1
TheEvolutionofDomesticTradeFlowsWhenForeignTradeisLiberalized:
EvidencefromtheChineseMaritimeCustomsService1
WolfgangKeller2UniversityofColorado,CEPR,andNBER
BenLiBostonCollege
CarolH.ShiueUniversityofColorado,CEPR,andNBER
Abstract
The impact that international trade has on domestic trade is especiallysignificant in the case of China in the 19th century when the British forced theopening of China to international trade. In this paper, we demonstrate how theinformationcollectedbytheChineseMaritimeCustomsService(henceforththeCMC)can be used to study trade flows and the relationship between domestic andinternational trade. This paper focuses on three main treaty ports: Shanghai,Hankou, and Guangzhou. We examine the geographic flows of domestic goodsdestined for foreign markets, and, the port‐to‐port distribution of foreign goodswithin China. We find that different markets responded quite differently to theopening of trade. During the 1870‐1900 period, 40% to 50% of the importedChinese‐produced goods to Shanghaiwere re‐exportedabroad. InGuangzhou, bycontrast, most of the imported Chinese‐produced goods were locally consumed.Overtime,netimportsofforeigngoodstrendedupwardsinShanghai,whilethenetimports of Chinese goods trended downward, and this effect appears to bemorepronouncedinShanghaithanintheothertwoports.
JELN45,F13,N25,N75,F15
Keywordstreatyport,tradeopenness,colonialism,China,entrepôt,re‐exports
1WethankTimurKuran,DebinMa,aswellastheparticipantsandtheaudienceatoursessionoftheIEAWorldCongressinBeijing(July2011)forusefulcommentsonanearlierversionofthispaper.PartofthisresearchwasdonewhileKellerandShiuewerevisitingtheEconomicsdepartmentatPrinceton,whosehospitalitytheygratefullyacknowledge;theyalsobenefitedfromNSFsupport(grantsSES0453040and1124426).ExcellentresearchassistancewasprovidedbyXavierGitiaux.2DepartmentofEconomics,UniversityofColorado,Boulder,CO80309.Phone:+1(303)7355507,email:[email protected]
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1Introduction
Little is known about the interaction between domestic and international
tradebecauseofthepaucityofdataondomestictrade.Theopeningofinternational
trademaychange, forexample, theextentofdomesticmarket integrationasmore
domesticgoodsaremovedtoportsthatserveforeignmarkets.Inaddition,domestic
infrastructure and market networks can also be expected to adapt as a greater
volume of foreign goods are imported and subsequently distributed to different
domesticmarketlocations.Furthermore,asnewgoodsareintroducedbydomestic
producers to the foreign market, these Chinese‐produced goods (what are
commonlytermed‘nativegoods’)mayoccupynewandseparatetradingnetworks.3
The impact that international trade has on domestic trade is especially
significant in the case of China in the 19th century when the British forced the
openingofChineseportstoWesterntraders. AlthoughChinawasnotincomplete
autarkyatthetime, foreigntradewasseverelylimitedbyimperialdecreeandany
trade that did take place between Britain and China was not free trade, but a
meeting of national monopolies. While the British East India Company lost its
monopoly,theTreatyofNanjing(1842)begantotransformthetradeenvironment
in China. The treaty abolished the co‐hong system that limited trade to guild
merchants operating out of Guangzhou. In addition, four additional treaty ports
(that is,ports thatwerepermittedby treaty to tradewith foreigncountries)were
opened:thesewereXiamen,Fuzhou,Ningbo,andShanghai.Thetreaty,inaddition,
stipulatedthattradedutiesonforeigngoodsshouldbelimitedto5%advalorem.
TheTreatyofTianjin(1858)withBritain,theU.S.,France,andRussiaopened
yetmore treaty ports, and it also laid the foundation for foreign trade policies in
China inessentialways. Themost importantof the clausesof theTreatyallowed
duties to be collected in the same system across all treaty ports. In theory, this
implied that foreign goods would be taxed only once upon entry into China and
3ArecentcontributionisHolmesandStevens(2010)whodistinguishbetweeninternalandexternalflowsusingtheU.SCommodityFlowsSurvey.Ourapproachisdifferent,aswedonotexaminefirm‐leveltradeandfocusonthegeographicalorganizationoftradewithinacountry.
3
thereafterbeexemptfromfurtherdutiesevenifthegoodsweretransportedfurther
inland.Amongotherrightsgrantedtoforeigntradersandresidents,foreignvessels
were permitted on the Yangzi River and foreign merchants could also employ
Chineseshipstocarrytheirgoods.
In this paper, we consider the opening of China to trade and demonstrate
howtheinformationcollectedbytheChineseMaritimeCustomsService(henceforth
theCMC)canbeusedtostudytrade flowsandtherelationshipbetweendomestic
and international trade. The CMC emerged in the aftermath of the SecondOpium
War (1856‐1860)andpolitical chaos inChina. AlthoughChinahadapre‐existing
customs revenue system, a different organizationwasneeded in order to enforce
thenewinternationaltradeagreements.
