistakes of the past is to forget how heavily the dead hand of the past weighs on interpretations of the present. If either President Donald Trump or President Xi Jinping has a reading list, I would recommend he add Imperial Twilight.
