For quite a long period of time, China has had the largest economy in the world. Concepts such as use of money and development of merchant class were introduced by the ancient China. The Chinese exhibited a false sense of superiority as they believed that they had nothing to gain by trading with other countries. The country was locked to external trade and it was not until after the Opium War that the country was forcefully opened to the world, which carried both positive and negative effects (Rawski, Para. 2).
In the time of cold war, the literature which talked about China’s development focused on two major issues, one was that the involvement in international trade was less likely to be helpful in search of economic development for poor countries. The second was that the culture and social structure of China was a great impediment to its development. It was believed that substantial development in the country would only arise after major and dramatic changes were carried out to the social structure and individual behavior (Overholt. 22).
According to Rawski (Para. 8), the 19th century was in the Qing Period of the Canton trade and the balance of payment was in favor of Chinese as the silver flowed into the country. It was at this period that the British discovered a favorable market for opium in China as it shipped opium from India. This new discovery made the silver flow to reverse as outflow of silver increased. The balance of payment was no longer favorable as the trend decreased money supply in the economy. The resultant effect was a downward pressure on general prices of goods and services that led to economic problems. The Qing court wanted to stop the outflow of silver and Commissioner Lin was sent to Canton in the efforts to stop the trade of opium. He confiscated property that belonged to the British traders and destroyed this business. When the traders complained to their government, the British government responded with military pressure which led to the opium war and unequal treaties system.
The British soldiers easily outgunned the Qing forces as they had superior weapons. The Qing then surrendered in the year 1842 and the treaty of Nanking was signed. It allowed unrestricted European access to Chinese ports and the island of Hong Kong was ceded to Great Britain. During the war, farm areas were destroyed, and millions of lives were lost that made China’s income to fall. Another war that emerged between the British and the Chinese led to grievous losses and British warships obtained unlimited access to all rivers in China provided they were navigable. All official Chinese documents were to be written in English (U.S. Department of State, Para. 10a).
The system of unequal treaties had economic impact on China and it also infringed on their political sovereignty. It led to the imposition of a free trade regime that allowed unlimited trade in all goods and services which eventually was obliged to allow foreign investment and foreign trade as well. The fact that China was large and far from the coast, was a reason that the foreign trade was not a large component of the economy. However, with the coming of new technology which involved rail road and telegraph, the Chinese were eager to utilize these opportunities. New commodities were thus adopted and organizational innovations implemented. In 1860s, the Qing dynasty initiated several institutional reforms in order to deal with the problem of modernization (Gibson 59).
The Chinese had a vague concept of European countries and it was not until the opium war that they tried to understand the west in form of their ideologies, social and political structures. Technology was thus introduced into the country as much as democracy and capitalism were recognized by the citizens. They realized that by being locked to other countries, they were left ignorant of significant concepts and ideologies from other countries. The need to conquer the west made them interested in understanding the west in form of their economic structures and political structures. It was certain that the defeat in the opium war was due to the better technology; lethal western weapons, and strong ships. It was then that reform was underway in China (Beeching 47).
In the early 19th century, China was completely closed and isolated itself from other countries in the world. Foreign trade was limited in the city of Canton and it was not until the opium war that led to the signing of Nanjing treaty, that China’s ports were opened and western merchants found their way into the Chinese market. The effect on Chinese economy was significant as they had least expected it. The effect of opening up of China did not have just the negative effects but it also had good and positive effects on the economy and social relationships which existed in the people of Qing Dynasty. Among the negative effects that we shall look in details are internal struggles, increase in the rate of crime, economic downfall in the city of Canton and the increase in the economic welfare at the cities of Shanghai and Hong Kong (Chesneaux, Marianne & Maie-Claire 7).
Chinese local industries were affected by cheaper western machine made products. This created so much pressure on the local industries as they had to adapt and reform in order to compete with the western merchants. The defeat of China in the opium war was enough to convince the Chinese that they were no longer the ‘Heavenly Middle Kingdom’ that they always thought they were. They were thus awakened and exposed to the reality of progress (Gibson 32).
