The Opium Business
A History of Crime and Capitalism in Maritime China
Peter Thilly


The Opium Business: A History of Crime and Capitalism in Maritime China


The Opium Business in Chinese and World History

In the autumn of 1840, as British and Qing forces squared off in what would become known as the “Opium War,” a gang of a few dozen men set out into the mountains with a modest cargo of opium hidden in their bundles. The drugs had been cultivated and manufactured in India, transported over the ocean on British clipper ships, and unloaded in clandestine transactions to importers on the Qing empire’s southeast coast. The gang purchased the opium wholesale in a bustling maritime port city, concealed it within their clothing and among their supplies, and set out walking for thirteen days from the coast up into the mountainous regions of inland Fujian province towards neighboring Jiangxi. Their leader was a seasoned opium dealer, his second-in-command a locally renowned martial artist. The opium dealer had paid a generous sum for the company of the martial artist, knowing that the mountainous upland districts were teeming with bandits, soldiers, and competitors.1

Along the way, all through the final months of 1840, the gang grew in number. Wandering, unattached men and small-time opium dealers threw in their lot with the travelers. Most were surely drawn in by the lure of profit. Some might have joined out of addiction or craving for opium. The personal charisma of the martial arts virtuoso must also have inspired confidence among some of the more vulnerable travelers who joined up. The archive conceals exactly how the group expanded from a few dozen to over a hundred men in just a few months. What we do know is that by the time autumn turned to winter, the ranks of this opium gang had swelled. The two leaders worried that they were becoming too conspicuous. They needed a plan.

The opium dealer and the martial artist created a uniformed, confederated, opium army. They split the large and disorganized gang into ten teams, bringing in people with an existing capacity to capitalize on opium as team leaders and subsidiary investors. For the privilege of working within the organization, team leaders were required to pay steep fees on the opium that they handled. Members referred to these payments with the term lijin, drawing on a vocabulary of transit surcharges levied by prominent brokers or industry leaders, often through a tax farming relationship with the local state.2 At the top of the organization, the founders kept daily ledgers and entered each team’s membership, productivity, and lijin contributions into a central register. The teams themselves were made up of small-time bandits, boat paddlers, and rootless rascals, whom the leaders paid a porter’s daily fee for carrying and protecting the opium and supplies.3 The founders gave each team a code name and a red flag, issuing members a small swatch of red cloth to hang on their clothing for mutual recognition. Together, they were known as the Red Society (honghui).

The Red Society was a short-lived regional operation with just a small archival footprint, but the case narrative offers tantalizing clues about the economic life of the opium trader. The founders of the Red Society were ambitious rural opium dealers who set out to connect inland consumers with the coastal import market, and who strove to edge out or subsume their competition with a territorial transport and distribution monopoly. They rose to prominence by creating a hierarchical shareholding enterprise: two founders who received profits on all opium sold by the organization, presiding over a small group of investor-salesmen who managed teams of transporters and retailers and passed a cut of their sales up to the founders. They institutionalized the organization with a language of merchant surcharges that has deep roots in late imperial systems of revenue extraction and market regulation.

The people who operated the opium business along China’s southeast coast in the nineteenth and twentieth centuries drew upon a variety of local, regional, and global profit-seeking techniques and economic traditions. The Red Society’s business strategy, practices, and terminology embody a particular cluster of those techniques, which echo throughout this book in the tax farms and prohibition agencies that emerged in later decades. Like the leader of the Red Society, many of the people who achieved success in the opium business in this region did so by assembling a small group of investors and then establishing a monopoly over the transport and distribution of opium within a territory. Like with the Red Society, groups of investors in this region often grew and protected their market share by hiring low-wage teams of the laboring poor to put on uniforms, carry weapons, transport drugs, and enforce monopolistic terms of trade and transport.

There was a broad confluence of forces that shaped the opium business in late imperial and Republican China: patterns and practices of lineage organization, flexible citizenship, bribery, subterfuge, jurisdictional arbitrage, and creative accounting. Here, at the beginning of the story, I introduce the Red Society as an early example of what became the hallmark institution of the modern Chinese opium business: a joint-investment corporation that maintained a discrete territorial control over the regulation and taxation of opium’s transport and distribution.

This book investigates how people in southeast China bought and sold opium: how their businesses interacted with the state, how the most successful opium traffickers accumulated profit and exercised power, and how these practices and patterns changed over time from the 1830s to the 1940s. It starts from the premise that opium was first and foremost a commodity: an important item of exchange and consumption in the late imperial and then modern world economy. The drug was shipped and warehoused with other items. Opium capital was entangled in businesses like cotton, tea, and sugar. Those commodities have inspired scholars to write rich global histories, and as items of production, trade, and consumption, they are less problematic objects of study for historians of global capitalism.4 Opium was in the same world as those other mass-produced agricultural products: it was in the same boats, the same banks, and it was bought, sold, and consumed by many of the same people. But opium was “special,” because it was often illegal, and it was always transgressive. Because of the regulatory and moral context surrounding the drug, opium traders developed a particularly thorny relationship—antagonistic and yet codependent—with the people and institutions of state power.

