Economic Development of China and Japan
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Economic Development of China and Japan

C.D. Cowan, C.D. Cowan

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Economic Development of China and Japan

C.D. Cowan, C.D. Cowan

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First published in 2005. Some of the most important of the world's problems today concern affairs in Asia, and the relations between Asia and the West. To deal adequately with these problems it is necessary not only to master their more obvious elements as they present themselves today, but to go to their historical roots. In particular it is necessary to study the economic history of modern Asian society. In London the School of Oriental and African Studies, with the generous assistance of the Ford Foundation, began in 1959 a research programme on the economic history of East and South-East Asia. As part of this programme an international study group, composed of scholars from America, Europe and Asia, was held at the School in July 1961. This volume contains a selection of the papers presented to the study group.

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Publisher
Routledge
Year
2013
ISBN
9781134561148
Edition
1

1

THE KIAKHTA TRADE

MARK MANCALL

Instructor in History, Harvard University

Russia and England developed their contacts with China from opposite directions, by land and sea respectively, and in different political contexts. Yet each had to work out an institutional framework for its China trade, on terms that deserve comparison.
England and Russia were similarly affected by contact with China. Russian cossacks, explorers, and merchants in 1581 began the trek across Siberia and quickly arrived at the shores of the Pacific Ocean, paralleling the movement of the western powers—Portugal, Spain, England and France—through the southern oceans to China, with similar results: colonization, empire, and trade. As with England, so with Russia: this movement across Siberia brought Russia—a specialized instance of western culture, in comparison with the Far East—into contact with alien populations living at a lower level of technical development. This contributed to the ease of conquest. Intensive contact with the new populations of the East, on the coasts of the Asian continent as well as on China’s Inner Asian frontiers, created new markets and new sources of supply and wealth. This early inter-cultural contact also created new demands in the home countries: both Russia and England became great consumers of tea. Both Russia and England sought to place their relations with China in an institutional framework which would facilitate the realization of their chief goal, trade.
However, special attention must be paid to the difference in the English and Russian approaches to China if we are to account, in some measure at least, for the differences in the Chinese response. Western Europeans reached China during the decline of the Ming Dynasty, before 1644, while the Russians came into contact with China thereafter, at the beginning of the rise of Manchu power in North China. This difference in their time of arrival in the Chinese cultural world was to result in differences in the nature of the contact which these two western societies had with China. Institutionally, as far as China was concerned, England and Russia presented different problems. The English were unwilling to fit into the established Tribute System, but still demanded trade. A compromise was necessary, and the Canton System was the result. English trade was thus institutionally and geographically restricted to Canton. The Russians arrived at China’s frontier from a north-westerly direction at a time when the Manchu Empire was engaged in a strenuous effort to pacify the Jungarian tribes of Central Asia. Fearing that Russia might participate in the struggle on the Jungarian side, the Manchus sought a means to neutralize the Russians, to limit their desire for (and the possibility of interference in) the conflict. The means was the Russo–Chinese treaty system, initiated in 1689 with the Treaty of Nerchinsk. This first treaty dealt with political problems (England, on the south-eastern coast, was not yet a political problem) and established the basis for the development of a trade system which, especially after 1727, was to prove of benefit to both parties and to satisfy the political and economic demands of both. This I call, for convenience, the Kiakhta System, since Kiakhta fulfilled a function not dissimilar to Canton in the Canton System. Unlike the Canton System, the Kiakhta System of trade developed within the political context of the Russian–Chinese treaty system, which preceded the initiation of the unequal treaty system between China and the West in 1842.
The study of the Sino–Russian trade system at Kiakhta has been almost totally ignored by western, as well as by Japanese and modern Chinese, scholars. This is probably because the northern trade did not have the immediate social and economic impact on China and on Chinese society that the Canton trade had. This was partly due to the fact that Kiakhta was considerably removed geographically from the centres of Chinese population. But even more important, it was a result of the fact that the forms developed at Kiakhta for international political and commercial intercourse were of a nature which allowed the preservation of the native institutions on both sides. The Russians did not seek entry into China (they already had access to Peking) nor to force concepts of free trade on the Chinese, concepts the Russians themselves held, at best, only weakly; the Chinese, in turn, did not insist on the all-importance of Chinese customary forms for this intercourse, as they did at Canton. Measures were worked out early for mutual forms of address and approach, and these measures obviated the necessity of conflict such as occurred in Canton.
