Dissertation, Chapter 1

Part 3

Economic Development and Expansion
In the period of relative peace from 1726 to 1856 after the Qing conquest of Yunnan and administrative reforms to bring more the region under direct rule of the Chinese state, trade and industrial development increased rapidly. The demographic transformation (see below) also facilitated economic change. We can look at trade and industrial development.
Trade continued and perhaps even increased in importance at this time. Han migrants moved into trade. They had certainly been involved previously, but more as seasonal, itinerant peddlers. They now became large-scale traders permanently settled in the region in urban areas (Lee 1982b:299). By 1775, there were Han trading associations in the southwest and both Han merchants and Chinese Muslims (well-known as muleteers) had established themselves in urban trading centers (Giersch 2001:77). However, in many areas before the Muslim Rebellions, the Hui (Chinese Muslim) merchants monopolized trade and local markets. Their neighborhoods were often the richest in the new urban areas. They ran shops and workshops of cloth, cotton yarn, and native products. In Tengchong, the Hui merchants owned 70% of the shops in town. Han merchants could not match them in either sales or volume. One Hui family controlled almost all the regional business in cloth, cotton, yarn, jade jewelry, and other items. They cooperated with two other families to establish a firm that had sub-branches in many towns and cities, and even in other provinces. They were believed to rig the market. The rebellions appear to have been started over various competing economic interests between the Muslims and Chinese (Wang Jiangping 1996:249). There was also a busy caravan trade between Burma and China and the Hui played an important role in cross-border trade. Dali was a very important way station in this trade (Wang Jiangping 1996:212).
Much of this expansion was based on trade between China and Yunnan, but trade with Burma and the Tai polities continued to be important. There were three spheres of long-distance trade: Siam, Burma, and other Tai polities with varying loyalties (feudal relations); China proper under the Qing; and Yunnan, particularly in a region Giersch calls ‘the Crescent,’ the extreme western border of Yunnan from Sipsongpanna up to across from the northern tip of modern Burma (Giersch 2001:81, see Figure 1, page 69). From Southeast Asia (to use an anachronistic term) to China, there passed luxury items such as ivory, uncut gems, jade, gold, and silver, and basics such as cotton, iron, sea salt, and salted fish (Giersch 2001:81) In fact, cotton was extremely important to Yunnan, and access to it was used as a justification for invasion of one Tai polity. The vibrant cotton import trade continued up to the turn of the twentieth century, and even survived the Muslim Uprisings (Giersch 2001:82) Chinese exports to Southeast Asia included silks, satins, and thread (Giersch 2001:81) Chinese trading firms also exported silk, cotton, pottery, tobacco, and hard wares, while importing wool, hides, animals, deer musk and medicinal herbs from Kham and other border regions with Tibet (Lee 1979:50) The musk trade was at times the most important item of trade on the Sino-Tibetan border (Kingdon-Ward 1986 [1923]:61). From Yunnan particularly, Burmese traders sought copperware, needles, and horses, among other things. Western Yunnan also produced gems, silver, black jade, and grain for Yunnan’s city’s growing populations (Giersch 2001:81). A salt monopoly also existed, established in the Ming Dynasty as part of a system to encourage grain merchants to bring grain to military garrisons in the southwest (Wiens 1967 [1954]:198-9). A number of agricultural crops were produced for sale. Potatoes were cultivated in western Yunnan and across the border in Burma, and were said to sell well among the Chinese. Celery was also cultivated and sold, along with a variety of fruits, nuts, and herbs (Anderson 1871:93) Trade was seasonal, occurring in the dry months from October to May (Giersch 2001:81).
On of the most significant trade items in northwestern Yunnan was tea. The tea trade between Yunnan/China and Tibet was massive and continued unabated up into the twentieth century. Tea trade took place under government supervision for its tax revenues and role in frontier policy (Lee 1979:50) The Chinese bartered tea for the nomad horses important for ensuring supplies of war mounts. Controlling the frontier tea trade also allowed the Chinese government to keep frontier people under control by threatening suspension of the tea trade (Lee 1979:49-50) Tea produced by local peoples of Yunnan was sold to both Han and Tibetan traders (Giersch 2001:82) Tea was exported from Yunnan and Sichuan to Tibet and the border regions through a licensing system in which the merchants were required to pay a fee for a fixed number of permits allowing the holder to sell a fixed amount of tea. The Qing government regulated the number of permits, so that the merchants granted the permits had a monopoly on the tea trade (Lee 1979:50) Tea had high value in west China due to the demand for it in Tibet, and the often impoverished Chinese officials and military took advantage of that trade by taking as many bales of tea as possible with them when traveling from east to west. Since they took advantage of the Tibetan ula system of corvee frequently, their tea trade activities contributed to the burdens of transport placed on local peasants (Teichman 1922:223-4) Baber surmised that Tibet depended on silver rupees from India to finance its tea trade with India because its trade in Tibetan woolens to China could not have been enough to finance the quantities of tea traded. Russian rubles also began to make an appearance in local markets. Previously, bricks of tea had been used as a currency but it had been devalued with access to silver (Baber 1882:197-9).