Opium first became a major industry in China during the early nineteenth century when the drug was a contraband item with a huge market. In those freewheeling years, opium traders partnered with local officials to formalize fees and bribes on the drug’s sale, and together they created the first local opium taxation systems. The industry expanded horizontally and vertically across mid-nineteenth-century China, responding to new tensions, new opportunities, and new technologies. When the drug became de facto legalized around 1860, the people at the heights of the opium business worked with officials to determine tax rates and quotas. They made themselves indispensable as sources of state revenue, leveraging their essential contributions to state finances for ever greater privileges. The opium business, as it came to evolve in the age of legal opium, took shape through its interactions with a state that was beset with problems, but which was also determined to protect its borders and build up military capacity.

Opium revenue became a cornerstone of the fiscal basis of the militarizing late Qing state.5 This was not unique in the region: opium revenue was integral to late-nineteenth-century state finances across Chinese, British, Dutch, and French jurisdictions in Asia.6 Qing officials taxed opium’s circulation after import through farming, or subcontracting the rights to taxation and market regulation to people within the opium business. This too was not unique and mirrored policy in French Cochinchina (until 1881), French Indochina (until 1899), the Netherlands Indies (until 1904), and the British Straits Settlements (until 1909). China’s largely unsuccessful move towards prohibition after 1906 was also not unique. It was part of a regionally “shared turn” towards prohibition, and one that in many of China’s neighbors also involved the perpetuation of a state-sponsored opium trade into the 1930s.7 What was unique in China—the story told in this book—is how opium tax farming relationships and practices developed in the nineteenth century then persisted into the prohibition era after 1906, through the Yuan Shikai and warlord years after 1911, and withstood the centralizing efforts of the Nanjing government into the late 1930s. The people who bought and sold opium, in China, maintained their positions at the nexus of profit and power much longer than in neighboring states.

This book takes its journey through opium’s modern history from the vantage of the Zhangzhou-Quanzhou littoral in southern Fujian: a region with a dual identity as a volatile maritime frontier and a bustling Mediterranean hub.8 The Qing invaders who had consolidated rule in the region during the seventeenth century did so with extreme violence. Coastal Fujian was a slow and painful conquest, and the Qing only reopened residence along the coast in 1683 and then further loosened maritime trading restrictions in 1727.9 As the maritime trade industry revived, investors commissioned ships and dispatched sons and nephews to help build the family fortune in places like Batavia, Tianjin, Manila, Shanghai, Singapore, Macao, and Penang. 10 The most powerful built up large territorial lineages, sometimes fortified with walls, gun towers, and cannon.11 Sworn brotherhood organizations flourished inland along the coast and among the diaspora, providing mutual aid and community for unattached males, often cultivating a set of rituals and iconography focused around restoring the Ming dynasty and destroying the Qing.12 Confederated piratical fleets dominated the waters around the turn of the nineteenth century, just as opium was becoming a staple of the regional economy.13 Year after year, teams of migrant laborers, merchants, and displaced farmers loaded onto boats bound for Taiwan and Southeast Asia.14

The extensive trading and diasporic network emanating from the region structured the evolution of the opium business. In the formative years, Fujian’s maritime traders and their British partners turned the coastline into a vital offshore import market for the Qing empire, second in volume only to the Pearl River Delta in neighboring Guangdong. Diasporic information networks connecting Fujian to places like Macau and Singapore helped merchants understand price differences and take advantage of market irregularities. Money, people, and commodities continued to flow back and forth between Fujian and Southeast Asia, on sailboats as before, but also on new steamship lines, breaking the older seasonal limitations of trade and migration and increasing opportunities across the board. By the end of the century a new trend had emerged: opium’s reverse course. Where the opium business during its rapid expansion in the 1830s–1870s was characterized by the flow of drugs from India to China, the global swirl of drugs after the 1880s or so became more convoluted. In Fujian, there was a steady expansion of local opium poppy cultivation and production in rural areas—often with the encouragement and taxation of local authorities—much of which was being smuggled out of China and into colonial jurisdictions in Southeast Asia to compete with government monopoly opium. By the 1920s, the diaspora maintained a constant and illicit flow of opium (as well as cocaine, morphine, and heroin) from Fujian into places like Manila, Batavia, Singapore, and Rangoon.

The book follows the engagement of people from southern Fujian in the larger enterprise that was the opium business in Chinese and world history. It is a story of structure and agency, how a fluid and opportunistic transshipment network came to influence and impact the late imperial and then modern Chinese political economy. The people at the helm of the opium business captured the power of the state for their own economic purposes, at the precise moment in time when government was exerting more control over local economic life.

The first three chapters are chronological, framed around changes in the legal context for buying and selling opium in the nineteenth century: from a period of total illegality leading up and into the 1830s (chapter 1), to a period of negotiated illegality in the immediate aftermath of the 1843 Treaty of Nanjing (chapter 2), and then a period of de facto legality that began in the late 1850s and lasted until the Qing state’s final decision to prohibit opium once again in 1906 (chapter 3). The second half of the book is then divided into three thematic chapters about the history of the opium business in the early twentieth century: one on prohibition bureaus and poppy tax agencies (chapter 4), another on the export of opium and other narcotics from China to Southeast Asia (chapter 5), and then a final chapter on the decisive role played in the opium business by the Japanese-protected community in Xiamen, culminating in the Japanese occupation of that city after 1938 (chapter 6).

