By All Means Necessary (3 page)

Despite the fact that alarming claims are frequently unsupported by reality, then, China's resource quest still poses important challenges. Sorting through the varied and rich territory of China's resource quest—the task of this book—is essential to responding intelligently to these challenges, whether as an individual, business, or government. But indiscriminate hype about Chinese activities, far from sounding a useful alarm, only distracts from those problems that are genuinely important. Were all the claims about China's resource quest true, it would be so overwhelming as to be all but impossible to formulate an effective response. And if none of it were true, no response would be necessary. Distinguishing the real consequences of Chinese behavior from the mass of imagined possibilities is thus essential if people and countries around the world are to adapt and respond effectively to China's ever-changing—and sure to continue—quest for natural resources.

THE STORY OF CHINA'S
resource quest begins not with China's emergence in the 1980s and 1990s, or even with the founding of modern Communist China in 1949, but rather centuries ago when China was last a global power. Indeed, even as Chinese strategists craft novel paths forward today, many facets of modern Chinese efforts to secure resource supplies have roots in centuries of traditional Chinese statecraft and economic practice.

Chinese emperors during the Ming (1368–1644) and Qing (1644–1911) dynasties and successive Chinese leaders in the twentieth century often looked beyond China's borders to secure resources for their people, yet were ambivalent about relying too greatly on the outside world. Rules and regulations governing resource trade thus changed frequently and sharply depending on the preferences of individual Chinese rulers. In addition, the link between resource shortages (particularly of grain) and social unrest shaped Chinese resource policy, contributing to Chinese rulers' fear of the market and desire to control resource access and allocation. The Chinese resource trade was also tightly bound into a set of broader political and diplomatic understandings and objectives; decisions regarding trade were often driven less by Chinese economic strategy than by China's broader view of the world and its place within it. Finally, the Chinese state traditionally sought to capture significant economic benefits from the resource trade and to prevent local officials and businesspeople from profiting too much. This produced ongoing political battles between the center and periphery, and
it contributed to corruption as local officials and businesspeople sought (often together) to seize as much profit as they could.

Chinese imperial management of the resource trade from the Ming dynasty through the Qing reflected deep ambivalence with regard to China's relations with the world outside. The country's willingness to engage with the outside world and economy—to welcome outsiders in and send those inside out—waxed and waned through the centuries. The benefits of engagement were balanced by a fear that the country could become overly dependent on unreliable foreign partners, as well as a fear that too much foreign knowledge, technology, and integration would undermine the essence of what it meant to be Chinese.

During the Ming dynasty, for example, various emperors adopted radically different approaches to the outside world. Emperor Zhu Di (the Yongle Emperor) gained fame for the seafaring exploits of his eunuch, Admiral Zheng He. Sailing on ships that were among the largest and most sophisticated in the world, Zheng traveled through the South China Sea and the Indian Ocean as far as the Maldives and coastal East Africa, demonstrating the emperor's power and wealth and collecting treasures in the process.
¹
Zhu Di's motivations for this outward orientation have been described by China scholar Wang Gungwu as a combination of “treasure hunting, tribute seeking, court rivalries, and personal imperial vanity, ” but official Ming history states that the emperor was driven by a desire that “none of the ten thousand countries in distant lands should not be his subject.”
²
Yet Zhu Di's successors closed the door to such expeditions, banning further explorations and destroying his world-class ships. More restrictions were placed on Chinese merchants, first preventing them from engaging in overseas trade in particular goods, and then banning overseas trade entirely. Trade became acceptable only in the form of tribute.
³
Later Ming rulers argued that the sea “represented problems, not opportunities.”
⁴