Despite the importance of trade, the Qing state occasionally saw this as a dangerous contact, uncontrolled and with the potential for fostering rebellions. In the 1740s and 1750s, for instance, travel was allowed and Han miners and merchants crossed freely into frontier zones and across borders (Giersch 2001:75, 83) At other times the Qing court attempted to restrict trade and population movement across the ‘frontiers.’ In the 1760s, the state attempted to prevent people from leaving the ‘interior’ of China for the ‘frontier zones’ and following the Qing-Burma frontier wars of 1765-1770, the two courts banned cross-border movement and trade. This was eventually circumvented when local Chinese officials and native rulers of Yunnan colluded to convince the two courts to lift the embargo (Giersch 2001:83).
In the eighteenth century, Han migrants contributed to the textile industry of western Yunnan and collaborated with native workers to dig the salt mines of Yunnan (Lee 1982b:299). The Qing also sought to develop agricultural interests and to extract Yunnan’s rich mineral resources. An influx of Han immigrants supplied the capital, labor, and organization that built an increasing urban network (Lee 1982b:297; Giersch 2001:73-78). From the early eighteenth century on, newcomers who could not settle agricultural land gravitated toward trade and industry, especially the booming mining industry. E’ertai (r. 1726-1731) encouraged mining, especially of copper in Yunnan (Mote 1999:903). The Lijiang area, especially around Dongquan and Yongsheng, was known for its production of copper goods (Chao 1995). Han immigrant workers flooded the gold, copper and silver mines of the southwest. By 1750, over three hundred thousand miners had moved to the southwest to work the mines (Lee 1982b:299); by 1800, the number of miners had increased to over 500,000 (Lee 1982a:742). The mining boom was not based on private entrepreneurship, but the consequence of planned, managed government development. Merchants organized and managed the mines, miners moved south in response to the demands of the labor market, but the Qing state regulated supply and demand. By the turn of the eighteenth century, most mines had already reached their peak and from the early nineteenth century, mining output steadily declined (Lee 1982a:743).
As we shall see, all of these factors brought Han immigrants and the Qing state into conflict with the Chinese Muslim Hui of Yunnan in trade and mining. The Muslim Uprisings show signs of having come about as a result of increased contact and competition between Han and Hui over mining, trade, and in urban areas. For instance, an 1848 dispute over a salt well, sparked by an unfair trade incident in the Yao Sub-Prefecture, resulted in about 2,680 Han households and 260 Muslim households being burned out (Wang Jiangping 1996:249) In general, cross-cultural contact within Yunnan, often exploitative in nature, increased. Many peoples already living in Yunnan – indigenous peoples and older settlers – adapted to the commercially oriented way of life that arose, however. Muslims, Naxi, and Bai came to dominate certain sectors of the regional economy. By 1850, they controlled much of the commercial instruments in western Yunnan and in particular monopolized the transport industry (Lee 1982b:304). The people of Kham were skilled, shrewd traders and held their own with Tibetan, Burmese, and Chinese traders, as well as those further afield. All the territorial chiefs and monasteries took part in trading. They had the financial resources and experience to compete. Chinese brought their goods to distributive centers such as Tachienlu and Lijiang where they traded with caravans from beyond the border. When Chinese agents ventured into non-Chinese territories, they had to seek the cooperation of local authorities. Since traders never traveled with their wives, many married local women and their children were raised in their mothers’ cultures (Lee 1979:50).
The Muslim Uprisings put an end to this era of an expanding economic environment. The uprisings and the epidemics that followed it left southwest China shattered and empty. Many travelers noted the empty towns and the paucity of trading (Anderson 1871; Baber 1882:182). While Yunnan was noted for its gold, silver, copper, lead and gem mines, the metal trade nearly disappeared during the Muslim Rebellion (Baber 1882:183) although many mines may have been worked out to the technological limits of the day. Certain elements of trade did survive this time. Small amounts of copper were still traded (Baber 1882:183) The trade between Tibet and China, particularly in tea, continued into the late nineteenth and early twentieth centuries (see Baber 1882; Samuel 1993:145). The cotton trade also survived the Muslim Uprisings (Giersch 2001:81). On a small scale, trade in other items continued. Along different routes, Baber noted trade in white copper, opium, and salt (Baber 1882:165, 183); in opium, cotton-cloth, raw cotton, raw copper, worked copper, zinc, and hill goods such as furs, bones, deer horns, musk, and medicinal herbs and roots (Baber 1882:92); and in rice, opium and silk in the more productive regions of Sichuan (Baber 1882:4). In short, previous regional trade had contracted and was reorienting away from Burma and the Tai polities (Giersch 2001:73). It was eventually revived and transformed by the opium trade.

British Colonial Influence
Into this breach moved Western governments and commercial interests with hopes of rebuilding the trade to their advantage. Competition between British and French interests drove the discourse and planning for colonial economic expansion. British officials hoped to revive and benefit from the trade between Burma and Yunnan, hopefully as a back door to the China trade. British explorers extensively explored the upper Shweli and the Salween, closer to Lisu territory, in search of an overland route between British India and Burma to China so as to compete more effectively with French trade interests with good overland routes to Kunming (the provincial capital of Yunnan) from Indochina. Annexation of Upper Burma was important to the British to enlarge the Indian trade with China (Turrell 1988:147).