Chinese were used to being self reliant as they had a self sufficient domestic trade. This was occasioned to a large extent by the fact that it has an immense home trade. It has a vast land that their internal trade is sufficient to perform commercial operations. In opening up, China was able to compare itself with other nations internationally and thus realized that it was no longer on top of the world. Chinese thus developed a sense of purpose and a desire to improve their economy; it was a period of awakening the giant (Chesneaux, Marianne & Maie-Claire 53).
Various economic repercussions were obtained after the opening of China. The flourishing of foreign trade was evident as China increased its export from 7.5 million kilograms of tea in 1843 to 42 million kilograms in 1855. The export of silk also increased significantly. The demand of tea and silk led to the expansion of tea and silk producing regions as they greatly benefited from foreign trade. Another economic effect was a monetary crisis which resulted from the increased volumes of trade activities. There was a reduction in the Spanish silver dollar and it appreciated so much that it was abolished and the Mexican dollar introduced. These problems were enhanced by internal monetary crises that were instigated mainly by poor administration. The copper cash that prevailed in China depreciated significantly as a result of inadequate supply of copper. This devastated Chinese financial system and in 1853, the country had to result to paper money (Beeching 67).
There was a significant effect on the textile industry. Prior to the Opium War, the Chinese made cloths by hand. This industry was almost eliminated as open system led to the importation of cheaper machine-made cloths and other products. The native textile industries had to adapt by lowering their charges, though this was detrimental to the textile workers. Their wages were reduced as the textile industries looked for ways of reducing their operation costs and led to lowering the living standards of these workers (Beeching 63).
The old Chinese self-sufficient economy was changing under pressure. China’s social-economical development was affected by western capitalistic societies. This however did not lead to the formation of capitalistic China but rather made it to a semi-colonial semi-feudal state. The Chinese industries had been exposed to the outside states but at a time when they had not anticipated it. They were thus less prepared and less equipped to compete with these international industries.
The opening up of China meant that the people who used to transport goods to Canton (mostly the Hakkas) were left without jobs. The majority of trade shifted from Canton to Shanghai as Shanghai had been opened for foreign trade. The Hakkas were considered to be ethnic minorities by the natives of Canton which led to a competition between the two clans in form of farming and economy. This led to wars between the two clans and as a result, hundred of thousands of lives were lost and the effect was quite significant to the China’s economy. The population which had made the country prosperous was being threatened by this internal wars and struggles (Chung, Para. 4).
China was no more affected as a series of natural disasters also stroke the country. The Huang He River had burst its banks and flooded a vast portion of land in the year 1851. In 1855, the river flooded again and the fertile and among the most productive province of Jiangsu was in ruins as farmland was destroyed and loss of lives intensified. The Qing government could not afford to provide adequate aid to the survivors as funds had been drained during the opium war and against the Taipings rebellion. The government was also busy in negotiating for military aid with the European powers. The Qing government also faced contempt from the Nian movement which had just begun. The government was thus placed in a very unstable situation by all these occurrences and frustrations (Chung, Para. 5).
According to Chung (Para. 7), the Muslim rebellions that tried to enhance equal rights among the Muslims and the non-Muslims, the Taipings rebellion, and other groups that were opposed to the Qing government failed to strike a solution to the prevailing social and economic crisis, as millions of people died. The much relied agricultural industry was severely affected by these rebellions as the countryside was ruined in these battles and countless people lost their lives. This led the Qing government to increase its dependence on the European Imperial forces and subsequent purchase of modern weapons.
These internal conflicts made it hard for the Qing government to concentrate its military powers and it thus lost external wars: the Second Opium War (1856-1860) and Sino-Japanese War (1894-1895). The effect was an occupation of Beijing by an international force and the agreement of the Boxer Protocol (1901) which was done under humiliating terms. The government was to indemnify the European powers for the losses that they had suffered. The Qing court resisted reforms and revolutionaries and reformers advocated for overthrow of the Qing dynasty in order to form a republic. The Qing government was eventually weakened by the numerous rebellions as they tried to pursue economic stability as the economic crisis had worsened by the end of 19th century to a national status (Chung, Para. 10).