TheCMCassessedandmonitoredthe tariffsdueongoodsshippedthrough
thetreatyports.Theseincludedimportdutiesonforeignvessels,exportdutieson
Chineseproducedgoodsshippedabroad,anddutiesonforeignandChinesegoods
passingthroughordeliveredattreatyports.TheCMCemployedaChinesestaff,but
itcametobedominatedbyforeign,andinparticular,Britishnationals.Thus,itwas
a western organization providing the functions of tariff revenue assessment for
China, whose approach to collecting tariffs had the advantage of being more
systematicandlessarbitrarythanitspredecessor.
TheCMC’sstatisticalrecordsontradearecontainedprimarilyintheReturns
ofTrade,with additional statistics andmore descriptive accounts available in the
TradeReportsandSpecialCollections.FromthestartoftheCMCin1859toitsend
in1948, recordson tradewereenteredannually.Thenumberof treatyportsand
Customs houses expanded until there were over 40 by the year 1907. Previous
studieshaveoverviewedtheinstitutionalfeaturesoftheCMCorganizationandhave
providedbroadoutlinesofsomeofthecontentsintheCMCtradedata.4Nostudy,
however,hasyetbeenable to fully capture thedetailedcomplexities contained in
4Lyons(2003)outlinesthecontentsoftheCMCdataandalsopaintsadetailedportraitoftheteatradeatseveralChineseports.OntheinstitutionalhistoryoftheCMC,seevandenVen(2004),Brunero(2004),andBickers(2008).
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thesetradedata,andmuch lesshasbeendoneintermsofattemptingto interpret
whatthedataactuallyrevealabouteconomicconditions.
ThispaperattemptstosetthestageforourongoingresearchontheCMCby
exploringtheconnectionbetweendomesticandinternationalnetworksoftradeat
timesoftradeliberalization5.Themaincontributionistoshowthatthesedatacan
potentially be used for this purpose. We focus on just three ports, Shanghai,
Guangzhou,andHankou,buttheapplicationcanbeinprincipleextendedtoinclude
manymoreports. This typeofquantitativeanalysis canusefully complement the
manydescriptiveaccountsoftheperiodthatcurrentlyexist.6
Theremainderofthispaperisorganizedasfollows.Section2discussesthe
tradedataintheCMCrecords.Section3presentssomestatisticsfromtheCMCthat
sheds light on the organization of foreign and domestic trade in China. Section 4
summarizesourkeyfindingsandproposesavenuesforfutureresearch.
2TradedataintheCMCRecords
Perhaps themostnotableaspectof theCMCtraderecords is that theycapture
trade flows that are usually difficult or impossible to obtain even in developed
countries today. Mostdataon international trade treat the countryas theunitof
observation.Bycontrast,theCMCrecordedinformationnotonlybycountry,butby
port. That is, the unit of observation is not country‐to‐country trade, but rather
countrytoport‐of‐entrytrade,wheretheportistreatedindependentlyasifitwere
acountry.Thisallowsforinterpretationsthattakeinternationaltradeflowstothe
intra‐national level because the data effectively integrate domestic trade with
internationaltrade.Thisuniqueperspectiveofthemovementofgoodshadmuchto
dowiththepoliticalcircumstancesatthetime,whenthetreatyportsofChinawere
treatedlikeanenclaveoverwhichcertainforeigncountrieshadtradingrights.
5SeealsoKeller,Li,Shiue(2011). 6SeeMorse1926andFairbank1978onthehistoryoftheopeningofChinatoforeigntrade.SeealsoMizoguchiandUmemura1988ontheCMCarchiveandthehistoryofTaiwan;andKose1994,2005ontheemergenceofChinaintheearly20thcentury.
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Thefollowinggraphillustratesthenatureoftheinformationcontainedinthe
CMCreports inmoredetail.Figure1showsthetrade flowstoandfromShanghai,
for example, that were reported by the CMC. We have decomposed and labeled
these flows from one to nine. A first distinction is by type of good; flows 1 to 4
concerngoods thatareproducedabroad(foreigngoods),while flows5 to9show
tradeingoodsthatareproducedinChina(Chinese‐producedgoods).Flow1gives
the imports of goods from Japan to Shanghai. Other imports of foreign goods to
ShanghaiconsistofthosecomingfromotherChinesetreatyports;inthefigure,Flow
4 is foreign goods reaching Shanghai via Xiamen. Once imported into Shanghai,
these foreign goods may be re‐exported. The CMC data allow us to distinguish
betweenre‐exportsofforeigngoodstoforeigncountriesflow2)ortoothertreaty
portswithinChina(flow3).