As early as 1886, when the British annexed Upper Burma, they hoped to secure railways between British Burma, Thailand, and Yunnan. Colquhoun had hoped to establish river communications with Shanghai from the Upper Yangtze (Manchester Guardian, May 13, 1886), and between Upper Burma, Yunnan, and northern Thailand (Colquhoun 1970 (1885):49; 203-4). Even if central China and its port cities proved inaccessible from Yunnan, however, British industry hoped for an increased market for its manufactured goods, based on their estimates of the size of the populations of Sichuan, Kweichow, and Yunnan (Manchester Guardian, May 13, 1886). They particularly dreaded the French railway, which they believed would give rise to French economic dominance in the south of China (Colquhoun 1970 (1885): 200; Manchester Guardian, April 20, 1886). Baber noted the presence of Western manufactured goods as a gauge of the possibilities of market expansion. In Dali, on the eastern edge of western Yunnan, he noted goods from Tibet and lots of herbal medicines, but also a type of serge, Russian broadcloth, and Swedish goods. There were no “Manchester textiles,” although he noted some British-made cloth in women’s clothing in a poor hamlet further west (Baber 1882:87, 159). However, his conclusion was that the trade was too small-scale and terrain too difficult to make large-scale trade feasible. He concluded that trade was not a significant part in the economic life of western Yunnan in part because the mountain roads were impassible for “wheeled carriages.” He believed that there would be little opportunity for expansion of the trade between Burma and China (Baber 1882:184-5).
Nevertheless, British officials and researchers, particularly Davies, continued to search for a route that would support a rail line in competition with that being built by the French in Indochina. In the Upper Salween, Davies noted the breeding of mules and sheep, and the production of pottery, iron tools, and the existence of iron pan works. Davies was of the opinion that these items were not traded to Burma because of the lack of accessible routes, something the British hoped to rectify by building a railroad there. Davies wrote enthusiastically of the potential for industrial development of the iron pan works (Davies 1909:121-2). In keeping with the colonial viewpoint of “opening up” Yunnan, he wrote some of the lovely, pleasant upland plateaus of northwestern Yunnan, particularly in T’êng-yüeh, would serve as perfect hill stations for Burmese colonials (Davies 1909:121). He hoped that the routes he surveyed had the potential to provide excellent access to the rest of China as the basins of the Yangtze, Mekong, and Salween were all in close proximity to each other here near Yenching (Davies 1909:192-3). It is odd, however, that he did not note that the breeding of mules indicated that extensive caravan routes already existed, since mules were the main means of transport. In fact, the Hui had played an important role in the busy cross-border trade between China and Burma before the rebellions (Wang Jiangping 1996:212) and continued afterwards (Hill 1998:15). Davies’ viewpoint is in keeping with European lack of awareness of the regional significance of western Yunnan trade, in part due to its abatement following the Muslim Uprisings and reorientation of trade toward Western manufactured goods.
In the early twentieth century, British interest in expanding this trade had not abated (see Turrell 1988) at least for purposes of political integration of this region under British aegis. In 1913, a British plant hunter noted that all of the goods for sale in Lijiang were of European or Japanese manufacture (Kingdon-Ward 1986 [1923]). He also noted the significant trade in musk (Kingdon-Ward 1986 [1923]). Indigenous farmers traded corn for salt in Tibet and Eastern Tibet, where not enough grain could be produced for the population (Kingdon-Ward 1986 [1923]). Everyone smoked tobacco although tobacco did not grow there, and he noted that with the introduction of cheap cigarettes from Yunnan the custom of smoking would doubtless spread even further (Kingdon-Ward 1986 [1923]). Chinese peddlers from the Mekong passed up the Salween through Burma selling salt, cotton-yarn, and Chinese clothes; many of these peddlers were multilingual (Kingdon-Ward 1986 [1923]). Other native peoples came to the Salween to trade musk, gold dust, a medicine from the root of Coptis teeta; and monkey and black bear skins for salt, Chinese cotton yarn, and a few Chinese garments (Kingdon-Ward 1986 [1923]). There were reports of gold washed in the beds of the Irrawaddy, Salween, and Mekong, found and bartered by Lolos and Lawas (an aboriginal people in northern Thailand and Laos) (Colquhoun 1970 (1885): 2).
At this point, despite the small scale of this trade, the British sought to encourage and expand it as one means of extending their political control into western Yunnan by integrating it with British Burma. Kingdon-Ward commented that “... the trade between the Chinese and tribesmen, which is at present insignificant, will increase rapidly now that the Indian Government has brought Hkamti Long [in Burma] under direct administration” and suggested that they encourage this trade and facilitate it by extending the road from Upper Burma to Yunnan and Eastern Tibet in order to encourage Burma’s trade with the indigenous peoples in competition with Yunnan, since the communications on the Burmese side of the frontier under British rule had become much better than those on the Chinese Yunnanese side (Kingdon-Ward 1986 [1923]). The Muslim Wars along with the introduction of Pax Britannicus in Upper Burma and pacification of Kachins who preyed on trade caravans had re-oriented the trade between China and Upper Burma. After the establishment of British control brought about increased safety of trade and better roads, the numbers of pedlars and caravans rose (Scott & Hardiman 1983 I:(2)462-5, 527).