Maritime China and the Rise of the Opium Business

In the eighteenth and early nineteenth century, Indian opium was distributed into China through preexisting shipping operations among the southeast coastal maritime community. Seafaring traders since the reopening of trade in the early Qing empire had developed diversified portfolios based on seasonal and regional production and wind patterns, carrying items like tea, clothing, Taiwanese camphor, and metal cookware from China to Southeast Asia, and returning with aromatics, medicinal items, and rice.15 These same maritime traders carried the diaspora abroad, and each summer when the southwest monsoon was at its strength, the merchant fleet would set sail on their return voyages home from Singapore or Batavia. Throughout the late eighteenth and early nineteenth century, as they sailed alongside the ships of the British East India Company and “country traders,” these merchants also carried opium, the market for which grew steadily across China in the late eighteenth century.16 When the drug arrived at the Qing empire’s southeast frontier, maritime traders from Fujian and Guangdong also dominated the transport of the drug—together with rice, sugar, and Southeast Asian commodities—north up the China coast to ports like Shanghai and Tianjin, returning south with beancake fertilizer for sugar and opium cultivation, Jiangnan cottonwear, and silk for export to Southeast Asia.

In the 1820s and 1830s, the moment when this book starts, opium truly began to flood into China in unprecedented waves. The rapid expansion was fueled by new competition in India on the production end of the business. An emergent group of cultivators in Malwa and shippers in Bombay began to challenge the British East India Company opium shipped out of Calcutta, and as a consequence the company redoubled their opium production efforts in Patna and Benares.17 Chinese merchants still carried the drug from Southeast Asia, but new clipper ships owned by British, Parsee, and American traders brought opium to China’s southeast coast in previously unfathomable quantities, at any time of year, without having to wait for the monsoon. The most prolific of these British participants in the opium trade in China were two firms, Jardine Matheson and Dent & Company.18 Imports into the Qing empire rose, from several thousand chests per year in the 1820s, up to more than 30,000 chests in 1830, and reaching nearly 40,000 chests per year by 1839 and the eruption of war.19

Jardine, Dent, and the other foreign merchants were able to sell off this stunning volume of opium by partnering with powerful maritime lineages in southern Fujian and Guangdong, who managed the opium import and transshipment industry during the period of rapid growth from the 1820s to the 1850s. China’s southeast coast is an exceptional place when it comes to family size, and Fujian’s lineages might consist of whole cities of tens of thousands of people. As commercial organizations, lineages maintained diversified business interests including agricultural production, handicraft manufacture, retail shops, and maritime trading ventures. Lineage networks helped facilitate mutual aid, trust, and the extension of credit for new business ventures.20 Landholdings helped lineages fund shipbuilding and maritime trade operations, which in turn funded the further territorial expansion of the lineage in the local arena.21

When the drug trade accelerated in the 1830s, the lineage formation offered opium traders an inbuilt structure for capital accumulation, lawbreaking, and jurisdictional arbitrage. Lineages in the region had a long history of understanding and manipulating regulatory discrepancies in order to gain advantages over their neighbors.22 Lineage networks linked smugglers to the naval garrison or the magistrate’s office. When state crackdowns were coming, government insiders gave advance notice to lineage members and allowed them to make preparations and limit the damage. Internal hierarchies could isolate key players from punishment, and the bodies of poorer lineage members could be substituted for the actual suspects.23

Opium was illegal, and yet the volume of trade was stunning. In order to maintain this delicate profitability, coastal opium merchants and government officials worked out issues of bribery, taxation, and law enforcement within the context of long-developing negotiations of power and profit between the Qing state and the maritime trade industry. In eighteenth-century Xiamen, the city’s cadre of wealthy merchants had systematically partnered with local officials to provide essential funds for educational institutions, granaries, soup kitchens, and a variety of local social welfare institutions.24 The merchant associations (jiao) operating between coastal southern Fujian and Taiwan likewise contributed to public works and temples, cultivating productive relationships with local officials.25 When British ships began anchoring near Fujianese ports after 1832, powerful figures within the maritime trading community stepped in to negotiate a system of fees and protection. Lineage elders regularly met with local officials to negotiate the payment of bribes in the opium import trade, creating a system of fees that became normalized and standardized, with widely known rates, stamps, and inspections. The money was spread around, through the civil and military bureaucracy, and on at least one occasion earmarked to support the victims of a lineage feud.26 These local systems of opium revenue extraction developed in the 1830s provided the most immediate context for the earliest attempts to formalize opium import and transport taxes in the 1850s.

The extralegal offshore opium import system established before the Opium War (1839–1842) remained largely in place after the Treaty of Nanjing (1843) opened five ports to British commerce and consular representation. The treaty did not clarify or regulate the legality of the drug at the heart of the war that had just concluded, and the opium business continued to expand in a legal gray area until the late 1850s. Along the maritime frontier, British consuls worked to ensure that opium merchants could import the drug without interference, and they negotiated an extralegal, extratreaty settlement with Qing officials to allow British importers to sell off the drug outside of the physical limits of the treaty ports. The opium trade in the 1840s thus entered over a decade of negotiated illegality: a tolerated offshore contraband import market consisting of foreign importers and local wholesalers, each anchorage with its own system of fees and bribery as negotiated with the relevant officials, dating back in some cases into the early 1830s.

Despite this important continuity—opium’s formally illegal status and an extralegal import market scattered across anchorages along the empire’s southeast coast—the opium business otherwise experienced a wholesale transformation during the two decades after the opening of the treaty ports in 1843. The quantities of drug imported into China increased every year, even as domestic cultivation of opium poppies within China began to accelerate. With this rise in volume, there was a readjustment in the structure of the opium business: consolidation of markets, in part through new efforts to regulate and tax the drug, but also a broad expansion in the opportunities for people to make a living, or a fortune, in buying and selling opium.

