Friday, August 24, 2007

China as a Dollar grave?

In the early 18th century, Britain ran a huge trade with China because of its insatiable demand for Chinese goods. It paid for all of these goods – largely tea and silk – with silver. According to this wonderful BBC program, the imbalance became so large that “China was referred to as the silver grave of the world, because every silver dollar that is minted would end up in China sooner or later.”

At some point, the British had the brilliant idea of marketing more opium to China. As per Wikipedia:
“In an attempt to balance its trade deficit Britain began illegally exporting opium to China from British India in the 18th century. The opium trade took off rapidly, and the silver flow began to reverse… when China attempted to enforce her laws against the trade, the conflict erupted.”
.. thus the Opium Wars of 1840-1843 and 1856-1860.

It’s too tempting not to draw a parallel with today, and wonder (with tongue lightly in cheek) about China as the new dollar grave of the world…

Of course, in the 18th century, financial markets were not sophisticated enough for say, the Chinese to use the silver to buy shares in the British East India Company, or finance British government debt.

Nor is Chinese military power in such a relatively weak position today…

Nonetheless, I wonder if there if the Chinese leadership, famous for its long view of history, still has the Opium wars in its conscious memory as it goes on its foreign buying sprees

1 Comments:

Blogger Sabsay said...

nice post.
nice analogy... never realizeed the impact of the chinese was that large back then.
What were the english buying?
Best
dr

September 10, 2007 12:22 PM  

Post a Comment

Links to this post:

Create a Link

<< Home