Opium in Northern Mainland Southeast Asia
Economy and trade networks were profoundly transformed by opium as well as by shifting centers of regional and global trade. At a time when China was undergoing great social turbulence and Yunnan was only partially incorporated into the Chinese state (itself fragmented), opium as both a crop and a commodity flourished. This had a profound effect on the local people of the southwestern border areas.

History of Opium as a Trade Item
Opium was known in China by the Sung Dynasty and in the Ming dynasty it was in general use as a medicine, highly regarded for the range of illnesses it could treat: dysentery, diarrhoea, rheumatism, catarrh, coughs, leucorrhoea, dysmenorrhea, and spermatorrhea (Trocki 1999:20-21). It is possible that people of Yunnan used and grew opium long before the rest of China, having learned of it through contacts with overland traders from the Middle East (Meyer & Parssinen 1998:46). Some sources state that opium was planted in Yunnan in the sixteenth century and after the Ming, as well as by upland peoples of the rest of northern mainland Southeast Asia (Wang 1996:231). By 1400, opium was transported by both land and sea from Western to Eastern Asia, and until the late pre-modern period, both China and Europe imported the drug from Western Asia and (Trocki 1999:21). Indian opium was surely being traded to China by the beginning of the sixteenth century (p. 25). The early opium trade differed from modern trade in two very important respects: it was one of many high value exotic items carried in long-distance trade; and the people who bought it appear to have been ignorant of how easily they could have grown it themselves as poppy grows in a wide variety of conditions, even poor ones (p. 22). There are no reports of widespread drug addiction or a “drug problem” at this time, even where opium was cultivated. Nor was there drug use on an extensive scale (p. 26).
By the beginning of the nineteenth century, however, opium had been transformed from an exotic medicine to a “little luxury,” a recreational drug (Trocki 1999:37). By 1767 the British governed one of the major opium-producing regions of India, Bengal (Trocki 1999:44-45), and by the 1770s they had established a lucrative opium monopoly. Shipment and sale of the drug in Asia were left to British free traders (p. 47), that is, smugglers; the import of opium into China was illegal. For these traders, opium made up the imbalance of trade in luxuries of Asian origin to Europe. By the first decade of the nineteenth century, opium had become the most important item in their cargoes and accounted for fifty percent of their imports to China, where nearly all of the opium went (p. 50). With this foothold in economic control, the British opium trade continued to expand.
During the second half of the eighteenth century, the British began to dominate Asian trade and they did it largely by taking control of opium production and distribution (Trocki 1999:37). Western dominance was by no means a given. As discussed in the previous section, Chinese and other Asian trade was active and profitable well before Europeans came on the scene and Europeans were initially bit players in this regional market. Nothing much changed until global productive forces were significantly rearranged, and that did not occur until Europeans developed the drug trade that gave them a clear edge. By 1760 or 1770, opium trade began to transform the commercial and economic environment and by the late eighteenth century, or perhaps 1800, the European economic advantage over Asia had arrived (ibid.: 59).
Common wisdom regarding the British opium trade is that it ‘fixed’ the trade imbalance suffered by British traders buying Chinese luxuries (see, for instance, {Diller 2004}). Trocki argues that opium did far more than this: it brought about a radical realignment in the economic system. Opium was the keystone factor, “the one element in a larger system upon which the entire complex of relationships came to depend” (1999:58). It changed the nature of the political economy and was the foundation of British economic advantage (ibid.: 86). The consequences for British trade and empire were profound. The functions of banking, shipping, and insurance coalesced around the opium trade. “Not only did they service the opium traffic, but they became the foundation of a commercial infrastructure that ultimately supported a wide range of trade. In fact, the entire commercial infrastructure of European trade in Asia was built around opium” (ibid.: 52). Opium built empire and capitalism (ibid.: 52).
The opium trade further tied Asia into wider global economies, especially after the introduction of the clipper ships. These moved cargo and information faster, adding to the volatility of markets as news of opium suppression campaigns or annual harvests had a nearly immediate impact on prices. As early as 1837, the economies of Asia were linked to those of Europe and America; for instance, the crash in the opium market in early 1837 was, through global movements of silver, linked to roughly simultaneous financial panics in the U.S. and Britain (ibid.: 107).
A number of factors contributed to the rapid expansion of the opium trade. First was the innovation of smoking, which contributed to widespread addiction and a reliable market for opium. The innovation of smoking opium made it easier to ingest large amounts without losing consciousness and brought instant and more intense pleasure, which contributed to both the popularization of opium and the beginning of large-scale addiction (Trocki 1999:37).
