For centuries China had sent more goods and inventions to Europe than it had received, and such was still the case in the early nineteenth century. Trade with Europe was carefully regulated by the Chinese imperial government — ruled by the Qing (ching), or Manchu, Dynasty in the 1800s — which required all foreign merchants to live in the southern port of Guangzhou (Canton) and to buy and sell only to licensed Chinese merchants. Practices considered harmful to Chinese interests were strictly forbidden.

By the 1820s, however, British merchants were flexing their muscles. Moreover, in opium the British found a means to break China’s self-imposed isolation. British merchants smuggled opium grown legally in British-occupied India into China, where its use and sale were illegal. Huge profits and growing addiction led to a rapid increase in sales. By 1836, the British merchants in Guangzhou aggressively demanded the creation of an independent British colony in China and “safe and unrestricted liberty” in their Chinese trade. They pressured the British government to take decisive action and enlisted the support of British manufacturers eager to gain access to Chinese markets.

At the same time, the Qing government decided that the opium trade had to be stamped out. In 1839, it sent special envoy Lin Zexu to Guangzhou to deal with the crisis. Lin Zexu punished Chinese who purchased opium and seized the opium supplies of the British merchants, who then withdrew to Hong Kong. He sent a famous letter justifying his policy to Queen Victoria in London.

The British merchants appealed to their allies in London for support, and the British government responded. It also wanted free, unregulated trade with China, as well as the establishment of diplomatic relations on the European model. Taking advantage of its control of the seas, Britain occupied several coastal cities and in the first of two Opium Wars forced China to give in to British demands. In the Treaty of Nanking in 1842, China was required to cede the island of Hong Kong to Britain, pay an indemnity of $100 million, and open up four large cities to unlimited foreign trade with low tariffs.

With Britain’s new power over Chinese commerce, the opium trade flourished, and Hong Kong developed rapidly as an Anglo-Chinese enclave. But disputes over trade between China and the Western powers continued. Finally, the second Opium War (1856–1860) culminated in the occupation of Beijing by British and French troops. Another round of one-sided treaties gave European merchants and missionaries greater privileges and protection and forced the Chinese to accept trade and investment on unfavorable terms in several more cities.