Within Fujian’s two new treaty ports—Xiamen (also known as Amoy) and Fuzhou—opium capital was increasingly entangled within the production and circulation of other commodities, while the urban distribution and retail sectors offered a range of new jobs and investment opportunities. In Xiamen, a small group of wholesale brokers with connections to the local banking industry dominated the import trade and gradually came to exclude British and American firms almost entirely. In Fuzhou, American and British tea firms partnered with Cantonese and southern Fujianese brokers to send opium up the Min River to fund tea purchases. In both cities, the growing number of opium dispensaries and dens that popped up year after year were engaged in complex negotiations with municipal authorities over the payment of fees for the support of social services and infrastructure.

Opium Revenue and the Fiscal-Military State

The normalization of opium through regulation and taxation occurred locally in the mid-1850s and was ratified internationally in 1860 when the Treaty of Tianjin placed a uniform and low import tax on the drug.27Fujian’s officials first received permission from Beijing to start collecting import taxes on opium in 1857, the same year they also created the empire’s first formal opium transport taxes, known as the opium lijin.28 Opium was taxed on these two basic levels throughout the years of its legalization: the import tax, a low and standardized fee collected by a foreign-staffed Maritime Customs Service (after 1863) when the drug was unloaded from ships in port; and the wide range of municipal-, regional-, or provincial-level tax farms that collected a variety of associated fees, the most widely known of which was the lijin. These two separate taxation regimes worked to restructure the opium business during the age of legal opium, creating a new geography of control and evasion while also tying drug profits to state projects in influential ways.

The opium lijin was a tax farm, wherein provincial, prefectural, county, or municipal authorities contracted with a merchant or corporation for a predetermined quota of taxes on the transport and distribution of opium within a specified territory or at a jurisdictional border crossing. The institution has long roots in the same cluster of taxation and market regulation practices that characterized the mid-Qing long-distance trade industry, and which had inspired the Red Society to use the term lijin for their fees.29 The concept found new life in an era of strapped state finances during the Taiping Rebellion (1850–1864), generating crucial revenue on opium and a range of other commodities at a difficult moment in time for municipal and provincial authorities.30

Opium tax farms were familiar to the maritime Fujianese. Elite members of the Chinese diaspora for centuries had maintained similar relationships with local rulers in Southeast Asia to collect taxes on opium, liquor, and gambling among the Chinese diaspora.31 State tax farming contracts enabled mine and plantation owners to monopolize and systematize the sale of opium and liquor to their employees, who often also paid those same business owners for passage to Southeast Asia from China, as well as letters and remittances home.32 In the mid-nineteenth century, just as lijin bureaus were emerging in the homeland, members of the Fujianese diaspora abroad were finding ways to maintain their roles as opium tax farmers for the British and Dutch colonial states that had displaced many of the earlier maritime city-states and insular kingdoms.33 The creation and operation of lijin bureaus for opium in the 1850s should be understood within this broad regional context, wherein neighboring states were all seeking to draw revenue from the opium trade by selling off the responsibilities of taxation, market regulation, and social control to groups of powerful Fujianese and Cantonese investors.

From the perspective of an opium trader trying to expand their business during the period 1857–1887, the prospect of taking over a lijin bureau in Fujian was an enticing but risky opportunity. The territorial control over opium’s transport and sale could enable a firm or group of investors to edge out competition and consolidate control over a market, but the cash-starved provincial administrations of the late Qing could make for a dangerous partner. Several of the opium lijin bureaus in 1870s Fujian went bankrupt after the state demanded what turned out to be excessively high rates and unrealistic quotas, spiraling when sales were further undercut by smuggling from neighboring provinces with lower lijin fees.

Officials set the opium lijin in Fujian at such ambitious levels because of their determination to invest in military upkeep and modernization during a dangerous age. In addition to feeding, training, and arming soldiers in Fujian, Taiwan, and the Qing empire’s northwestern frontier, Fujian’s opium taxes were helping pay for the construction and maintenance of the Fuzhou Arsenal, a state-of-the-art naval yard that was chronically short of the money required to produce and maintain warships.34 The people who made their living in the opium business were thus embroiled in a collaborative but often antagonistic relationship with the helmsmen officials of the late Qing Self-Strengthening Movement, a reform effort intended to buttress the Qing against further victimization by employing techniques from their imperial rivals.35 These powerful provincial governors and governors-general were vocal advocates for opium’s eventual prohibition, which they believed could be achieved through heavy taxation—money that would also enable them to invest in military capacity and modernization. An unintended consequence of this plan was that opium revenue became ever more important to those same officials, which only further entrenched the opium business at the nexus of power and profit.