Second was the global silver shortage in which the British, who had cornered Indian production, were able to use opium as a replacement for cash. After 1815, trade experienced a global silver shortage. The British found themselves in control of a commodity that could be passed off as easily as cash: opium. In response, from 1820 to 1880, opium production and exports skyrocketed as the British used opium as capital (Trocki 1999:61). This resulted in a radical realignment of economic power that allowed the British to control Asian trade.
Third was a period of intense competition between British and American opium traders in the 1820s, which resulted in lower prices and increased levels of addiction. British and American competition in the opium trade led to oversupply in the 1820s and a drastic decrease in price, which was critical to the spread of both opium use and production. Despite the complaints by free traders that this would ruin the opium trade, the increase in supply and fall in prices resulted in an increase in consumption (Trocki 1999:79). By the 1830s, steamers and the famed opium clippers had replaced the old country ships. They made possible the maintenance of a continuous flow of opium and other goods to China (Trocki 1999:51, 71). Low prices saw new users introduced to the drug and moderate users increasing their consumption (Trocki 1999:79). On the eve of the first Opium War, in the mid-1830s, there were perhaps 10 million addicts in China (W. Walker 1991:5).
In short, by the early 1800s, opium was a significant trade item into China, and the market continued to increase due to the innovation of smoking and market factors such as the silver shortage, which made opium an attractive alternative to traders, and trade competition that reduced the price of opium.

Chinese Opium Trade
The second half of the nineteenth century brought major readjustments in the opium trade. Trade grew rapidly after the Opium Wars, but it did not redound to British Indian companies’ benefit. Two factors were in play: the legalization of opium in 1858 and improvement in the quality of domestic opium. Domestic production and trade expanded rapidly, particularly finding a foothold in southwestern trade following the Muslim Rebellions and the consequent social and economic chaos.
Legalization of the import trade paradoxically gave impetus to domestic trade. The opium trade became less profitable for big companies because, legalized and less risky, it allowed small capitalists to get in on it (Booth 1996:151). As a result of legalization, the big British suppliers moved into other businesses they had started with opium profits – insurance, banking, shipping (Trocki 1999:118). The internal and local regional distribution of opium had long been in Chinese hands, and so it was compatible with local traders’s practices to take over the trade as production became domestic. Small scale traders had existing trade routes and good access to crops grown by Chinese and ethnic minority farmers, which increasingly included opium. In Yunnan, opium dealing was relatively common among Hui Muslim traders from the early eighteenth century (Wang 1996:248). Taiping Rebellion (1851-1864) rebel forces recruited among the opium traders in western Sichuan (Baber 1882:54). By the late 1860s, a good proportion of likin revenues came from a tax on the export of opium (Hall 1974:2). ustoms stations collected dues on cotton cloth and Yunnan opium (Baber 1882:79). In his travels in 1868, Baber met opium traders and local tusi considering entering the lucrative opium trade in order to meet the expenses of their position (Baber 1882:105, 166, 172). Later, in the 1910s, “tribes” on the Yunnan/Sichuan boarder traded opium and silver for rifles from the Chinese, although they then used the rifles to steal the opium and silver back from the Chinese (Teichman 1922:197).
China had become the largest producer of opium in the world by the beginning of the twentieth century (Trocki 1999:126). The British were dismayed by this turn. They rightly feared that it would cut into the India opium trade. Sir Rutherford Alcock, a British ambassador to Beijing, warned in 1871 that:
There is a very large and increasing cultivation of the poppy in China; the Chinese government are seriously contemplating ... cultivation without stint in China, and producing opium at a much cheaper rate. Having done that they think they will afterwards be able to stamp out the opium produce among themselves (quoted in Booth 1996:147).
The British suspected the Chinese government of encouraging the cultivation of cheaper domestic opium in order to erect a barrier against British imports with hopes of stamping out domestic opium later when it was fully under their control. And, indeed, the Chinese emperor revoked all remaining anti-opium edicts in an attempt to quash imports, which merely encouraged the use, trade, and cultivation of opium (Booth 1996:147-149). A British explorer saw no conspiracy here, however. Anderson wrote:
Such a result was never contemplated when the British, French, and American Governments pressed for the legalization of the import trade, but the very circumstance that the drug was removed from the category of contraband goods, and entered the empire on the same footing, or nearly so, as the articles of legitimate trade, doubtless suggested to such enterprising agriculturists as the Chinese some such reasoning as this: – This hitherto forbidden drug, which finds such a large and remunerative sale among our people, is now declared a legal import; why should we be dependent on a foreign market for a substance which we can grow equally well ourselves, and which we will be able to sell at a profit, and at a much lower rate than the imported drug? Why should all the fortunes that are to be made by its sale go to the merchants, and the agriculturists be denied any participation in them? There can be little doubt that the legalization contributed to increased consumption, while at the same time it excited competition. ...In such an eventuality, our opium revenue will dwindle, in a few years, to a mere pittance, and ultimately disappear as an item in the budgets of our financiers, who will have to discover some other and more reliable sources of income, and one more in accordance with the principles of an enlightened political economy, having in view the good of humanity at large, be it Mongolian or Aryan (Anderson 1871:71).