With the fall of the Ming dynasty in 1644 and the ascension to power of the Qing, China once again looked outward to grow its resource base, but it still retained a deep-seated unease over Chinese
interaction with foreigners. The Kangxi Emperor, whose reign from 1661 to 1722 made him the longest-reigning emperor in Chinese history, expanded China's resource base by launching military expeditions to the south and west, incorporating Xinjiang, Taiwan, and the Miao territory (in modern-day Guizhou Province). Taiwan, in particular, became an important source of rice and other resources. Chinese settlers moved in to claim large tracts of land for rice cultivation that had been used as aborigines' traditional hunting grounds. Fierce battles ensued in which the Chinese established aborigine battalions, which they designated as “cooked” (tame), and sent them to attack the “raw” (wild) aborigines who refused to submit to imperial authority. The settlers developed rice plantations in the newly acquired territories and exported the rice to shortage-prone areas on the mainland, particularly Fujian, which was only eighty miles from Taiwan.
⁵

By the mid-1700s, trade flows between China and Southeast Asian countries included substantial Chinese imports of raw materials and food, particularly rice. China imported rice, wood, and raw materials for medicine from Siam, for example. Silver also became an important import; China's silver mines supplied only one-third of the country's stocks, and the rest was imported from Japan, Mexico, Peru, and India.
⁶
China was so prosperous during the first half of the Qing dynasty that the American Charles Thomson proposed in 1768 that America look to China as a model of successful development.
⁷

As China's rulers expanded the reach of their resource trade, they also attempted to keep a tight rein on the overall management of those resources, controlling in some cases where merchants and businesspeople traded and invested, the prices they charged, and how resources were distributed.
⁸
Chinese rulers maintained monopolies (or near monopolies) over valuable resources to ensure not only that any economic activity benefited the state before enriching private players but also that resources were sufficiently available to maintain political stability.

Foreign trade was subjected to a wide array of regulations to ensure that central government coffers were the primary beneficiaries. During the early years of the Ming dynasty, officials financed overseas trade and then took 70 percent of the profit. Eventually, however, they made the state the only legal entity engaged in foreign trade and forbade their citizens from going overseas. By 1394, ordinary Chinese were not permitted to use foreign goods.
⁹
Despite its best efforts, however, even during this most restrictive period, Ming rulers never fully monopolized the resource trade.

Qing rulers also sought to prevent local officials from gaining too much wealth and power. For example, the Qing set up only four maritime customs offices to handle foreign trade and established steep tariffs on foreign goods.
¹⁰
During much of the Qing's reign, local officials managed trade, sharing in the merchants' profit and sending a portion to the emperor as maritime customs revenue.

In all these efforts, the most important resource was grain. Grain shortages, or even just the fear that grain prices might rise, could lead to riots in Chinese cities.
¹¹
To stave off unrest, imperial and local officials issued directives aimed at ensuring adequate grain supplies. Soon after the establishment of the Ming dynasty, Emperor Hongwu declared “Agriculture is the foundation of the nation” and embarked on an effort to achieve economic self-sufficiency.
¹²
Despite such intentions, as the Ming population expanded from 103 million to 308 million, Ming farmers began growing specialized crops such as silk and thus needed to import rice from surrounding areas to sustain the food supply.
¹³
Later, when tobacco production began to rise during the Qing, the emperor attempted to limit its development, declaring “Tobacco is not healthy for the people, and because cultivating tobacco requires using rich land, its cultivation is harmful for growing grain.”
¹⁴

Despite officials' best efforts, grain shortages persisted. Guangdong, for example, became a “chronic food-deficit region, ” producing only one-half of the rice needed to meet its people's needs because the farmers there continued to plant more profitable commercial crops such as sugarcane, tobacco, and indigo. As a result, it
needed to import the rest from within China and from other regions in Southeast Asia.
¹⁵

As part of its efforts to acquire resources, the Ming also embarked on an aggressive acquisition campaign in the border states of Guangxi and the southwestern part of China. Soldiers and settlers expropriated land from ethnic minorities, and farmers were ordered to relocate to take advantage of newly acquired territory.
¹⁶
Although some reports at the time portray a positive picture of ethnic Chinese commerce in the newly acquired regions, historians of the period also decry the Ming farmers and other settlers' “displacing aborigines and local people, ruining upland areas, and reducing forest lands.”
¹⁷