The Rise of China’s Economy
The growth and the sudden rise of China is one of the greatest economic successes in the world. With economic reforms in China which started in the year 1979, to 2008 China’s economy is believed to have grown 14-fold in real terms. This has led to the raising of hundreds of millions of people out of extreme poverty. On per capita basis, China is relatively poor though it is currently the world’s second largest economy. This has led to increase in economic ties between China and the U.S. China is still marked with low-cost labor and as such, most U.S. companies operate in China so as to benefit from the vast and booming Chinese Market and low cost of operations as a result of taking advantage of the low cost labor in their export-oriented manufacturing (Rawski, Para. 7).
The basic improvements seem to have originated from four modernization strategies in Agriculture, industry, science and technology, and National Defense. This meant that rural electrification had to be initiated, a total industrial automation, a focus on a new outlook of the economy, and an enhanced national security and strength on defense. Mechanization in agriculture and subsequent use of irrigation, led to the modification of the industry so as to enhance production, better farming methods were also encouraged (Rawski, Para. 9).
The Chinese social and cultural structure had been thought that it was a major constraint to economic growth and development. The rapid improvement in economic conditions of the Chinese is a clear indication that the social and cultural structures might be conducive to growth. There are certain elements of Chinese culture that generate an enterprising spirit which is not found in most cultures in poor countries. One would pose to wonder why this enterprising spirit didn’t have major effects in the 19th century as it had after the minor reforms in 1978 which initiated explosive growth. China used improvements in the heavy industry and infrastructure. Development of modern highways, and compounding of Petrochemical, steel and other industries ensured that the economic capacity of the nation was improved. This rapid growth was also initiated by the use of cheap labor which was used extensively in manufacture and subsequent export of low-end products (Overholt 23).
The opening up of China and the subsequent catastrophic occurrences had negative impacts on the economic well being of China. The Western countries undermined China’s self sufficient economy, the rural homestead industries were as much adversely affected as the development that occurred in the urban market economy. On the other hand, it opened the nation to compare its progress with other nations as well. Technology was imported from the western countries and all this worked to enable the nation develop unbiased opinions on the working of international economies. The Chinese government established commercial and modern enterprises as a result of stimulation from the western capitalism. Many of the established enterprises went bankrupt as a result of poor administration, but the established modern industries thrived which enhanced the social-economic development of China. The modern industries stimulated the growth of Chinese capitalism and formed a basis which has marked a tremendous improvement of the Chinese economy (Chesneaux, Marianne & Maie-Claire 48).
It is a wonder that a nation that could barely feed its citizens is an industrial giant with the leading capacity in steel production, aluminum, cement and coal. The U.S. had been the world’s leading auto market but in January 2009, China had turned the tables. It had also been named the top producer of merchant ships in the year 2007. It is clear that the western influence had negative impacts to China at first but today China has all to gain. The exposure to the western markets at such a critical time gave the nation a clear understanding of improved technology and the workings of international markets and economies. China thus used its capacities and its capabilities so as enable it obtain control in this international market. When we compare China to North Korea, a country that was free from western influence, then we can confidently say that Western Influence was what was needed to awaken the sleeping giant in China (Overholt 29).
According to the U.S. Department of State (Para. 20b), in the Mid-19th century, the western countries focused the capitalist diplomacy on Korea. The policy which was adopted by the Leaders made the region to be termed as Hermit Kingdom. Korea remained independent until late 19th century when China wanted to block the influence Japan had on Korean Peninsula and the pressure by the Russians. This led to the afore-mentioned Sino-Japanese war in which Japan emerged victorious. Korea was thus annexed as part of the Japan Empire which had strong colonial administration and control and it was not until the end of World War II in 1945 that Japan surrendered. This led to the division of Korea, where the United States administered the southern part and the U.S.S.R. took over the northern side. North Korea attacked South Korea in 1950 and the United Nations sent troops to support South Korea. China Supported North Korea until an armistice agreement was signed in 1953.