Access to new foreign goods to consumers in Shanghai will raise their
standardof living. TheCMCdataallowsus toquantify certaindimensionsof this
access. Specifically, the statistics on re‐exports of foreign goodsprovidenot only
key information on the extent to which foreign imports diffused throughout the
country,somethingthatshouldhaveimportantwelfareimplicationsinthecaseofa
large country such as China; but it also affords us a direct measure of the
consumption of foreign goods in the treaty ports as within‐port foreign goods
consumptionmaybeobtainedbysubtractingre‐exportsfromforeignimports.The
levelofdetailofinformationintheCMCstatisticsvariesovertheperiodof1859to
1948 and across ports. Typically, port‐level imports net of re‐exports to both
domesticandforeigndestinationsareavailableatthecommoditylevel.Inaddition,
for aggregate trade and for key commodities, specific re‐exporting destinations,
whether that is to a Chinese treaty port or to foreign country, are available for
certainyears..
The CMC data also identify, separately from foreign goods trade, trade in
Chinese‐producedgoods.Flow5, forexample,showsChinese‐producedgoodsthat
areexportedfromShanghaitoforeigncountries. Theseexportsaredirectexports
in thesense that thegoodsareproduced in theGreaterShanghaiarea.Thedirect
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exports are to be distinguished from other Chinese‐produced goods that are
exported abroad from Shanghai but were produced elsewhere in China (flow 6).
Both direct exports and re‐exports capture major aspects of the evolution of an
economy. In particular, the size of direct exports demonstrates the change in the
production possibilities of local economies, while the extent of re‐exports sheds
light on the development (and trade integration) of the hinterland aswell as the
capacitiesoftheentrepots(here,Shanghai).
Flow7representsShanghai‐producedgoodsthatareexportedtootherparts
ofChina,whereasflow8givestheexportofChinese‐producedgoodsthatflowfrom
one region of China to another through Shanghai. The information on domestic
exports of Chinese‐produced goods at the port‐level is thus comparable to the
informationonforeignexports.Finally,flow9showsShanghai’simportsofChinese
goods thatwere produced elsewhere in China. The level of detailwithwhich the
Chinese trade in domestic goods is comparable to the trade in foreign‐produced
goodsdiscussedabove.
In this elaborate system, in order to assess trade duties the CMC staff
recorded the quantity (tonnage) and value of the goods carried. For example, in
1881, one can find over 20 different categories of Cotton Goods being imported
(fromVelvetsandVelveteenstoTurkeyRedCloths),atleast10differentvarietiesof
WoolenGoods,andsome70differentSundriesthatincludedWindowGlass,Alpaca
Umbrellas,Needles, andDriedClams. From1875until around1933,valueswere
reportedintermsofsilver,theCustomstael(orhaiguanliang). Ratesofexchange
betweentheCustomstaelandthelocalcurrencyexistedforeachportandwerealso
reportedbytheCMC.7
Thedataonthetotaltonnageofgoodsaredividednotonlybetweenforeign
and native goods, interprovincial goods, but also between ships and steamers, as
well as nationalities. Here, certain qualifications need to be kept in mind. First,
therewasacertainprogressionoflearningonthepartoftheCMC,sothatitwasnot
7Between1875and1933,thereweremorevariations.CurrencyunitsforvalueincludedtheSpanishdollar,theBritishpound,localcurrency,Goldunits,GoldDollar,andtheChinesedollar.
7
until 1867 that more uniform and accurate methods of accounting were put in
place.8 Second, the statisticsdonot refer to all the tradeofChina, butonly to the
tradethroughtreatyports,andofthistrade,onlythatpartofitthatwascarriedon
foreign vessels or on Chinese ships of the foreign type (that is, steamers). The
foreign‐flagvessels includednotonly ships, but also those transportswhichwent
overland to Russia. Initially, the CMC did not attempt to capture any part of the
domestictradethatwascarriedonChinesejunksthroughouttheempire,andwhich
wasnotdestinedforinternationaltrade.However,fromtheyear1901on,theCMC
also took over responsibility of Native Customs stations within 25 kilometers of
openportsandbegantocollectdataontradegoingthroughthosestationsaswell.9
TherecordsonflowsofthoseChinese‐producedgoodswerepublishedinseparate
tables.
