China’s War on Smuggling

Law, Economic Life, and the Making of the Modern State, 1842–1965

Philip Thai

• Publisher: Columbia University Press
• Year: 2018
• Topic: History
• eBook ISBN:
  9780231546362
• Subtopic: 19th Century History
• Index: History

Smuggling along the Chinese coast has been a thorn in the side of many regimes. From opium and weapons concealed aboard foreign steamships in the Qing dynasty to nylon stockings and wristwatches trafficked in the People's Republic, contests between state and smuggler have exerted a surprising but crucial influence on the political economy of modern China. Seeking to consolidate domestic authority and confront foreign challenges, states introduced tighter regulations, higher taxes, and harsher enforcement. These interventions sparked widespread defiance, triggering further coercive measures. Smuggling simultaneously threatened the state's power while inviting repression that strengthened its authority.

Philip Thai chronicles the vicissitudes of smuggling in modern China—its practice, suppression, and significance—to demonstrate the intimate link between illicit coastal trade and the amplification of state power. China's War on Smuggling shows that the fight against smuggling was not a simple law enforcement problem but rather an impetus to centralize authority and expand economic controls. The smuggling epidemic gave Chinese states pretext to define legal and illegal behavior, and the resulting constraints on consumption and movement remade everyday life for individuals, merchants, and communities. Drawing from varied sources such as legal cases, customs records, and popular press reports and including diverse perspectives from political leaders, frontline enforcers, organized traffickers, and petty runners, Thai uncovers how different regimes policed maritime trade and the unintended consequences their campaigns unleashed. China's War on Smuggling traces how defiance and repression redefined state power, offering new insights into modern Chinese social, legal, and economic history.

1

COASTAL COMMERCE AND IMPERIAL LEGACIES

Smuggling and Interdiction in the Treaty Port Legal Order

On the night of February 21, 1878, officers from the Chinese Maritime Customs Service boarded the British steamer Taiwan shortly after its arrival in Fuzhou. Notified by an informant that contraband from Hong Kong was hidden on the vessel, the search party scoured the ship’s quarters before finally uncovering smuggled opium concealed under pillows and mattresses. Suspicion quickly fell upon a Chinese cook, who was arrested after a failed attempt to flee the scene. The customs commissioner proceeded to fine the vessel’s captain 500 taels and called for a hearing to be jointly conducted by himself and the local British consul. When the trial was convened two weeks later, both the consul and the commissioner agreed that the opium was indeed smuggled. Yet the former rejected the latter’s contention that the captain should be held liable for the actions of his crew. The consul accepted the captain’s claim that he made a “diligent search on two occasions during the trip in question” and the vessel carried no contraband to the best of his knowledge. Since the captain did not willfully engage in smuggling, the consul ruled, he was thus not required to pay the fine. As for the Chinese cook, he was credited for time served and released with his wages forfeited. The commissioner objected to the verdict and forwarded the case to his superiors in Beijing, kicking off protracted negotiations between Qing and British diplomats that concluded only years later.1

In the annals of modern Chinese history, the Taiwan case was relatively unimportant. It did not implicate anyone of note; it did not change the course of Sino-British relations; and it was not even unique. Yet the case was not altogether insignificant, and it highlights many features common to illicit trade and official interdiction on the China coast in the late nineteenth and early twentieth centuries. Most importantly, it was made possible by the unequal treaties ratified after the First Opium War, which delineated how and where foreign commerce was conducted in China for the next hundred years. This new economy pulled China into the ambit of the emergent global capitalist order and placed complex restrictions on domestic authority. Treaty provisions constrained successive central governments—imperial and, later, Republican—from introducing mercantilist policies or raising import tariffs that would hinder foreign access to Chinese markets. They also formalized durable legal protections for foreign nationals on Chinese soil. Chinese control over foreign trade was primarily mediated through a new, foreign-operated customs service which monitored and policed commerce at the treaty ports dotting the coast. The disintegration of the late imperial order and the instability of the early Republican era further fractured Chinese sovereignty until 1928, when the Nationalists nominally brought the country under central rule and began to reverse the legacies of the unequal treaties. During this era of weak central authority, smuggling in China was widespread, yet it was not particularly profitable because of low tariffs. The range of smuggled goods was thus correspondingly narrow, limited to articles either heavily taxed or prohibited outright like opium, weapons, and salt.

Building on the contention that legality and illegality cannot be understood in isolation, this chapter surveys the workings of the treaty port economy in the decades leading up to 1928. It identifies the geography, practices, and networks that animated coastal commerce—in both its legal and illegal variants. In particular, the chapter looks at a series of smuggling incidents like the Taiwan case involving foreign merchants and Chinese authorities. Quotidian though they were, these disputes nonetheless reveal how late Qing and early Republican governments fought smuggling within a rapidly changing economy. They also highlight how the transformation of legal pluralism under the old Qing legal order to legal imperialism under the new treaty system complicated the judicial definition of smuggling in China. Tracing the evolution of the treaty port legal order is key to understanding coastal smuggling. Though riddled with contradictions, loopholes, and inconsistencies, the mélange of domestic laws and foreign treaties ultimately defined the incentives for trafficking, as well as the parameters for enforcement. More importantly, this treaty port legal order served as a prime target of subsequent efforts by the Nationalists to fight smuggling and expand state capacity.