Nevertheless, the long-range consequences of the Kiakhta System, as viewed from our vantage-point in the contemporary world, may have been as important as those of the Canton System. The institutions created by the treaties of 1689 and 1727 not only developed into a treaty system which ante-dated the Treaty Port System on the coast by 153 years, but they also created a relationship which, with minor modifications, was to endure 169 years down to 1858, precisely because these institutions satisfied the needs of the two greatest empires on the Asian continent.
Because of its long duration and comparatively peaceful nature, this institutional experience undoubtedly created a Chinese attitude towards Russia that differed markedly from the attitude towards the rest of the West. Because of this, Russia’s actions in consonance with the allied powers in 1860, for instance, appeared to the Chinese in a different light than the actions of England and France.2 Dealing with Russia from a position of strength in the eighteenth century was a somewhat different experience from dealing with the West from a position of weakness in the nineteenth and twentieth centuries. The results of this experience deserve extensive research.
The Kiakhta trade system was established by the Treaty of Kiakhta in 1727 to replace the inefficient and perhaps, from the Chinese viewpoint, undesirable Peking caravan trade which had developed on the basis of the Treaty of Nerchinsk. Although in the details of organization it was a totally different system, it was essentially an extension of the principles on which Sino–Russian relations had been based previously. The system lasted until the latter half of the nineteenth century, when it began to decline in competition with the newly opened sea routes (from Odessa via Suez), and, finally, it received the coup de grâce from the Trans-Siberian Railway at the end of the nineteenth century. Until 1854, the trade at Kiakhta was based on a strict barter system. As a result of the careful control of prices on both sides and mutual agreements on the evaluation to be made of goods offered for trade, the value of the goods traded was approximately equal year by year up to 1854. In that year, however, the Tsarist government modified the rules of the trade to permit the settling of accounts in gold and silver, as a result of which the balance of trade immediately went in China’s favour. In the period 1854–61, the annual export value of goods through Kiakhta to China was 4,825,000 silver rubles, while the export of silver and gold came to an annual average of 2,264,000 silver rubles.3 From this one may assume that the balance of trade throughout much of the history of Kiakhta up to 1854 would have been in favour of China, given the facts that tea consumption grew in Russia so rapidly, that Kiakhta was the major source of tea for the Russian Empire, and that Russia could not rely on a commodity such as opium to balance the trade.
After the beginning of the decline of Kiakhta in the 1860’s and 1870’s, Kiakhta merchants began to move out into Mongolia, under the protection of the Peking treaties of 1860, in search of supplies for the growing Siberian population. By 1900, Kiakhta had all but disappeared as a trade emporium, and its place was taken by a combination of rail and sea transportation. The very condition which made it so valuable in the eighteenth and early nineteenth centuries—its location on China’s Inner Asian frontier—dictated its disappearance in the twentieth century.
I. THE KIAKHTA SYSTEM
History. Although Russian–Chinese trade relations were formally inaugurated with the signing of the Nerchinsk Treaty of 1689 and the establishment of rules for a caravan trade to Peking, it is impossible to determine the precise date when Russians and Chinese first came into contact. Undoubtedly, this took place during the period of the Mongol invasions, when Russia and China both formed part of the Mongol Empire. Yaroslav, Grand Prince of Vladimir, and his son, Alexander Nevsky (1220–63) are both supposed to have visited the capital of the Mongols, and it is not impossible or improbable that they came into contact with Chinese at Karakorum. It is known that goods from the Caucasus, Persia, and China were to be found in the markets of the Golden Horde, but whether these were passed along the silk routes or brought by Chinese merchants themselves is not known. In the first half of the fifteenth century, Russians were seen in Samarkand (in 1404), where they were ‘recognized as on a level with the merchants of India and China; consequently, their trade was quite respectable’.4 By the sixteenth century, Russia was already beginning to be aware of China as a possible source of an important trade. In 1557, Ivan the Terrible gave an Englishman, Anthony Jenkinson, permission to cross Russia to Bukhara, where Chinese goods were said to be available. By the time of his arrival, however, Chinese caravans had ceased coming to that city.5 Throughout the seventeenth century, numerous expeditions were sent to Mongolia and to China with diplomatic tasks, in search of information, and to trade.6 Those expeditions which reached Peking on diplomatic or commercial trips traded goods at considerable profit. To cite but one example, at the end of the seventeenth century the merchant Nikitin brought back silk, cotton cloth, raw silk, pearls, gold, tea, medicinal herbs, porcelain, faience ware, and other goods.7
By the end of the seventeenth century, Russia was firmly entrenched in Siberia. At the same time, she became deeply involved in the struggle with Sweden and Turkey. To the south of Siberia, the Manchus had come to power in China after 1644 and grew particularly strong after the defeat of the San-Fan Rebellion in 1681. The Nerchinsk Treaty, which regulated the frontier and the caravan trade to Peking, was prompted by the Russian need to solve the outstanding diplomatic problem in Siberia—relations with the Manchus—so that Russia could devote her full attention to the West. At the same time, the newly-regulated caravan trade provided lucrative income for the Russian state treasury in a time of international stress. The Manchus, in turn, were faced with the problem of building their administration in China, where they were greatly outnumbered by the people they had just conquered. Faced with the rising power of the Jungarians in Central Asia and motivated in part by their desire to preserve Manchuria from Russian encroachment (in case that territory were needed for withdrawal from China), the Manchus, too, needed to find a modus vivendi with the Russians which would neutralize them in the struggle in Central Asia, preserve the inviolability of Manchuria and, at the same time, satisfy the chief Russian demands for trade.