Prohibition and the Survival of Tax Farming

In 1906, the Qing court issued a series of edicts announcing the empire’s return to a policy of opium prohibition.36 The plan was developed through negotiations with the British government, which had a vested interest in opium’s production and sale, but which was also under increasing pressure from missionaries and other activists to accommodate the Qing state’s desire to curb and eventually eradicate opium use. In the end, the British only agreed to reduce imports of Indian opium on the condition that the Qing achieved measurable success in eradicating domestic cultivation of the opium poppy. In Fujian, prohibition efforts therefore involved two very different projects: a primarily urban cluster of programs to license opium shops and smokers and thereby gradually reduce the retail of imported opium, and a rural paramilitary campaign to force poppy farmers to plant other crops.37 Like many of the political and economic transformations in the early twentieth century, the experience of prohibition varied widely from region to region. In Fujian’s provincial capital, Fuzhou, a robust gentry-led movement made real progress in holding the local state accountable to the terms of prohibition during the final years of the Qing.38 In the more freewheeling port of Xiamen, the transnational opium, morphine, heroin, and cocaine smuggling trades all accelerated precisely at the moment of prohibition’s introduction.

In rural Fujian, the effort to permanently uproot poppy cultivation was uneven at best and in many places a complete failure. Farmers in the province had been growing opium poppies since at least the 1830s, often cutting the inferior local product into more expensive Indian opium. The quality gradually improved and cultivation expanded throughout the final decades of the Qing, and when the prohibition edicts were announced in 1906, opium farmers and merchants were not predisposed to give up their livelihood.39 Long-standing poppy-growing districts like Tong’an and Xinghua maintained production through the more robust prohibition years immediately after 1911. Cultivation then accelerated again during the decade after the province fell into civil war in 1917, as a series of warlords and naval commanders fought over the province while drawing substantial revenue from opium poppy taxes.40

Following precedent set during the late Qing, warlords in Fujian farmed out poppy tax collection to people within the opium business. During the mid-1920s, the peak years for poppy cultivation in Fujian, high-level brokers from Xiamen would pay several millions of dollars for state contracts to collect and tax just a single county’s annual harvest. Cultivation only slowed down in the 1930s, when the Guomindang leadership in Nanjing came to view Fujianese opium as an unwelcome competitor to the state monopoly opium shipped out of Hankou.

For a person trying to make their way in the opium business during these chaotic years, the only job more lucrative than the management of a poppy tax collection agency was the directorship of an opium prohibition bureau (jinyan ju).41 Prominent traders and shadowy groups of investors sought after these positions from their origin in the final years of Qing rule, through the warlord period, and during the period of Guomindang naval authority after 1924. An opium prohibition bureau, when operated as they were in early twentieth-century Fujian, was a state-enforced licensing system on the wholesale, transport, and retail distribution of opium within a given territory. Like the lijin bureaus of the late Qing, and like the poppy tax agencies, the early twentieth-century opium prohibition bureau was also a tax farm, and the people who purchased the rights to manage the bureaus were themselves prominent opium traders, firms, or representatives of opium trade guilds. A vertically integrated operation like that of the Taiwanese opium magnate Zeng Houkun in the 1920s incorporated contracts to collect the poppy tax in several counties, alongside another handful of municipal or county-level prohibition bureau directorships.

The contracting system that warlord and Guomindang rulers employed in their opium revenue infrastructure meant, in essence, the survival of tax farming within the fiscal and regulatory arm of the modernizing Chinese state. China departed in this way from its neighbors in Southeast Asia, each of whom abandoned opium tax farming in the early twentieth century in favor of centralized state monopolies. The Guomindang monopolies of the 1930s, which sought to centralize control of opium supply and distribution from top to bottom, were nonetheless leased out to local “opium kings” in Fujian. The man who directed the southern Fujian Prohibition Bureau from 1934 to 1937, Ye Qinghe, who was contracted to manage the legitimate sale of state opium shipped out of Hankou, used his position from beginning to end for a wide range of purposes counterproductive to the Guomindang’s intention in creating the monopoly system. Among other actions, he repeatedly broke his own monopoly by smuggling in truckloads of Persian opium for manufacture into pills and powder, or to pack into small tins for reexport to Southeast Asia.

Mobility, Citizenship, and the Rise of Japan

The resurgence of the opium business and the proliferation of state opium revenue agencies in warlord and Guomindang Fujian was interlocked with what proved to be a robust market for illicit opium in Southeast Asia. Fujian was a center of opium smuggling into colonial jurisdictions like Singapore, Manila, and Batavia dating back at least to the 1880s, expanding rapidly in the 1920s and extending into the late 1930s. On the supply side, there was an almost unlimited volume of drugs in Fujian, purchasable at cheap prices thanks to the state-partnered poppy tax collectors and prohibition bureaus. On the marketing end, smuggling remained profitable in British, Dutch, and French colonies throughout their own long transformations from tax farming in the nineteenth century to state monopolies in the early twentieth century, and then in the 1930s gradually towards prohibition.42 The diaspora, central to so many of China’s important social and political transformations during the early twentieth century, was instrumental to the reoriented spatiality of the global drug trade in the years after World War I.43

Packed alongside the millions of tins of opium being sent out from Xiamen to ports abroad were chests and barrels full of carefully concealed packets of narcotic alkaloids like morphine, heroin, and cocaine. These new, more expensive and compact items were traded through many of the same steamship and smuggling networks as opium, but unlike opium these drugs were produced in laboratories and were supplied for the most part from pharmaceutical companies: first from European drug companies like Merck, and then increasingly from Japanese and local Chinese manufacturers. Fujianese traders carved out prolific roles importing and reexporting these drugs before the fall of the Qing dynasty, but the meeting of the International Opium Commission in 1909, the International Opium Convention of 1912, and the implementation of those agreements through the League of Nations after 1922 severely curtailed the illicit flow of narcotics from Europe to Asia.44 Still, heroin, morphine, and cocaine smuggling operations from China into Southeast Asia continued into the 1920 and 1930s, despite the challenges posed by the new international restrictions. Supply lines were adjusted and expanded: cheap Japanese cocaine from Taiwan, morphine produced with local poppies by rural Fujianese lineages, and heroin from underground laboratories in Shanghai.

