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Trade and Trouble

What China Can Learn from the 1640 Economic Bust

Chinese world map, drawn by the Jesuits (early seventeenth century). "Historic Maritime Maps" Donald Wigal

In 1514, the Portuguese navigator Jorge Álvares was the first European to reach China by sea. Just over 40 years later, the Portuguese leased Macau from China for an annual rent of about 600 ounces of silver. And then, 14 years after that, the Spanish colonized Manila as the hub of their transpacific trade. By 1600, trade in Chinese goods was in full swing. China became an export powerhouse, and not for the last time.

The problem for Europeans was that Chinese traders didn't need anything from Europe. Trade with China was strictly cash-and-carry—and cash meant silver. In the century or so between the first European sea contacts with China and the year 1640, European ships carried something like 100,000 tons of silver to China from mines in central Europe, Japan, and the Americas.

The massive influx of precious metal helped transform the Chinese economy from a nonmonetary economy based on feudal obligations and barter trade

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