When the Spanish started mining silver in Mexico in the 16th century not all of it went back to Europe. The Spanish also sent some across the Pacific to China to trade for tea, silk and other Chinese goods. Eventually other European nations also started trade with China. The Chinese had two rules for this trade. Trading could only be done through one Chinese city which the Europeans knew as Canton and the trade had to be done with silver. In the late 18th century the British were heavily influenced by the free trade theory of Adam Smith and wanted to open China to European goods. The King of England sent a letter to the Chinese Emperor but the response was ‘Thanks but you have nothing we want’. After the the Napoleonic wars in Europe were over the English finally found an item they could trade in China…opium. The Chinese government was well aware of the effects of opium and had made it illegal but that did not stop the British. The British had also taken over parts of India which was a perfect area to stop the growing of cotton (which was hurting their cotton industry) and instead grow opium for the Chinese market. Now the silver trade balance which had been all import into China became decidedly export out of China and into Europe. As the Chinese economy suffered from both the trade imbalance and the effects of the opium on its population the Chinese government decided to take action. They confiscated opium in warehouses, burned it, and then continued to effectively stop the sale of the opium. The British government was not happy and the opium wars with China ensued from 1839-1842. The Chinese military was no match for the British and the ensuing treaty was a disaster for China. The Chinese agreed to open 5 ports for trade and Hong Kong was leased to the British for 100 years, which was later extended. British citizens were no longer subject to Chinese law but were to be punished by the British court system. Missionaries were also now free to enter China. China also signed treaties with other Western countries and any privileges granted to any one nation were also granted to every other Western nation under the provision called the “no most favored nation” clause.

(The Great Courses – From Yao to Mao: 5000 Years of Chinese History)