COASTAL COMMERCE: INSTITUTIONS, GEOGRAPHIES, AND VECTORS

Maritime commerce in China flourished in every shade of legality long before the arrival of Western gunboats and the ratification of the unequal treaties. From the Ming dynasty (1368–1644) through the early decades of the Qing dynasty, overseas trade was actively practiced though formally restricted to “tribute trade,” commercial exchanges between the Chinese and foreign tribute missions dispatched to the imperial capital in recognition of Chinese suzerainty while earning handsome profits for participants.2 Starting from 1684, the Kangxi emperor (r. 1662–1723) inaugurated the “open trade policy” that lifted the ban on maritime travel (haijin), permitted private trade with overseas locales, and established a Qing tollhouse system on the coast.3 Although the Qing court in subsequent decades constantly swung between maintaining security and promoting commerce, trade continued apace.4 Indeed, junks loaded with travelers and goods continued moving up and down along the coast, back and forth on the seas—regardless of the policy that prevailed. During the late eighteenth and early nineteenth centuries, the volume of commerce outstripped the capacity of the state to monitor and tax it. Innumerable ports and bays—many of them not recognized or even recorded by officials—sprung up to handle the burgeoning traffic.5 Even tribute trade reflected this reality, as tribute missions freely traded with private merchants on the coast.6 Legal and illegal commerce thus existed side by side and were often indistinguishable.

Trade with the West, meanwhile, was originally permitted at several ports but remained minuscule in volume before the 1750s, when only five to ten ships arrived in China annually. In 1757, Western merchants were officially required to trade only at Guangzhou with licensed Chinese monopolists—collectively known as the Cohong (gonghang)—as intermediaries. The creation of this famed Canton System was motivated more by fiscal than security concerns; the Qianlong emperor (1736–1796) acceded to this arrangement on the recommendations of Guangdong provincial officials who promised better collection of taxes.7 Despite such restrictions, Western trade in Guangzhou rose steadily in the decades before the First Opium War. Moreover, Western merchants frequently and easily circumvented the system to evade paying duties and engage in other forms of smuggling. Opium was the most notorious contraband trafficked, but Western merchants also traded rice, saltpeter, salt, silver, gold, and other commodities controlled or banned by the court. Nor did they restrict their trading to a single port or with the monopoly. Yen-p’ing Hao enumerates the many forms of the “free trade” (i.e., smuggling) that continued to prevail along the Chinese coast after 1757: British and Portuguese merchants moving opium through Macao; Cantonese and British merchants chartering Spanish ships to trade between Xiamen, India, and Manila; and American merchants buying silk from non-Cohong merchants at volumes exceeding export quotas.8 Despite later complaints by Western merchants of the “arbitrary” fees imposed by Chinese officials, taxation on maritime commerce—interregional or international—was relatively light and varied by locale.

Imposition of the Treaty of Nanjing [Nanking] (1842) and subsequent treaties redefined China’s engagement with the global economy in several ways. First, the treaties guaranteed foreign access to Chinese markets by loosening the restrictions of the Canton system. Foreign merchants were permitted to trade at specified treaty ports, which grew from five initially to ninety-two by 1917.9 Other restrictions such as trading with government monopolies and quotas on imports and exports were lifted. The treaties also forced the Qing to surrender China’s tariff autonomy. Duties for almost all imports were fixed at a flat rate of 5 percent ad valorem at all treaty ports. In addition, foreign powers won the right to exercise consular jurisdiction on Chinese soil, putting foreign nationals under the laws of their home country rather than the laws of China. Finally, the treaty system changed imperial China’s ambiguous, centuries-long policy toward overseas travel by Chinese subjects. Mass migration was formally legalized in the late nineteenth century but had been already permitted by provincial authorities decades earlier in response to growing Western demand for cheap Chinese labor. The treaties were initially concluded with Great Britain, but their provisions extended to other foreign powers who concluded their own treaties with China due to the “most favored nation” clause.10 Through force and diplomacy, the international community—led by Britain, France, the United States, and, eventually, Japan—kept Chinese markets opened and Chinese authority constrained.

