It became so popular that by 1794 Britain was buying nine million pounds each year. The big problem, for Britain, was that the Chinese would only sell tea for silver, and so large amounts of silver were leaving the country. In order to stop this imbalance, the East India Company began to smuggle opium into China illegally, for which they could demand payment in silver. This illicit traffic was fiercely resisted by the Chinese authorities, and led to Britain declaring war in 1840 to force China to buy the drug
By the late eighteenth century tea purchases dominated the China trade and accounted for more than 60 percent of the East India Company’s purchases. The Imperial Chinese authorities required all purchases to be made in silver. With English silver increasingly in short supply, European traders began to bring Indian opium to China, which they sold for Chinese silver dollars and then used the silver dollars to finance their purchases of tea.
Meanwhile the English traders were becoming dissatisfied with the services available to them from Macao and the Ch’ing were becoming increasingly nervous about the growing European presence in Canton and the spiraling opium trade.
In 1796 an edict totally banning the drug trade was issued but was ignored by the foreign traders. As the trading environment in Canton deteriorated, Lintin Island developed as the preferred transit point for the European clippers bringing opium to China. Lintin Island, lying in the mouth of the Pearl River Estuary northwest of Lantau Island and northeast of Macao, was known as the ‘outer anchorage’.
Being in the outer waters of the estuary it was beyond the jurisdiction of both the Chinese and Portuguese authorities yet within easy reach of the Bocca Tigris and the river passage to Canton. Ships bound for Canton would wait at Lintin for their cargo to be measured and for their Imperial custom fees to be collected.
They also unloaded their opium here. But the lack of shelter during the monsoon season made the anchorage perilous and the sheltered harbour of Hong Kong to the southeast looked increasingly attractive to the opium clippers, schooners, sloops-of-war, barquentines and brigantines on the China coast.
From 1821, as the Ch’ing prohibited the importation of opium into Macao and Whampoa, hulks were anchored at Lintin as floating depots and warehouses for the inbound opium cargoes. Chinese smugglers would then carry the opium to Canton and other ports in smaller boats. Once the opium had been offloaded at Lintin the clippers would continue on to Whampoa to unload their legal cargo and purchase tea. By the 1830s Lintin had become the trading base for the British in Southern China
They would sell Europe their silk, tea and porcelain, but would buy nothing in return.
Because Chinese goods were so sought-after in Europe, an imbalance of trade developed. European gold and silver went to China to import goods, but none returned because there was no possibility of export. This was unacceptable to the British and they desperately looked for a solution.
The solution to Britain's problem was opium. Although opium had been used in China for medicinal purposes for a long time, it had not been used as a recreational drug. The British introduced opium to China in 1825, and soon, not surprisingly, Chinese began to be addicted to the drug. The emperor outlawed the possession, use, and trade in opium, but the profits were so immense, that an illegal trade quickly developed. The East India Company in India supplied all the opium the Chinese wanted and the Chinese government was unable to stop the smuggling. The balance of trade gradually reversed.
---- The Opium War and Its Background Despite strict government regulations, foreign trade in China expanded during the late 18th century and early 19th century. As trade grew, the West found themselves to have a large and rising trade deficit with China. They were increasingly anxious to balance their trade. Yet the Chinese, having a self-sufficient econom, showed little interest in Western products. Finally, in 1820, the West found a product which China did not have, opium. Between 1829 and 1855, opium smuggling developed rapidly along China's South Coast. In 1820, 9,708 chests of opium was smuggled in per year. 15 years later, the smuggled opium rose to 35,445 chests, a growth of 400%.
In the 1830's, opium had became a vice in China. Virtually all men under 40 smoked opium. The entire army was addicted. It affected all classes of people, from rich merchants to Taoists. The total number of addicts in China in the 1830's was as high as 12 million. Due to the smuggle of opium, the trade deficit Western countries had with China quickly turned into a trade surplus. China could not export enough tea and silk to balance the trade. Instead the difference in trade was made up by the export of Chinese silver, which was highly valued for its fine qualities. In the 1835-1836 fiscal year alone, China exported 4.5 million Spanish dollars worth of silver. In 1839, the Chinese opium smokers spent 100 million taels, while the government's entire annual revenue was only 40 million taels. The drain of silver greatly weakened the Chinese government. One government official wrote, "If we continue to allow this trade to flourish, in a few dozen years, we will find ourselves not only with no soldiers to resist the enemy, but also with no money to equip the army."2 ---------
Lin ordered the destruction of a large supply of opium stored on Chinese soil. (The Chinese had allowed the British one port in which they could trade with China).The British were outraged, and the first Opium War began. Faced with British industrial weaponry, it was no contest, and Britain easily defeated the Chinese. As part of the settlement of the war, China was forced to agree to open up new ports for trade, and to surrender the island of Hong Kong. A second Opium War was launched by Britain in 1856, forcing more concessions on the Chinese. Among other humiliations, the Chinese government was no longer able to hold foreigners accountable under Chinese law for crimes committed in China. The proud Central Kingdom had lost the ability to control trade and foreign nationals within its own borders.