Despitethesequalifications,thetradestatisticsarebroadlyconsistent,both
internally to other numbers reported by the CMC aswell aswith foreign partner
traderecords.10 Many treatyportswere locatedalongriversor coastalportsand
most foreigngoodsentered throughoneof the treatyports.11 After theTreatyof
Tianjin(1858)enteredintoforce,theCMCdataaccountedfor80‐90%ofallforeign
tradeinChina,andthecoverageoftheCMCdatabytheyear1904wasessentially
onehundredpercent.12
8AccordingtoRobertHart,theInspectorGeneraloftheCMCfrom1863‐1911andoneofthemostinfluentialindividualsinthehistoryoftheService,inhisprefacetoTradeStatistics,compiledfortheAustro‐HungarianUniversalExhibition. 9Lyons(p.66):after1900,“[t]radeinforeignflagvessels,Chinese‐flagvesselsofWesterntype,andChinesejunkstradingtoHongKongandMacao;alsooverlandtoRussiaandtoFrenchandBritishpossessionsborderingChina.”After1900,foreignincludesHongKong,Macao,andTaiwan.10 See Lyons, pages.31-32, for further discussion on accuracy and on the relatively modest worry that smuggling might represent. 11Themainexceptionsincludetheentryofopiumpriorto1880sandillegalexportsofgoldandsilverinthe1929‐1930becauseoffluctuationsinworldprices.TheCMCorganizedaPreventiveDepartmentin1931inresponsetopatrolthecoast.12TheannualCMCReturnstoTradereportsrevealthattheonlysignificantportionofforeigntradeinitiallynotcoveredbytheCMCstatisticshadtodowithtrafficonChinesejunksfromtheGuangdongprovincetoHongKongandMacao.WiththeopeningofthecustomsstationsinLappa(nearMacao)andKowloon(oppositeHongKongisland)intheyear1886,thistradewasextensivelyrecordedintheCMCstatistics.Asforitsmagnitude,intheyear1887,forexample,foreignimportsinKowloonandLappaaccountedfor7%ofallimportsofChina(CMC2001,volume14,p.24).HsiaocitesCMC
8
Therewere certainly some changes in the coverage and definitions during
the 90 years that the CMC was in operation in mainland China.13 Some of these
changeshavebeenidentifiedinpreviouswork.14Itisworthemphasizinghowever
thatthedifficultyinusingthedatadoesnotsomuchcenteronthequalityofdata,
since the records as such are of high quality, but rather that one must carefully
understand the aims of the compilation and thepurpose forwhich thedatawere
originally intended. The next section gives a brief overview of domestic and
internationaltradeinChinainthelate19thcentury,andthendiscusseshowtheCMC
datalinkstogetherthetwotypesoftrade.
3. DomesticandinternationaltradeinChina(1859‐1900)
Thissectionhighlightsthesizeofforeigntradeandthegeographicalflowsof
domestic trade. From reports of the British East India Company, in 1834 China
importedapproximately6centspercapitaandexportedwerearound3centsper
capita.15 Theopeningof tradeduring thisperiod canbe seen inFigures2 and3.
Figure 2 shows the value16 of British imports to China from 1828 to 1863 using
information from British Parliamentary Reports for the period.17 There were
importsalsofromothercountries,butBritishgoodsoccupiedasignificantshareof
thetotal.Figure3plotstheeffectoftheopeningtotradebylookingatthechangein
thetotaltonnageofBritishvesselsthatwereexportingChinesegoods.
Between1840and1845, importvalue increasedat anaverageof29%per
year,andexporttonnageincreasedatarateof36%peryear.Thegrowthoftradein
thisearlyperiodofopeningwasneithersteadynorlinear.Between1845and1854,
thetrendsappearedtoplateauordecrease incertainperiods. Between1854and
1860, importsgrewatanaveragerateof26%.Figure4showstradeexpansion in
documentsstatingthatfrom1904onwardtheCMCdatacovers“practicallythewholeforeigntradeofChina”,Hsiao(1974,p.8).13TheCMCmovedtoTaiwanin1949.14Seeespeciallypages69‐70inLyons(2003).15Greenberg(1851),page21716 The imports are expressed in 1840 British Pound. 17TheseimportsincludethosefromHongKong.
9
China trade stagnated again from 1865 to 1885. Overall trade growth averaged
3.5%peryearforimportsand2.7%forexportsovertheperiod1865‐1900.
Unlike foreign trade, domestic trade in China was not restricted over this
period and experienced no institutional changes comparable to the opening of
international trade. Interregional trade in staples, beans, cotton, animal products
flourished, especially along the coastal and river routes (Myers andWang 2002,
Rowe2009).Fan‐I‐Chun(1992)estimatesthattherevenuecollectedatthecustoms
housesfrombrokersengagedinlong‐distancetradeincreasedatarateof1.6%per
yearfrom1668to1788.Bytheendofthe18thcentury,controllingfordistance,the
extentofdomesticmarketintegrationwithinChineseprovinceswascomparableto
whatwasseenwithinWesternEuropeancountries(ShiueandKeller2007).
Evenbeforethemodernera,ShanghaiandthewiderYangziDeltaareawas
known for its manufactures of non‐agricultural Chinese‐produced goods. The
densityofpopulationinShanghai,togetherwithrelativelyhighpercapitaincomes
alsoimpliedthattherewouldhavebeenhighdemandforgoodsfromotherplaces.