The circulation of these new powdered drugs was underwritten by the rising power of Japan and the active participation of Japanese pharmaceutical companies in the manufacture of cocaine, morphine, and heroin, some of which held their operations in nearby Taiwan.45 The rise of Japan had an enormous impact on the drug trade, both in China and among the diaspora. Xiamen’s long-reigning urban lineages ceded their neighborhoods to new street gangs from Taipei, Japanese-protected people with lineage connections to southern Fujian but who were relative newcomers to the city of Xiamen.46 Tea merchants traveling back and forth from Fujian to the Netherlands Indies came to realize that Japanese citizenship could help them avoid onerous taxes in China and increase their privileges in European colonial jurisdictions.47 Applications for Japanese imperial citizenship surged among the Fujianese population.48 Tens of thousands sought protection against local Chinese police and tax collectors from none other than China’s most bitter rival. The opium business was central to this phenomenon, as Japanese protection enabled people to defy prohibitions with impunity. By the 1930s, Fujian’s warlord and Guomindang rulers almost exclusively contracted with Japanese-protected opium merchants to run prohibition bureaus, with the understanding that this community would need to be given a stake in the system of state opium profiteering if the prohibition infrastructure was going to meet its revenue goals.

Xiamen and the neighboring districts became the frontier of Japanese expansion in south China. The institutionalization of this power began shortly after the Xinhai Revolution of 1911, when the Japanese consul in Xiamen created an independent police force housed within a Taiwanese brothel to try and protect the growing community of Taiwanese migrants in the city. By the early 1920s, tensions between the Taiwanese migrants and locals were fueling street fights, with dramatic shootouts and public beheadings. The Taiwanese police force, staffed with roughnecks from the opium and sex industry, had the backing of the Japanese Navy, and slowly but surely the Taiwanese community and their Japanese support compelled Xiamen’s warlord and Guomindang rulers to accept a new status quo, wherein the city’s administration would partner with the city’s Taiwanese opium traders rather than continue the mutual antagonism.

And so began the rise of “opium kings” like Zeng Houkun, Chen Changfu, and Lin Gun. These were powerful men: opium traders, brothel keepers, and gun runners, but also respected community leaders, presidents of the Taiwan Association, developers who shaped the urban landscape, and chairmen of Tokyo-backed finance associations designed to promote sustainable economic growth for the Japanese-protected community in south China. When the global winds shifted and Japan invaded the port of Xiamen in 1938, the city’s long-standing clique of powerful drug traders took over important positions in the new occupation government, blending the opium business with governance in a fever dream of power and profit.

Method and Sources

Opium was everywhere in Qing, warlord, and Republican China. The business was a steady enterprise in every part of the Qing empire during the de facto legal years between 1857 and 1906. Opium was cultivated and prohibited in Yunnan, Sichuan, and Guizhou well before the first Jardine Matheson ships anchored off the Fujian coast in 1832, and farmers grew opium poppies in various parts of China long into the mid-twentieth century.49 The opium business was in Beijing, Hankou, Tianjin, Chengdu, and of course, Shanghai, where the size of the foreign concessions and the existence of a mixed court created singular conditions for the drug’s trade and regulation, quite different from the rest of China. The drug was also in Yan’an, where opium revenue helped the Chinese Communist Party survive war and financial crisis in the early 1940s.50 With the possible exception of Taiwan, there was no successful, sustained prohibition of opium in any of the former Qing territories until the late 1940s.51

Opium was everywhere, and yet it was such a shameful business that its centrality within the local and national political economy has been difficult to acknowledge and assess. The popular presses and academic journals of the late Qing and Republican period did not view opium as a legitimate sector of the economy, but as a criminal, even treasonous enterprise. When the drug was legal, nobody spoke of opium merchants in glowing terms, especially in elite Chinese intellectual circles. The opium industry did not inspire people to study and rethink the political economy. It was never seriously promoted as a potential savior in the nationalist quest for wealth and power. The opium business had nobody like a Wu Jienong, a man whose life’s work it was to revive a tea industry held down by foreign imperialism and “backwards” technology and labor practices.52 A great many people openly reviled the opium business, from beginning to end, and the drug trade remained throughout its history an extraordinarily secretive sector of the economy. Even today opium is a moral touchstone in Chinese and global history, a potent symbol of imperial greed, and an orientalist dog whistle used to signal racist images of fin de siècle degeneracy.

Opium’s moral untouchability is reflected in the archive by a source base largely written from the perspective of prohibitionists, and in the wider world by a broad moral consensus about opium’s instrumental relationship to British and Japanese imperialism in India and China. Social and cultural histories of opium consumption, now nearly twenty years old, have pushed back against some of the oversimplified narratives about opium use and opium smoking culture in China.53 Historians of civil society and state prohibition institutions have explained the rise of gentry-led opium prohibition movements and the trajectory and challenges of the Guomindang’s approach to opium taxation and prohibition.54 Still, we have only a limited understanding of the basic mechanisms of the opium business, the evolution of the industry, and its impact on the modern Chinese political economy. This book is the first step towards historicizing the drug within its local economic context from the late Qing to the end of the Japanese occupation in 1945.