An observer commented regarding the movement in Britain for the abolition of opium in India that it would only encourage production in Yunnan: “If, however, they desire to give the strongest impetus to its growth in Yunnan, let them by all means discourage its production in India” (Baber 1871:184). The argument was, of course, that opium production in the hands of British was under better control than under the Chinese, an argument for a sort of ‘constructive engagement.’ It was a more than somewhat cynical justification for continuing the most important source of revenue for the Indian colonies.
The Chinese domestic product hit at British Indian profit margins (Booth 1996:147; see also Anderson 1871:72). Estimates of imports vis-á-vis Chinese domestic production vary, but it is clear that after 1890, the Chinese demand for Indian opium decreased (Trocki 1999:121). China was producing nine times the total import from India by the end of the nineteenth century (Trocki 1999:126) and from six to ten times as much as was imported from India by the beginning of the twentieth century (Trocki 1999:165). In the early 1900s, Indian imports stabilized at around 50,000 tons, from a high of 80,000 (W. Walker 1991:12-13).
The only factors that slowed the progress of the domestic opium trade in the mid- to late nineteenth century were the unsettled social and political conditions of the 1850s and 1860s, particularly the Muslim Rebellions, which hindered both commerce and agriculture (Trocki 1999:121). This effect was temporary; the upheavals ultimately favored the conditions for domestic opium trade. The prospect of rapid profits must have been a potent incentive to people impoverished and left homeless by the wars (Trocki 1999:123). Opium seems to have jump-started the economies of this region after the devastation of the Muslim Rebellions. After the mid-nineteenth century, the opium trade created new trade routes, settlements, and a new economy that ultimately proved the catalyst for trade and communication between central and outer China (Trocki 1999:125), thus re-orienting Yunnan’s economic focus from northern mainland Southeast Asia to China.
Researchers disagree about the market for Yunnan’s opium. It is generally believed that 95% of China’s opium production was being consumed by Chinese smokers (Trocki 1999:126), but that does not mean that the 5% exported did not originate in Yunnan. In the early 1910s, China began to export opium out of China (Booth 1996:159). McCoy states that most of Yunnan’s vast opium harvest had always been smuggled southward into Burma, Thailand, and Indochina, because it was too far from the large urban centers along the coast to market there (McCoy 1972:88). In contrast to McCoy, Hall states that most of the opium of Yunnan was exported to central China, writing of the period of 1989 to 1937 (Hall 1974:13), and thus exported out of the country. But from the Southeast Asian perspective in the early twentieth century, China was a source of imported opium. Opium was smuggled from Yunnan into Burma and Indochina (Hall 1974:13). In Burma, Chinese opium was considered superior to the local variety, and it was imported into Burma in large quantities by the hill tribes (Hertz 1912:102); at the very least, it was cheaper than the opium available to addicts through colonial and royal monopolies.
In fact, observers on the ground observed that the steady trade between Yunnan and Burma included opium. The trade of western Yunnan at this time was largely in cotton and opium and “monopolized” by (or under the protection of) Yang, General of Yunnan, and the King of Burma, but particularly Yang, whose large caravans manned by former soldiers Baber met with on his travels (1882:166, see also p. 92). At first, opium grown in China was inferior, but as it improved, its market in Burma increased. Anderson reported that a Colonel Burney noted a very inferior opium brought to Mandalay (Burma) in 1831 from a place two days’ journey from Tali (Anderson 1871:72), although by the late 1860s, the quality of Yunnan opium approached that of India.

Domestic Production
Chinese opium production for the markets began around 1820, particularly in Yunnan and Sichuan (Trocki 1999:96). There is no truly reliable information on the history or extent of opium cultivation in China at that time; we know only that the increasing consumption and import of Indian opium spurred domestic production. Some reports state that in 1800 Chinese domestic production was already greater than that of imported opium (Booth 1996:147), although Trocki does not support this. Small quantities were grown secretly as far west as Tali-fu in 1821 (Anderson 1871:71) although we do not know from this if production was for local, regional, or national markets. In 1830, poppy farming was also recorded in the provinces of Chekiang, Fukien, and Kwangtung (Booth 1996:147). By 1836, China was producing about 342 tons (5,000 chests), mostly from Yunnan and Sichuan. Yunnan alone was said to produce several thousands chests of opium annually (Trocki 1999:96). For comparison, British Indian opium production in 1820 was about 1,640 tons. By 1847, production in Yunnan and Guangxi was conservatively estimated at 12,000 chests (approximately 821 tons); by 1850, when the opium trade was still illegal, China as a whole produced about 20,000 chests of opium (approximately 1,368 tons) (Trocki 1999:120). Conversely, British Indian production figures tended to fall steadily from 1845 to 1856 (Trocki 1999:121).