Consequently the Treaty of Nerchinsk, China’s first treaty with a non-Asian power and a treaty signed on totally equal bases (indeed, it could be argued that it was favourable to the Chinese, since the Russians were forced to leave the Amur river basin area), satisfied the needs of both the powers concerned.8
Under the regulations of the Treaty, caravans were permitted to come to Peking once every three years, numbering not more than two hundred men. These caravans provided a valuable source of income for the Russian merchants as well as for the Russian state. This dual interest was reflected in the fact that they were state caravans conducted by licensed merchants.
Having gained official permission to send trading caravans to Peking on a regular basis, the Russian court began to conduct the trade as a monopoly.9 Russian merchants had to obtain licences from the government before they could go to the East. The goods destined for trade and the routes to be followed were all closely regulated by the government.10 The reports of these caravans, though not published, are known to be in the archives or the soviet union and will provide valuable source material if they become available to the scholarly world. Between 1698 and 1718, some ten state caravans made the journey to Peking. After the establishment of the Kiakhta trade, however, the caravans began to lose their economic value, and in 1755 the last purely commercial journey was made to Peking. This form of trade was officially terminated in 1765.
By the twenties of the eighteenth century, Russia once again felt the need to secure her Siberian frontier before attending to serious problems in the West. Catherine I, coming to power with the aid of a small group of people who had risen to influence under Peter the Great, feared the reaction of the remnants of the old Boyar class; her first measures were directed at strengthening her own position on the throne. In August 1726 Russia formed an alliance with Austria against France, England and Prussia, hoping, in turn, to obtain aid from Austria against Turkey. Faced with this developing situation, a year earlier, in July 1725, Catherine I had appointed Sava Vladislavich Raguzinskii as ambassador plenipotentiary to meet with Chinese envoys in order to settle outstanding questions of frontier management and trade relations. The Kiakhta Treaty, signed by Raguzinskii in October 1727, created a new system of trade which endured until 1860.
With regard to the Peking market itself, the Russian government retained the right to continue sending trade caravans to Peking once in three years.11 This was, essentially, a reaffirmation of the older caravan trade system. During their sojourns on Chinese territory, the caravans were to be responsible for their own expenditures, but they were entirely free of duties in Peking, where they were allowed to remain for eighty days to conduct trade. All arguments arising between members of the caravan or between them and the Chinese residents were to be decided by the leader of the caravan or by the Chinese official accompanying it. This is the first instance of extraterritoriality being formally incorporated into a treaty between China and a western nation. The quality of this extraterritoriality, however, should probably be understood in terms of mutual convenience, rather than in terms of the later unequal treaty system, since the treaty itself was a mutual convenience, not an instrument imposed by force on a defeated government. The caravan merchants were to be licensed in order to prove that they were appointed members of the particular caravan, and upon arrival at the frontier the caravan was to notify Peking in writing of its arrival, whereupon an official would be dispatched to accompany the merchants to the capital.
In addition to the caravans, trade was permitted at two frontier points: Kiakhta and Tsurukhaitu. The latter never developed as a serious centre of intercourse due to its poor geographical location and its proximity to the well-situated Kiakhta. At Kiakhta, officials were to be appointed on both sides to superintend the trade.12 In addition to trade, the Kiakhta treaty also dealt with the frontier and refugee problems, and it made arrangements for the permanent residence of Russian Orthodox clergymen in Peking, out of which grew the Russian Ecclesiastical Mission in Peking.
After several months of indecisiveness on both sides, the Kiakhta trade was finally initiated at the end of September 1728 in a fashion which foretold its rise and the decline, in turn, of the Peking caravan trade. At that time, a large Russian merchant-caravan which Raguzinskii had sent to Peking immediately upon conclusion of the treaty returned, having been unable to sell a large quantity of furs in the capital due to a glut of Siberian furs on the market during the caravan’s sojourn in Peking. The leader of the caravan turned the furs over to the chief of the new Kiakhta outpost for bartering to the Chinese merchants who were beginning to gather in the area. The trade went well because Kiakhta had begun to attract merchants from various areas in North China, in addition to Peking, and it provided a focal-point for a wider area of distribution than had Peking alone.13
From that time on, the caravan trade was unable to compete with the trade at Kiakhta and by the fifth decade of the eighteenth century, it had ceased almost completely.14 The last Russian state caravan went to Peking in 1755, but the lack of success in the trade caused the cessation of the state monopoly in the caravan trade and of its chief item of commerce, fur, with the result that the trade became totally centralized in Kiakhta. Fur continued to be sent to Peking, however, to the Russian religious mission there, but the profits of this minor commercial activity were, by and large, devoted to the needs of the members of th...

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