Excavating opium’s place in local economic life is a challenging proposition, however, due to the drug’s particular legal and moral status. The opium business was purposefully shadowy, because of the laws and attitudes that surrounded the drug. This was an industry where bribes slowly became taxes, where business owners paid undisclosed sums to state authorities for the right to collect taxes on the drug, where unnamed investors hid behind teams of uniformed, armed officers. After a decade of working through Chinese, Taiwanese, British, Swiss, and American archives, business records, newspapers, and published sources, I wrote this book as the sum total of what I learned about the people running the trade and the forms and flows of legal and illegal taxation that characterized it.

The first two chapters of the book juxtapose three archives: the records of the Qing territorial government preserved in the First Historical Archives of China, the commercial correspondence of the Jardine Matheson Company held at the University of Cambridge, and the records of the British Foreign Office. The Jardine Matheson sources for this period are some of the only archival sources written by opium dealers in the world and offer reliable information about the volume of the opium business and its geography. They also give little or incomplete information about the Chinese buyers of Jardine Matheson’s opium and display sometimes inaccurate understandings of the Qing state. Relevant Qing documents from this period are limited to terse “memorials” about the arrest and punishment of people charged with opium crimes. These provide some small biographical information about the people involved and include data on labor and investment arrangements, but also include a host of inaccurate claims about the volume and nature of the opium business.

In the rest of the book, chapters about the opium business in the late nineteenth and early twentieth centuries, the research involved assembling a more expansive range of sources and confronting a wider range of problems and opportunities. English-language customs records and Chinese newspapers like the Shanghai periodical Shenbao signpost major changes in the opium business, but customs officers rarely discussed opium after the moment of import, and Shenbao’s reporters were circumspect about revealing the identities of key figures in the drug trade, using terms like “a certain merchant” (moushang) rather than giving personal names. In the 1920s and 1930s, however, reporters working at the Chinese-language newspapers in Singapore were thankfully more direct in their reporting on the Fujianese drug trade. Diplomatic records and investigations from the League of Nations Archives in Geneva help identify the export markets and shipping patterns for Fujianese opium and morphine (and cocaine) in the early twentieth century, but reveal little about the people in China who managed the clandestine export of those commodities. Guomindang materials in Chinese and Taiwanese archives clarify the trajectory of opium rules and regulations, but only rarely contain information about implementation and enforcement on the ground. British and American intelligence reports fill in some of this picture, but they too imperfectly capture how the actual business of opium buying and selling worked.

These archival and published sources have also helped me corroborate a set of articles from mostly out-of-print local history collections, known as wenshi ziliao. The articles in these collections, purchased in used bookstores in Xiamen and Quanzhou, have cavalier approaches to citation and are often polemical. They are also usually right about the details. One example, the oral history of an anonymous subordinate of the “opium king” Ye Qinghe originally conducted in 1965 by the Xiamen historian Hong Buren, offers a laundry list of enticing tidbits about the opium business in the 1920s and 30s.55 In the years since I first read Hong’s article, I have corroborated almost all of the key details in newspapers, diplomatic records, and business records from the Shanghai Municipal Archives (SMA). Locating the name of Ye’s Shanghai accountancy firm in the SMA enabled one of the most significant breakthroughs in “following the money” that this book has to offer. Much of the texture and detail that this book offers about opium trading, economic life, and the on-the-ground experience of political transition in early twentieth-century Fujian is possible because of the Xiamen, Jinjiang, and Quanzhou wenshi ziliao publications, and especially the good works of Professor Hong Buren (1928–2019).


1. Junji chu hanwen lufu zhouzhe (Grand Council Chinese-Language Palace Memorial Copies), Beijing: First Historical Archives, 03-4015-012, DG 21/4/5, hereafter LFZZ. See also Neige daku dang’an (Grand Secretariat Archives) 059365, DG 21/2/13 and 059371, DG 20/11/24, hereafter NGDKDA.

2. Lijin bureaus as normally discussed in the scholarship are institutions that were not created until 1853, thirteen years after this case took place. What the officials who wrote the memorial on the Red Society were referencing was an older term for merchant surcharges. On the history of lijin after 1853, see Luo 2010. For examples of lijin as a merchant surcharge in the context of eighteenth-century Chongqing, see Dykstra 2014, 134–136.

3. The porters were given 200 wen per day for their services. LFZZ 03-4015-012, DG 21/4/5.

4. There is an expansive and growing scholarship on global capitalism, with some especially good histories of individual commodities. For tea, Liu 2020; for cotton, see Beckert 2015; for jute, see Ali 2018; for sugar, see Mazumdar 1998 and Mintz 1985; for indigo, see Bose 1993; for coffee, see Topik and Clarence-Smith 2003. For an analysis of labor in opium’s production in Bengal, see Bauer 2019.

5. On the late Qing fiscal-military state, see Halsey 2015. My claim in this book is not that opium was the only or even necessarily the most important taxable commodity during these years, just that it formed a substantial portion of the revenue during this period and was viewed as indispensable in the eyes of the officials at the helm of the Self-Strengthening Movement. As an essential component of the late Qing fiscal military state, then, opium deserves special consideration due to the legal and moral haziness surrounding the drug’s trade and revenue collection. For new research that reappraises the taxation of commerce during the late Qing in light of developments during the preceding centuries, see Dykstra 2022.