Finally, Shanghai’s 19th century treaty port status and coastal location made it a
popular location for exporters of Chinese products. The ease with which goods
couldbetransportedtoandfromShanghaieitherviathecoastaltradeortheYangzi
Rivermayhelptoexplainthedirectionofthetradeflows,buttheport‐to‐porttrade
statisticsprovidesomefurtherevidenceoftheextenttowhichthesegeneralclaims
aretrue.
Table1showsthegeographicalflowofChinese‐produced(native)goods.It
shows the percent of imports of Chinese produced goods arriving in Guangzhou,
Hankou,andShanghai,andthedifferentportsfromwhencethegoodscame.From
1868 to 1888, more than 50% of all Chinese‐produced goods imported to
Guangzhou came from Shanghai. Most of those goods imported to Hankou also
camefromShanghai,specifically57.1%.Hankouwasalsoaveryimportantsource
of Chinese products for Shanghai, accounting for 36.7% of all –Chinese‐produced
imports.ThetablealsosuggeststhatShanghai’simportsofthosegoodscamefroma
moregeographicallydiversesetofcitiesthanwasthecaseforeitherGuangzhouof
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Hankou.Chinese‐producedgoodswereimportedfromall17portsinthelist,while
goodsfromonly12portswenttoGuangzhouand11forHankou.
Figure5givesthevalueoftotalimportsofChinese‐producedgoodsgoingto
eachofthethreeports.Thereisanupwardtrendineachcasefromtheearly1870’s
through to the year 1900,with Guangzhou and Hankou holding to similar levels.
ShanghaiimportedapproximatelyfourtimesmorethanGuangzhouorHankou,and
also experienced a short period of rapid increase at the end of the 19th century.
From1870to1900,importsofChinese‐producedgoodsfromotherChinesecitiesto
Shanghaigrewatanannualrateof10%.This figure is3.7%forHankouand5.5%
forGuangzhou.AsacertainfractionofChinesegoodssentfromport‐to‐portwere
destinedforexport,partofthegrowthindomestictradecanbeultimatelyrelatedto
the opening of international trade in China. The next section examines this
possibility.
i. Relationbetweendomestictradeandinternationaltrade
Theobjectiveofthissectionistolookforevidenceofaconnectionbetween
domestic trade and international trade. Shanghai was an important port for the
exportofChinese‐producedgoodsandadistribution center forChinese‐produced
and foreign products. Goods could be sent downstream to Shanghai along the
YangziRiveranditssmallertributaries.OnceinShanghai,thesegoodscouldbe1)
consumedlocallyinShanghai,or2)re‐exportedtootherChinesetreatyports,or3)
re‐exported to foreign countries. Similarly, imports of foreign goods could be
consumedlocallyinShanghai(netimports),‐re‐exportedtootherChineseports,or
toaforeigncountries(recallFigure1).
Anygrowth in thesizeofdomestic trade toaportsuchasShanghai,which
alsoexported to foreigncountries, couldbe therefore triggeredby the increase in
internationalexportvolume,asChinese‐producedgoodshadtobefirsttransported
to treaty ports before they could be exported abroad. To examine whether this
couldbethecase,Figure5showshow1)—3)evolvedovertimeineachofthethree
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cities. Panel (c) shows that, during the 1870‐1900 period, 40% to 50% of the
imported Chinese‐produced goods to Shanghai were re‐exported abroad. In
Guangzhou,bycontrast,mostoftheimportedChinese‐producedgoodswerelocally
consumed(panel(a)).Hankoufellinbetween,with10%‐20%ofthoseimportsre‐
exported directly abroad (panel (b)). This is some preliminary evidence of a
heterogeneous connection between international trade and domestic trade across
Chineseports.Ontheonehand,inGuangzhouthereisnodirectevidencethatport‐
to‐port imports of Chinese goods were directly related to exports. On the other
hand,almosthalfoftheflowsconvergingtoShanghailikelyhadtodowithforeign
tradeexports.
This analysismightunderestimate the impact of international tradeon the
growthofdomestic trade forat least tworeasons.First, someof there‐exportsof
Chinese‐produced goods towardother treaty portsmaybe eventually destined to
exportsabroad.Of interest is theroleofShanghai in there‐exportsofgoods from
Hankou.InFigure6,Hankouischaracterizedbyincreasingimportanceofre‐exports
toChinesetreatyports.However,mostofthegrowthindomesticre‐exportscanbe
attributed to re‐exports to Shanghai (the sharewas 91% in 1888),where a large
share of re‐exports were exported abroad as shown in panel (c). Secondly, our
simple analysis doesnot account for any indirect effects of international tradeon
transportation infrastructures thatwould facilitatedomestic tradeor theeffecton
economicgrowththatwouldincreasedemandandsupplyoflocalgoods.
ii. Importsofforeigngoods
Theprevioussectionsgiveevidencethattheeffectofinternationaltradeon
domestic trade was fairly heterogeneous across China. We also examine the
consumptionof foreigngoods inaportas total importsnetof re‐exports toother
Chineseportsandto foreigncountries. InFigure7,Panel(a)suggests that foreign
goodsreachedconsumersinShanghai,HankouandGuangzhoutovaryingdegrees.