While historians have debated (and continue to debate) the extent to which the treaty port system transformed the Chinese economy, they have largely agreed that any changes inaugurated by the treaties were not distributed evenly across China. Indeed, international trade played an outsized role in the urban economies of the coast compared with interregional trade for the rural economies of the interior. Tighter connections to imperial markets in Asia and the rest of the world helped incorporate coastal China within networks of Western capitalism. Moreover, this treaty port system with its links to the global economy, limits on Chinese authority, and a panoply of foreign privileges did not emerge de novo after 1842 but actually built on prior practices. The flat 5 percent tariff, for instance, was only slightly higher than the rates charged at the old Qing maritime tollhouses. Extraterritorial concessions were initially viewed as acceptable accommodations by a legally pluralistic Qing empire that had long subjected different ethnic, social, and professional groups to different laws and courts. Practices that were part and parcel of extraterritoriality—including consular jurisdiction and mixed courts—were thus entirely consistent with Qing legal traditions such as personal jurisdiction and joint trials.11 Nor was the treaty port system consciously engineered by a single architect. Instead, it evolved over decades through continual encounters on the diplomatic table, on the battlefield, and on the ground until foreign powers prevailed in interpreting and enforcing provisions more favorable to their interests. The steady decline and eventual collapse of central authority in the early twentieth century only further weakened China’s geopolitical position. The 5 percent tariff remained fixed for decades despite a clause in the Treaty of Tianjin [Tientsin] (1858) permitting adjustments every ten years.12 Persistent efforts by Qing (and later Republican) authorities to revise the treaties and thereby increase government revenues and protect domestic industries went unrealized. Extraterritoriality, for its part, eventually became so absolute, so pervasive, and so abused that foreign nationals and even Chinese subjects in foreign concessions were practically unconstrained and untouchable by any Chinese authority.

Overseeing China’s foreign trade during the treaty port era (and beyond) was a new institution, the Chinese Maritime Customs Service.13 Established in 1854 by British diplomats to collect duties on foreign trade in Shanghai, the agency emerged during a fortuitous moment when Sino-foreign geopolitical interests converged.14 For overextended Western powers, the agency assumed many of the responsibilities their consuls were required to—but could not—fulfill as required by the Treaty of Nanjing. For the beleaguered Qing dynasty, it provided reliable and desperately needed revenues during the chaos of the Taiping Rebellion. The Maritime Customs initially possessed a limited mandate: assessing duties on foreign maritime trade at a handful of treaty ports. Yet as its size, responsibilities, and geographical reach steadily expanded, the agency eventually incorporated and supplanted the old Qing maritime tollhouses. It maintained China’s coastal and riverine navigation systems along with its network of lighthouses. It collected revenues that hypothecated China’s indemnities and bond issues to foreign and domestic investors. By 1930, the Maritime Customs had a presence in almost fifty ports throughout China, monitoring, regulating, and taxing both international and domestic trade.

The institution itself was headed by an inspector general (zong shuiwu si) based in Beijing until 1929, when the Inspectorate General Office was relocated to Shanghai. Each customs district was headed by a commissioner (shuiwu si) appointed by and answerable to the inspector general. Each commissioner nominally assisted the local superintendent (jiandu) appointed by the Qing court. The post of inspector general was held exclusively by non-Chinese (almost all of whom were Britons) during the entire period of the Maritime Customs’ existence.15 The longest-serving and most influential inspector general was Robert Hart (1835–1911), who carved an indispensable role for the agency within the Qing bureaucracy during its formative years. Commissioners, too, were exclusively non-Chinese until the late 1920s, when the Nationalists pressed to “Sinicize” the agency. Although foreign-staffed at senior levels, the Maritime Customs operated as a bureaucratic arm of successive Chinese regimes on a largely uninterrupted basis from 1854 to 1949.16 From the Qing dynasty through its Republican successors, the agency maintained its institutional integrity during the almost one-hundred-year span of its existence.17

Most importantly, the Maritime Customs was the primary institution operating on the frontlines of the fight against smuggling. Fighting duty evasion was important because of the Qing’s growing reliance on import duties to fund its military, infrastructure, and other state-building projects. Despite being capped at 5 percent, tariffs came to make up a significant part of the late Qing court’s income. In the decades after the Taiping Rebellion, revenues to the court came primarily from three sources: the land tax, customs duties, and the lijin transit tax collected by local government tollhouses on domestic comm...

Table of contents

• Cover
• Series Statement
• Title Page
• Copyright
• Dedication
• Epigraphs
• Contents
• List of Maps, Tables, and Figures
• Acknowledgments
• Introduction
• 1. Coastal Commerce and Imperial Legacies: Smuggling and Interdiction in the Treaty Port Legal Order
• 2. Tariff Autonomy and Economic Control: The Intellectual Lineage of the Smuggling Epidemic
• 3. State Interventions and Legal Transformations: Asserting Sovereignty in the War on Smuggling
• 4. Shadow Economies and Popular Anxieties: The Business of Smuggling in Operation and Imagination
• 5. Economic Blockades and Wartime Trafficking: Clandestine Political Economies Under Competing Sovereignties
• 6. State Rebuilding and New Smuggling Geographies: Restoring and Evading Economic Controls in Civil War China
• 7. Old Menace in New China: Symbiotic Economies in the Early People’s Republic
• Conclusion
• Character List
• Notes
• Bibliography
• Index
• Series List