Domestic production began in the southwest of China, largely in Sichuan, Yunnan and Guichou, and remained there for several decades (Trocki 1999:119). These provinces were largely independent of the authority of the central government (Baber 1882:71). By 1860 there was a considerable increase in poppy cultivation, apparently successfully hidden from (or ignored by) local authorities (Booth 1996:147). In Burma, British officers noted that opium was common crop in Yunnan and by the 1860s cultivated within 100 miles of what they considered their borders, which concerned the British administration “...which [had] derived such a large portion of their revenue from the monopoly of opium” (Anderson 1871:70-71). Opium was certainly common and extensive in Sichuan and Yunnan within a decade of legalization. Baber was astounded at the extent of poppy cultivation. As far as he saw, opium was the sole agricultural export for the people of the far west of Sichuan and Yunnan. He wrote:
...wherever cultivation existed we found numerous fields of poppy. Even the sandy banks were often planted with it down to the water’s edge; but it was not until we began our land journey in Yunnan that we fairly realised the enormous extent of its production (Baber 1882:183).
He continued:
We walked some hundreds of miles through poppies; we breakfasted among poppies; we shot wild ducks in the poppies. Even wretched little hovels in the mountains were generally attended by a poppy patch (Baber 1882:184).
Throughout his travels in the far west bordering with Tibet and Burma, he found opium thriving in every type of soil (Baber 1882:4, 87, 166, 171, 174). It was planted in December or earlier, the plants were sprouting by January at the latest, and the petals of the ripened flowers were falling by May (ibid.: 183). In Sichuan along the Tibetan border in 1877, the valley of Liu-sha was renowned for its opium (ibid.: 44). South of Hu-pei and Sichuan, a very valuable form of native opium was produced (ibid.: 183). Sichuan farmers produced a great deal of opium by the late 1860s and around the T’ung, opium poppies with brilliant red and purple flowers grew profusely in the lower-lying glens of the wild craggy mountains (ibid.: 4, 44-45). One of the ‘natural curiosities’ in this region were the opium ducks, wild ducks that fed on the poppy plants and so were languid and soporific from the narcotic (ibid.: 184). Even during the imperial suppression, opium was grown in remote parts of Yunnan and may have been particularly grown by non-Han peoples who resisted Han penetration and control (Hall 1974:8). Opium was also being produced in quantity on the plains of Mêng-hua, at the head of the Red River in southern Yunnan (Davies 1909:147).
Domestic opium once had been considered of lower quality, and commanded a lower price of about half the price of Indian opium and so attracted a poorer user (Trocki 1999:21, 96). But the quality of Chinese opium improved after the mid-nineteenth century. Legalization gave impetus to increased quality of opium, such that it became possible for it to compete with Indian imports. An envoy from the Indian Board of Revenue was dispatched to study the situation in 1868 and reported an alarming increase in quality and use of domestic opium (Booth 1996:148). By the late 1860s, the Opium Examiner to the Government found that opium from “Western Yunnan” was at 35 grains of morphia per 1000 grams; that for Benares was 39 and for Behar 37. Extraction of morphia was 42% for Yunnan opium 43.33% for Benares opium and 44.66% for Behar opium (Anderson 1871:72). Opium from Yunnan that came to be prized for its quality (Meyer and Parssinen 1998:45). A local gazetteer of the nineteenth century said that the fame of Yunnanese opium was known throughout the land (Hall 1974:3).
It quickly entered the western consciousness that Yunnan was a major opium producer devoting one-third of its cultivation to poppy. Baber estimated that poppy fields constituted one-third of the whole cultivation of Yunnan in 1877; he stated that he had probably under-estimated the proportion (1882:183-184). Another source argues that as early as 1875, one-third of the arable land of Yunnan was devoted to opium poppies (Anderson 1993:116). In 1888, The Times (London) stated that one-third of Yunnanese cultivation was devoted to poppy fields (Booth 1996:148). Regardless of the validity of this figure of “one-third,” it is clear that opium poppy had become a major cash crop in Yunnan. Opium was suitable to the region, politically, economically, and ecologically.
Chinese domestic production probably did not match surpass imports until after 1870. From the 1870s on, domestic opium cultivation expanded at an extraordinary pace and by the end of the nineteenth century it had become an enormous enterprise in the southwestern provinces as well as in parts of Southeast Asia where Chinese immigration exploded after the uprisings of the 1850s, especially the Taiping Rebellion (1851-1864) (Trocki 1999:123, 142). Between 1870 and 1906, domestic production is estimated to have increased by five times. By 1879, Sichuan, Yunnan, Guichou, Shanxi, Shenxi, Kansu, Honan, Guangxi, and Sinjiang were producing nearly 90 percent of China’s domestic opium crop and they maintained this market share until the 1911 Revolution (p. 123). By late 1890s, cultivation was booming (Hall 1974:2). By 1908 production in all of China was between 30,000 and 40,000 tons annually. In December 1888, The Times (London) stated that in the previous year opium had been produced throughout all of China (Booth 1996:148). China had an opium economy, but it was of longer time period and more entrenched in the border regions of Yunnan and Sichuan. There, opium had become an integral element of farmers’ agricultural economic strategies.
