The South China Sea World-Economy
The Portuguese arrival in 1511 at Malacca at the western edge of the South China Sea was violent. When they discovered a Chinese commercial community already based there and handling a brisk trade, they decided to treat them as their main competitors and do what European traders as a general practice did to their competitors: kill them and take over their business.
This is why the South China Sea became a critical zone for the eventual integration of the Ming economy with the global economy. The tribute system allowed foreigners to enter China as tribute bearers, but it also required them to exit. Foreign merchants were forbidden from residing in the realm on a permanent basis, and the Ming had the military power to enforce this condition. Anyone who wanted access to the Chinese markets, whether to buy or to sell, had to go through state channels and establish a bilateral relationship, the terms of which the Ming always controlled(snipe)
And so a zone of circulation had to emerge to manage the sale of Chinese commodities leaving China and the foreign imports entering. What emerged around the South China Sea, and what the Portuguese became part of, was a network of multilateral exchanges among merchants tied for the most part to states that submitted tribute to the Ming, but who developed an intra-regional trade in which Chinese manufactures and grain were the leading trade goods.
This trading arrangement rested on one economic condition and one political condition.The economic condition was that the Ming economy had to continue producing goods of sufficient quality and reasonable price to be in huge demand elsewhere: China was the motor of this growth. The political condition was that the Ming state had to continue denying foreign access to its domestic market. Neither condition faltered. Indeed, we could say that the growth of the commercial economy through the sixteenth century, combined with a border-closure policy that only relented in the last third of the century, ensured the strength of this trading system.
The author goes on to talk about the "world" economy, in which China maintained trading links, expanded by Zheng He with the Spanish in the Phillipines, the Dutch/Portugese as the first European contacts, in particular, the spices the Dutch controlled and Malacca, then under Dutch influence.
The world-economy preceded the arrival of Europeans, which is why they were able to take advantage of the regional trade once they came on the scene. The Portuguese, sailing in from the west, finally got their perch on the tiny peninsula of Macao in 1557. The Spanish, coming across the Pacific from the west coast of the Americas, discovered the perfect harbor at manila in 1570. They also discovered a trading community of over three hundred Chinese and the court of a minor Muslim rajah, whom they tricked and deposed the following year. The third major European player in this economy, the Dutch, reached the South China Sea only in the 1590s. After returning in the new century under the banner of the VOC, the Dutch east India Company, they set up their base of operations on Java, first at Bantam on the west end of the island in 1609, then at Jakarta(which they called Batavia) further east. Java gave a strategic position from which to lock down the Moluccas(the Spice Islands), but it left them too far from China, though not for want of trying.
The Dutch would gain access to the spice routes, which was how the Bugis people had conducted entrepot trade for generations, selling spices to the Chinese before the Europeans came on the scene.
Note: China would STILL retain the mercantile links. Its just that the Europeans took over the local portion of the trade and conducted their own. Indeed, chinese traders in the region, such as Malacca and etc found themselves displaced in favour of the Europeans.
The other was a deftness in operating an extensive intra-regional trade, such that the company moved more goods between sites within the South ChinaSea and the Indian Ocean than they did between Asia and Europe. The business was profitable so long as Jakarta could monopolize its regional markets......(snipe)
The strengthening of Chinese commercial networks throughout the region meant that by the middle of the eighteenth century, Chinese merchants had a stronger grip on the trade than the Dutch of the Spanish. At the same time, the British were increasing their presence in the region, quite overshadowing the Dutch.
Indeed, the presence of Singapore, influx of Chinese traders and coolie expanded the trading settlement, as entrepot trade, the non existence of taxes and cheap harbour duties shifted the nexus of trade to Singapore. I will argue given the importance of this trade that if the trading routes created by Ming merchants had not existed, neither would have Singapore.
Silver was the perfect commodity from the European point of view. Its value when traded for gold was three times higher in China than at home, yielding arbitrage profits simply waiting to be plucked. In addition, the goods that the silver bought in manila were acquired at a price far below what they sold for in Europe. The trade was also ideal from the Ming point of view, and for the roughly the same reasons, in reverse. The price differential was fantastic: a hundred catties of Huzhou silk in 1639 could be sold for a hundred ounces of silver in China but fetched two hundred from Spanish buyers in Manila.
The value of the trade.
Fujian merchants responded with alacrity, loading as much merchandise as they could warehouse onto junks and sailing it out to Manila to exchange for the precious metal. The annual departure of the cargo junks was timed to coincide with the spring arrival of the Manila galleon......... The bridge that connected Moon Harbor to manila, Fujian to Peru, Ming to Spain, and China to Europe was made of silver.
One of the main arms of the Chinese trade routes, that which went to Manila.
Regarding the infamous ban and smuggling
The ban on trade with Japan soon became a dead letter. Merchants from Canton all the way north to Chongming Island in the mouth of the Yangzi River near Shanghai were sending vessels to Japan and setting up agents there to handle foreign commerce. The scale of this trade can be imaginged from the ship that a Jiaxing magistrate seized in the winter of 1642 on the charge of smuggling. It was carrying a cargo of ginseng, probably imported into Japan from Manchuria and then re-exported to China. The magistrate claimed that the cargo was worth a stunning one hundred thousand ounces of silver.
The ban that he was petitioning to remove reduced the number of junks sailing to Manila from 50 in 1637 to 16 in 1638. The collapse rippled through the entire coastal economy. Fortunately for the Fujianese whose livelihoods depended on the trade, the ban was lifted in time for 30 junks to catch the spring winds down to the Phillipines-