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Despite Chinese efforts to restrict European traders and citizens to Macau, European trade spread throughout China. The Canton System supported European trade with China. It also forced large amounts of direct trade between European merchants and Chinese civilians. Europeans, generally employees of major trading companies (most importantly the British East India Company), had to trade with an association of Chinese merchants known as the Cohong. The emperor appointed an official called the Hoppo (the spelling at the time of 戶部, Hubu, which was short for 粵海關部, Yuehaiguanbu), to take charge and collect taxes from the goods traded. The position also overlooked whether the trades went accordingly. The hoppo was responsible for merchant relations on behalf of the Qing court. It was an important position since Western merchants were not allowed to communicate with the emperor directly.
The European (and soon the American) presence was restricted to the Thirteen Factories on the harbour of Canton (Guangzhou) during the trading season, but the foreign traders were permitted to remain on Chinese soil at Macau in the off-season (a mitigation of earlier Chinese restrictions on trade, which had banned foreign residence in the off-season).
The first trade that existed with China was for silks, porcelain ("fine china") and most lucratively tea. It was the incredible financial deficit caused by European demand for tea that spurred the British to begin shipping opium to China from its colonies in India. (While only silver was allowed for trading, opium was initially tolerated. See First Opium War - Background.)
Despite Britain's growing apprehension at the Canton System, revenue from opium eased British resentment, and the system remained intact until the Opium Wars, which established "treaty ports" in accordance with the Treaty of Nanjing. Each of these ports was governed not by Chinese laws but rather the laws of the country controlling the port.
By the time Hong Kong became a full-fledged British Colony, many of the merchants would be led by a newer generation of western hong merchants. Many of these companies would become the back bone of the young Hong Kong economy.
- Economy of China
- Economic history of China (Pre-1911)
- Economic history of China (1912–1949)
- Colonial Hong Kong
- English East India Company
- Danish East India Company
- Dutch East India Company
- Maritime Fur Trade
- Swedish East India Company
- Sydney punchbowls
- Old China Trade
- Thirteen Factories
- Louis Dermigny, La Chine et l'Occident: le commerce à Canton au XVIIIe siècle, 1719-1833. Paris: SEVPEN, 1964.
- Liu Yong, The Dutch East India Company's Tea Trade with China, 1757-1781. Leiden and Boston: Brill, 2007. ISBN 90-04-15599-6
- Hoh-cheung Mui and H. Lorna Mui, The Management of Monopoly: A Study of the East India Company's Conduct of Its Tea Trade, 1784-1833. Vancouver: University of British Columbia Press, 1984. ISBN 0-7748-0198-0
- Paul Arthur Van Dyke. The Canton Trade: Life and Enterprise on the China Coast, 1700-1845. Hong Kong University Press, 2005. ISBN 9622097499.
- Paul Arthur Van Dyke. Merchants of Canton and Macao: Politics and Strategies in Eighteenth-Century Chinese Trade. Hong Kong University Press.2011. ISBN 9789888028917
- Zhuang Guotu, Tea, Silver, Opium and War: The International Tea Trade and Western Commercial Expansion into China in 1740-1840. Xiamen: Xiamen University Press, 1993.