Throughout history, Chinese rulers have embedded their trade and economic relations in a much larger context of Chinese diplomacy and a sense of their place in the world. China's diplomacy reflected the belief that China, as the Middle Kingdom (
Zhongguo
), would shape the less-civilized world through its interaction. At the same time, rulers controlled interactions with foreigners, a reflection of fear on their part. The movements of the foreign emissaries were highly circumscribed from the moment they arrived. They were not, for example, permitted to travel within the country. Some Chinese rulers, such as those during the Qing dynasty, believed that trade could be used by outside forces to learn about the state of the empire's defenses. Chinese citizens were not permitted to go overseas in a private capacity, except if engaged in the copper trade with Japan, and shortly thereafter not permitted to live overseas.
¹⁸

China's ability to manage its diplomatic and economic relations with the outside world diminished dramatically, though, as a result of the Opium Wars (1839–1842 and 1856–1860). Although estimates vary widely, by the mid-1800s between four and twelve million Chinese were addicted to British-produced opium.
¹⁹
The Opium Wars pitted Great Britain, which sought to maintain its lucrative opium trade, against China, which wanted to ban the trade. Opium was devastating to the Chinese people, particularly young men in
the coastal regions, and it drained silver from government coffers. The military battles that ensued revealed the weakened state of the Chinese forces and the superiority of the British.

In the wake of military losses, China was forced to sign a series of treaties, which became known in the nation as the “unequal treaties” and led to greater integration with the world economy. The first of them, the 1842 Treaty of Nanking, was signed with Great Britain. It opened additional Chinese ports to foreign trade, ceded Hong Kong to Britain, and granted extra-territorial rights to British citizens in China. China then signed similar treaties in rapid succession with the United States and France. The 1858 Treaty of Tientsin further broke down Qing protection against foreign involvement in China's economy. It gave foreigners the right to travel in the interior provinces of the country, allowed foreign ships access to the Yangtze River, and opened up ten new ports, including Taiwan, to foreign trade. Several trade restrictions, however, remained. For example, the major southern port city of Canton was open for trade only from October to January, and ships sailing to Canton were required to undergo numerous inspections and pay fees and extra tariffs.
²⁰
In addition, all trade items had to be approved a year in advance, and prices of goods were fixed by Chinese merchant guilds, eliminating any room for open competition or bidding.

Just as the Qing grappled with the loss of its monopoly on foreign trade, the empire also gradually lost control of its natural resource monopolies at home as a result of both political and economic forces. As overpopulation spurred a rise in poverty and famine, China became the perfect breeding ground for social unrest. In 1850, a charismatic young man, Hong Xiuquan, claiming he was the younger brother of Jesus Christ, led a rebellion against the Qing and threw southern China into a brutal civil war. At least twenty million died before the Taiping Rebellion was finally quelled in 1864 with the help of foreign forces from England and France.
²¹
And by 1900, the nativist Boxer Uprising had resulted in the death of more than two hundred foreign diplomats, businessmen, and missionaries in several areas of northern China.
²²

At the same time, China's economy and relationship with the outside world was transformed. Resource-based economies within China, such as that of Taiwan (incorporated into China just a century earlier), became far more profitable. Taiwan transitioned from an agricultural economy that produced primarily rice and sugarcane for the mainland into a commercial agricultural economy, creating new and important sources of production for tea and camphor. By the 1890s, Taiwan boasted two-thirds of the world's camphor supply.
²³
Through its forceful acquisition of Taiwan, the Qing thus turned the island from a potential source of costly resource imports into a vital source of export revenue for Peking, which desperately needed money to pay the indemnities resulting from the various unequal treaties. By the start of World War I, ninety-two Chinese cities were formally open to foreign trade, with many hosting foreign banks, manufacturers, insurance firms, and more. Trade flourished as rice from Siam, opium from India, and silver from Mexico poured into the country. At the same time, silk, tea, and porcelain went out.