North Korea is governed by a centralized government under the Communist Korean Worker’s Party (KWP). Minor parties do exist but under limited power and scope of authority. It has a record of wide violations of human rights as the government has total control on all issues in the state. The media is controlled by the government that it is not a wonder that ‘North Korea was ranked second to last on the World Press Freedom Index’ (U.S. Department of State, Para. 23b). North Korea spends quite a substantial proportion of its income on military, but the nation has not yet become self-sufficient in food production. Technological links were disrupted and affected with the collapse of communism in the former Soviet Union in 1989. The GDP of the nation has stagnated for quite a while and it is far much below China in economic development and in the living standards of its nationals (U.S. Department of State, Para. 18b).
The Chinese people were against the opening of China by the Opium War, but the control of China and influence by the Western countries made China a semi-feudal semi-colonial state. It was not until then that technology found its way into China and the Chinese were quick to use it to their advantaged. The shameful defeat in the Opium War made the Chinese vow to strengthen their country in order to prevent a repeat of the same. This has inspired the nation to the current situation of growth and influence in the world. In fact China is very reluctant to succumb to international pressure as it is on its way to gain the title the world’s economic giant.
Beeching, J. The Chinese Opium Wars. London: Hutchinson & Co (Publishers) Ltd, 1975.
A well detailed book about China and free trade. It has vital information regarding the growth of the opium trade and consequential Opium Wars between China and the West. It is recommended in understanding the Chinese history and the relation with the West.
Chesneaux Jean, Bastid Marianne, and Bergere Maie-Claire. China from the Opium Wars to the 1911 Revolution, New York: Patheon, 1976.
The authors of this book concentrates on changes that were prevalent in China in the 19th-century up to the 20th- century. The book narrates major events that took place in china, which includes the rebellions and movements which were introduced. It is a rich source to explain the emergence of an indigenous capitalist class in China.
Chung, Rabin, Economic Factors in Chinese Rebellions of the 19th Century. November 2005, 20 May 2010. <http://www.zum.de/whkmla/sp/0708/habin/habin3.html>.
This is an electronic academic source presented in a history class in Korean Minjok Leadership Academy. It has a good history overview of the rebellions and various strains that China underwent. It also gives the economic effects of these rebellions.
Gibson, Michael, China Opium Wars to Revolution. London: Wayland Publishers, 1975.
This is a 96 pages book that gives China’s history. It shows a traditional China and China in revolution. The writer narrates events that led to Opium Wars, repercussions and effects after the Opium wars.
Overholt, W. H., “China in the Global Financial Crisis: Rising Influence, Rising Challenges.” The Washington Quarterly 33.1 (January 2010): 21-34.
It is an article which featured in the journal of international affairs: Washington Quarterly. The author of this article writes about the financial crisis, challenges and influence that the crisis had on China and its outer relations. He concentrates on changes that have been witnessed in China, and how the changes enabled the country deal with the global financial challenges.
Rawski, T. Economic Influence in China’s Relations with the West. 2 March 2008. 19 May 2010. <http://www.fpri.org/footnotes/1309.200808.rawski.economicinfluencechinawest.html>.
This is a rich article from an online journal, where the author of the article, clearly and distinctly gives the economic history of China. The reader obtains substantial information regarding the same since the Ming Period to the current reform era.
U.S. Department of State, Background Note: China. 30 October 2009. 19 May 2010. <http://www.state.gov/r/pa/ei/bgn/18902.htm>.
The U.S Department of State in this article features the people of China, history, government, political conditions, economy, defense, foreign relations and background notes about China.
U.S. Department of State, Official Name: Democratic People’s Republic of Korea. 9 March 2010. 19 May 2010. ;http://www.state.gov/r/pa/ei/bgn/2792.htm;.
This article gives the history, government, political, economic, defense, foreign relations, business and other background notes of North Korea. It is a sufficient source to give an outline of North Korea’s Economic conditions.