Opium continued to be grown on a small scale in the remote far west parts of Yunnan, where people were not under the effective control of the central government even in periods of interdiction (Hall 1974:8). Opium production returned and increased in the 1920s and 1930s in Yunnan and Sichuan; here, upland minority peoples as well as Han migrants grew opium. In fact, the 1920s marked the beginning of an increase in the importance of opium in western Yunnan societies, especially those outside of complete Han control. That peaked in the 1940s (Hill 2001: 1037-39).
Opium cultivation in the twentieth century waxed and waned in response to its legal status and the extent and nature of central political control. There were recurrent campaigns to end opium production. The most important was that in 1906 under the Qing (Meyer and Parssinen 1982:2; Walker 1991: 14-15). It was locally successful for a time and by 1911 in Sichuan, hardly a poppy was to be found (Trocki 1999:129) or in Yunnan by 1910 (Meyer and Parssinen 1998:46). Still, landlords and local officials benefitted so much from the trade that they generally avoided active opium interdiction and still compelled tenants to grow some (Trocki 1999:128; Booth 1996:158-9). In A-tun-tzu, a frontier town on the China-Tibet border, the civil officer who carried out his duties to end opium smoking was characterized as dour and ascetic, and universally hated (Kingdon-Ward 1986 [1923]:61).
With the fall of the Chinese Empire and the rise of the Republic, there was little consistency in policy. Local officials and military leaders increasingly depended on opium revenues to provide needed income after the transition to the Republican government in 1911 (Meyer and Parssinen 1998:47). Provincial and regional landlords dominated the southwest throughout and after WWI. The tax revenues from revitalized poppy cultivation were basic to their hold. Opium production and taxation supported political parties as well. Opium production in Yunnan increased by 50% in 1922; by 1923, opium was openly grown throughout the south and southwest; and by 1929, opium shipments even received military protection (W. Walker 1991:30-35, 48). Attempts to curtail or control the opium economy usually function more to channel opium revenues into the hands of the central government (W. Walker 1991:26). The opium economy was possible in part because little was done to dismantle channels of distribution, which were long-established and well-organized along pre-existing trade routes (Booth 1996:159) that had long carried legal, illegal, and not-so-easily categorized trade items.
The opium economy dominated Yunnan and Sichuan from the 1920s to the early 1950s, ebbing and flowing with regional and international political and economic conditions. Opium had become the cash crop of choice in areas where there was political unrest. Opium, once the economic foundation of a colonial empire, had become the economic support of revolution and the fiefdoms of warlords. It became embedded in the economy of political turmoil and social disruption, a patterns that continues in parts of Southeast Asia.

Summary
Even after World War II, a wide range of trade continued to pass through western Yunnan. Lijiang was a particularly important point of trade (along with Dali). Western observers attributed the strength and importance of these overland routes to the closure of the ‘usual’ routes by the Chinese civil war and then World War II (Goullart 1955). However true, this would have been more of a revival of historically important trade routes, part of an ebb and flow of trade routes in relation to political and external economic conditions that had occurred for millennia.
Thus we see the shrinking of the trade due to unsettled social conditions and the reorientation of that trade from Burma and the Tai polities to Central China (Giersch 2001:73) and the West in the context of new definitions of worthwhile trade – larger scale and profitable. We also see the introduction of opium as an important overland trade item between Yunnan and Burma.
Opium played a significant role in this re-shaping of historical trade patterns. By the late 1850s, China was producing a significant opium crop. However, there is some evidence that opium was being produced even earlier in the far southwest region where imperial control was weak, and economic and ecological conditions supported both opium trade and cultivation. Opium had become an important cash crop in Yunnan by the late nineteenth century and was one of many items carried in overland routes (Anderson 1871:93, 124, 133-4, 221, 183-4; Baber 1882:4, 79). But when opium became a global cash crop produced in Yunnan, it came to dominate trade and economy.
In terms of trade, Yunnan was ‘a place between,’ in which was negotiated commercial, political, and social relationships, creating new patterns of interaction. Some see this as a middle ground where Southeast Asia met China at a frontier that eventually became Chinese (Giersch 2001:73). Lee (1982a, 1982b) has pointed out that by the mid-nineteenth century, the demographic face of Yunnan had been transformed into one in which Han Chinese dominated and indigenous peoples had become minorities. Ordinary Han citizens saw opportunities for trade and did not perceive the differences of Yunnan as significant obstacles (Mote 1999:953; Giersch 2001); it appears to have entered the Chinese popular imagination as a place in which riches could be made. Yet Yunnan had been a ‘frontier’ for millennia, a crossroads of trade and therefore of cultural influences. To view it as a static place inalterably transformed by its confrontation with China does little justice to the importance of its trade, natural resources, and especially the fact that commercial, political and social relationships were constantly being re-created in this area in which Tibet, China, Burma, Shan, Lue, Naxi, Lisu, and countless other peoples from near and far met. As a result, the people of Yunnan were not isolated. Trade was an essential part of their ecological adaptations, whether as peddlers, traders, muleteers, protectors of mountain passes, or robbers and brigands. The peoples of Yunnan were exposed to a wide range of peoples, cultures, and ideas.

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