On average over the period 1872‐1900, per‐capita consumption of foreign goods
12
was50CustomstaelsinShanghai,17CustomstaelsinHankouand5Customstaels
inGuangzhou.
Withintheframeworkofagravityequation,wemightinterpretthesourceof
these differences as the result of variations either in GDP or in trade frictions.
Shanghai might have been more exposed to foreign goods because of its initial
higher GDP. This might be why Guangzhou lagged so much behind, despite its
coastal location. Shanghai might have been also more exposed to foreign goods
because of the difficulty for foreign traders to penetrate the mercantile Chinese
systemand then to carrygoods inland.This typeof frictionmighthelp toexplain
whyHankou,althoughintegratedintheYangzisystem,didnotbenefitfromforeign
goodsasmuchasShanghai.
Lastly, the per‐capita imports of Chinese goods, net of re‐exports, exhibit
someofthefeaturesalreadyobservedforthenetimportsofforeigngoods.The‘Net
importsofChinese‐producedgoodspercapita’isdepictedinPanel(b)ofFigure7.
Inparticular,Shanghaiwasmoreexposedtoimportedlocalgoods(23Customstaels
per‐capita, on average from 1872 to 1900) than Hankou (9 Customs taels per‐
capita) and Guangzhou (6 Customs taels per‐capita).18 Here, some of the same
mechanisms as for foreign goods might explain the larger exposure in Shanghai.
Additionally,Shanghai'spositionasanentrepotcouldfavortheconvergenceoflocal
goodstowardShanghai.
Overtime,netimportsofforeigngoodstrendedupwardsinShanghai,while
the net imports of Chinese goods trended downward. As net imports capture the
part of imports that are consumed locally in Shanghai, these trends reflect the
relative ‘foreignness’ of average consumption in Shanghai. We might expect the
opening of trade to result in the substitution of Chinese products for foreign
products.However,thiseffectappearstobemorepronouncedinShanghaithanin
theothertwoportsinthesample.
18PopulationfigurescomefromtheannualCMCReturnstoTrade.
13
Toquantifyfurtherdifferencesinregionalresponsestotheopeningoftrade,
weusethedetailedinformationfromtheCMCsourcesandcountthechangeinthe
numberofvarietiestradedovertheperiod1868‐1947.Wedefineasatypeofgood
any variety that is categorized under the same name in the CMC record. For
example,thegroupteain1872includesblack,green,brickandleaftea.Withineach
group,we count thenumber of varieties that differ either by origin or by further
specification. Figure 7 shows the number of foreign cotton varieties available in
Shanghai, Guangzhou and some cities along the Yangzi River (Jiujiang, Yichang,
Wuhu) from1875 to1900.Twoobservationsemerge fromthiscountingexercise:
first, in all ports, therewas an expansion of imported cotton varieties over time;
secondly, there was a heterogeneous penetration of these varieties within the
country.Between1875and1900,thenumberofimportedcottonvarietiesgrewat
anaveragerateof4.5%inShanghai,4.1%inGuangzhouand2.6%inHankou.
Figure8plotsthenumberofforeigncottonvarietiesavailableinGuangzhou,
Hankou, Shanghai, and three other ports. This figure also suggests that
internationaltradeaffecteddifferentportsdifferently.Overtheperiod1875‐1900,
there were twice as many varieties available in Shanghai compared to varieties
availableinGuangzhou,andthreetimesasinHankou.Moreover,thereisnosignof
convergencebetween the threeportsover time.The caseofHankou isnotableas
Hankou and Shanghai werewell connected by a transportation system along the
YangziRiver.TheYangziwasnavigablefromShanghaitoHankoubyoceansteamer
and then by light‐draft steamers to Yichang.19 However, the difference in the
numberofvarietieswidenedovertimebetweenShanghaiandHankou.Bycontrast,
alongtheYangziRiverbetweenHankouandYichang,thenumberofcottonvarieties
convergedtoapproximately30foreignvarieties,availablein1900,inWuhu,Jiujiang
and Yichang, despite the lower quality of waterways on this part of the river.
DifferencesinGDPbetweenShanghaiandupstreamcitiesmaypossiblyexplainthis
sharpdecreaseinthenumberofimportedvarietiesalongtheYangziRiver.
19 Feuerwerker,1980,page43.
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iii. OpeningofTrade:AChineseStory?
The comparative lack of penetration of foreign cotton goods in Chinese
marketsbeyondthecoastmaybeduetoanumberofreasons.Theremayhavebeen
weak demand for foreign cotton, cheaper substitutes, the difficulty for foreign
traders to enter the long‐established traditional Chinese trade networks, or other
reasons.Rawski(1970)andMeyer(2000)describehowforeigncompanieshadto
rely on Chinesemiddlemen, so called compradors, to reach Chinesemarkets. The
traderequiredtrustworthyrelationshipstokeepcostslow,andtheseacquaintances
hadtobepreservedinacomplicatednetworkofmercantilerelations.
Since the CMC reports the citizenship of traders that were carrying the
coastal trade and the transit trade in China, we can examine the nationality of
traders by nationality. Transit passes were instituted by the Treaty of Tianjin
(1858)andwasthefirstamonganumberofsubsequentinternationalnegotiations
exempting foreign merchants from further internal transit tolls after paying the
requiredtariffattheportofentry.Thetransittradeisofparticularinterestforus
asitprovidesameasureofwhocarriedthetradebetweenthetreatyportsregions
ininlandChina,andallowsustoexaminetheregionalrelationshipbetweenforeign
tradeandthenationalityofthetrader.
Figure9decomposes,bynationalorigin,thedifferentoperatorsdoingtrade
inChina from1875 to1900.Panel (a) is for thecoastal tradeandPanel (b) is for
transit trade. The results confirm partly Rawski’s (1970) and Meyer‘s (2000)
descriptionoftheimportanceofChinesemerchantsincarryingforeigngoodsalong
thecoastandwithinChina.By1900,40%ofthetransitpassesand40%ofcoastal
tradewereoperatedby theChinese. By theendof the19th century,most foreign
nationals were not involved in carrying trade inland and along the coast. For
instance, although the shares of U.S. and Japan in China's total imports increased
substantially after the opening of China to trade, reaching respectively 13% and
20%, theirparticipation in coastal and transithaddwindled, suggesting that their
operationswere transferred to Chinese firms. The one exceptionwas the British,
15
whomaintained their participation in coastal trade at around 50% and in transit
tradearound40%throughoutthelastthirdofthe19thcentury.
Thestrengthoftheforeignpresenceincoastaltradealignswellwiththefact
thatmarketsforforeigngoodstendedtobelocatedthereaswell. However,there
wasanincreaseininternationaltradeonthecoastdespitethefactthattheforeign
presencehardly increased. Overall tradewiththeU.S.andJapangrewdespitethe
fact that the trades were most likely handled by Chinese middlemen. Moreover,
therewasadeclineinthepresenceofforeigntradersintransittrade,eventhough
thepenetrationof foreigngoods in transit trade tended to increase, albeit slowly.
ThedominanceofChinesemerchantsintransittradeprobablyhadsomethingtodo
withthelimitedpenetrationofforeignimports,butotherfactorsthatwehavenot
yetquantifiedwerelikelyalsoimportant.
4. Concludingdiscussion
Undertheinfluenceofforeignpressureovertheperiod1865‐1900,Chinese
importsgrewatanaveragerateof3.5%peryearandChineseexportsgrewatarate
of2.7%peryear.First,inthispaper,weshowthatwhatliesbehindtheseaggregate
statistics is a great deal of heterogeneity in how different markets in China
responded to the opening of trade. It is useful to consider domestic and
international tradeasan integrated concept. For example, theopeningof foreign
tradeinfluencedtheflowsofgoodsbetweenShanghaiandotherportsontheYangzi
River. Thus, once foreign goods arrive in a country, or once a domestic good is
available for international consumption, the two types of trade—domestic and
international—becomefairlydifficulttoseparate.
Secondly, we consider the geographical organization of trade, with Shanghai
playingtheroleofahub,redistributinggoodseithertowardforeigndestinationsor
within China. Not all ports played an equally important role in re‐exports. In
Guangzhou, 90% of the imports of Chinese‐produced goods from other Chinese
portswereconsumedin‐situ.Thirdly,thedataallowsustoexaminethepenetration
16
offoreigngoodsintoChina.Forexample,two‐thirdsoftheimportedcottonvarieties
remained on the coast in Shanghai and never traveled further along the Yangzi
River.Thatis,theexpansionofnewvarietiesmighthavebeenfairlylocalizedinthe
treatyportregion.Lastly,weprovidefiguresexaminingtheimportanceofChinese
merchantsindomesticandinternationaltransactions.
These conclusions and the CMC dataset used in this paper offer numerous
avenues for future research, which we will only briefly mention. First, we can
explore further the impact of the opening of foreign trade onmarket integration
withinChina.Oneway toproceedcouldbe to relate foreign trade to thepricesof
different commodities in various regions of China and measure whether or not
marketsmayhavebecomemoreco‐integratedaftertheopeningofChinatotrade.
Secondly,itseemsfruitfultoattempttobetterunderstandthejointevolutionofthe
domesticandinternationaltradingroutesovertime.Forexample,isthereevidence
that market networks evolved toward a structure more and more centralized
around Shanghai, or rather is it the case that new centers emerged? Thirdly, one
interpretation of the CMC is that itwas awestern institution placed in a country
dominatedbyChinesemerchants. It remains tobeestablishedwhatprecisely the
relationshipwasbetweentheCMCorganizationandChinesemerchants. . Amore
carefulanalysison theroleof theChinesemiddlemenmerchantscouldrelate toa
burgeoningliteratureontheroleofintermediariesininternationaltrade.20
20SeeAntrasandCostinot(2010).
17
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19
Table1:Share(%)oftreatyportsinimportsofChinese‐ProducedgoodstoGuangzhou,ShanghaiandHankou.Average1868‐1888
Average1868‐1888PortofOrigin: Guangzhou Hankou ShanghaiYingkou 7.1 0.7 2.1Tianjin 6.9 0.5 5.1Yantai 1.8 0.1 5.2Yichang 0.0 4.9 0.1Hankou 9.3 * 36.7Jiujiang 0.1 26.8 12.2Wuhu 4.4 1.1 1.6Zhenjiang 6.9 1.8 2.8Shanghai 50.5 57.1 *Ningbo 2.9 6.4 11.8Wenzhou 0.0 0.0 0.1Fuzhou 0.0 0.0 1.9Danshui 0.0 0.0 0.2Dagou 0.1 0.0 0.4Xiamen 0.1 0.0 1.0Shantou 0.0 0.1 8.8Guangzhou * 0.6 4.3HongKong 10.0 0.0 5.7
20
21
Figure 1: British imports to China 1828‐1863, expressed in 1840 British pounds
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1825 1830 1835 1840 1845 1850 1855 1860 1865
In 1000 pounds
22
Figure 2: Tonnage of British vessels exporting goods from China.
0
20000
40000
60000
80000
100000
120000
140000
1832 1834 1836 1838 1840 1842 1844 1846 1848 1850
In tons
23
Figure 3: Chinese foreign trade, 1865‐1900
0
50000
100000
150000
200000
250000
1865 1870 1875 1880 1885 1890 1895 1900
1000 Customs Taels
Imports
Exports
24
Figure 4: Total imports of Chinese goods in Shanghai, Guangzhou and Hankou
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
1870 1875 1880 1885 1890 1895 1900
Customs tales (1000)
Canton Hankow Shanghai
25
Panel(a):Guangzhou
Panel(b):Hankou
Figure 5: Re‐exports and net imports of Chinese goods toward Guangzhou, Hankou and Shanghai, 1872‐1900.
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1870 1875 1880 1885 1890 1895 1900
Cusoms taels (1000)
Re‐exports to Chinese ports
Re‐exports to foreigncountries
Net imports
0
2000
4000
6000
8000
10000
12000
14000
16000
1870 1875 1880 1885 1890 1895 1900
Customs taels (1000)
Re‐exports to Chinese ports
Re‐exports to foreigncountries
Net imports
26
Panel(c):Shanghai
Figure 6 (Continued): Re‐exports and net imports of Chinese goods toward Guangzhou, Hankou and Shanghai, 1872‐1900.
0
10000
20000
30000
40000
50000
60000
70000
80000
1870 1875 1880 1885 1890 1895 1900
Customs taels (1000)
Re‐exports to Chinese ports
Re‐exports to foreigncountries
Net imports
27
Panel(a):Netimportsofforeigngoodspercapita
Panel(b):NetimportsofChinesegoodspercapita.
Figure 6: Net imports of foreign and local goods to Guangzhou, Hankou and Shanghai, 1872‐1900.
0
5
10
15
20
25
30
35
40
1870 1875 1880 1885 1890 1895 1900
Haekw
an Taels per capita
Shanghai
Guanghzou
Hankou
0
20
40
60
80
100
120
1870 1875 1880 1885 1890 1895 1900
Haekw
an Taels per capita
Shanghai
Gaunghzou
Hankou
28
Figure 7: Number of foreign cotton varieties available in Guangzhou, Hankou, Shanghai, Jiujiang, Yichang and Wuhu.
0
10
20
30
40
50
60
70
80
90
100
1875 1880 1885 1890 1895 1900
Number of varieties Shanghai
Hankou
Guanghzou
Wuhu
Jiujiang
Yichang
29
Panel(a):Coastaltrade
Panel(b):Transittrade
Figure 8: Share of the carrying of trade, by citizenship of the carrier, 1875‐1900.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1875 1880 1885 1890 1895 1900
Chinese
Japanese
Continental Europe
American
British
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1875 1880 1885 1890 1895 1900
Chinese
Japanese
Continental Europe
American
British
30
Figure 9: Treaty ports along the Yangtze River.
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