6. For the British Straits Settlements, Burma, and French Indochina see Kim 2020. For Singapore, see Trocki 1990 and Trocki 1999. For the Netherlands Indies, see Shen 2013.

7. Kim 2020, see especially chapter 1.

8. Ron Po’s recent book on Qing maritime policy in the eighteenth century offers an extended explanation of how Qing naval and trade policy on the southeast coast reflects the region’s frontier status. See Po 2018, Introduction. On the concept of the Chinese maritime frontier, see also Macauley 2021, Introduction. For a critical survey of the concept of a “Mediterranean” Asian maritime zone, see Sutherland 2003, 1–20. Other examples of scholarship that relates to the concept include Amrith 2015; Deng 2011, 215; Hamashita 2011, 107–139.

9. On the resistance to the Qing conquest in Fujian and the regime of Zheng Chengong (Koxinga), see Hang 2015. One of the more detailed studies of the coastal evacuation in southern Fujian is Chen 2019, 163–180.

10. The Chinese scholarship on Fujian’s long history of maritime trade is voluminous. Two now-classics are Lin 1991 and Lan 1999. For English-language scholarship on the subject, the best place to start is Vermeer 1990b; and Ng 1983. A new addition to this scholarly tradition, which bridges the Qing and Republican periods, is Ong 2021.

11. For scholarship on the lineage formation in southeast China, see Faure 2007; Freedman 1958; Szonyi 2002; and Zheng 2001.

12. For social histories of the Heaven and Earth Society (often called the “triads”), see Murray and Qin 1994 and Ownby 1996. On the anti-Qing rituals of these groups, see ter Haar 2000, 449–450.

13. See Antony 2003; Calanca 2010; and Murray 1987.

14. For scholarship on Chinese migration to Southeast Asia and beyond, including critical debates about the utility of the term diaspora, see e.g., Chan 2015, 107–128; Shih 2013, 25–42; Kuhn 2008; McKeown 2011, 62–83; Miles 2020; and Wang 1996, 1–15.

15. These shipping networks go back at least as far as the Ming, see Chang 1990, 64–80.

16. The opium import trade before the 1830s is not well documented. The best scholarly treatment is Lin 1985, 62–71. Archival research in Singapore and Netherlands Indies archives could potentially help build out this picture.

17. For the production end of this story, Bauer 2019, 11–15.

18. The most recent book about Jardine Matheson is Grace 2014. Within the historiography from the China field about opium in the 1830s, scholars have done admirable work in excavating the role of British traders and officials, as well as the policy debates and reaction to opium among Chinese officials, but the Chinese opium merchants themselves are largely absent from the story. See e.g., Morse 1910; Fairbank 1953; Chang 1964; Owen 1968; Fay 1975, 1997. Stephen Platt’s recent book about the Opium War stands out among this field as offering a particularly rich tapestry of narratives about the life on the southeast coast of China in the 1830s, though here also the Chinese opium merchants are not a substantive feature of the narrative, see Platt 2018.

19. The impact of this imbalance of trade on state finances is the subject of ongoing scholarly debate. See Lin 2007; Irigoin 2013; He 2007, 63–80; Deng 2008, 320–258; Polachek 1992.

20. See e.g., Chen 2010, 435–445.

21. Ng 1983, 29–30.

22. Szonyi 2017.

23. See e.g., Macauley 2009, 15–17.

24. Ng 1983, 94.

25. Lin 2014, 11–27, see esp. 24–25.

26. The Jardine Matheson Company Archive, Section K1–2, “Extracts from company records,” hereafter JM K1–2, May 15, 1837.

27. Zheng Yangwen gestures towards a similar revision of the periodization of opium’s legalization, see Zheng 2005, 110, 152–153.

28. Luo 1936, 328.

29. I believe it is a reasonable possibility that the term lijin entered the Red Society through local officials extracting their own fees.

30. The classic Chinese work on the lijin is Luo 1936. Newer scholarship on the opium lijin in Chinese include Lin 2016, 31–81; and Zhou 2010, 57–69. The subject is also central to a number of prominent works in the English-language China field, including Bastid 1985, 51–79; Halsey 2015; Kuhn 1970; Mann 1987; and Rowe 1984, 1989. On British opposition to lijin taxes and the transit pass system created in response, see Kent 2016, 78–100.

31. For an overview, see Trocki 2011, 89–90; for the example of Siam, see Eoseewong 2005, 108.

32. Carl Trocki has made this argument in several forms, synthesized most concisely in Trocki 2000, 79–104.

33. For a rich case study of a Fujianese hui that was involved in the Penang opium farm, see Wong 2016, 600–627.

34. Pong 1987: 121–152.

35. Jonathan Spence was the first to lay this out in stark terms, see Spence 1975, 143–173. See also Zheng 2005, 150–155; Wong 2000, 189–211.

36. See e.g. LFZZ 03-7403-008, GX 32/10/6.

37. The literature on opium prohibition in the early twentieth century is particularly rich. See Baumler 2008; Madancy 2003; Rimner 2018; Slack 2001. See also Kim 2020.

38. Fuzhou’s anti-opium organizations are the subject of Madancy 2003.

39. In one of the more famous incidents, reaching the pages of the New York Times, a southern Fujianese lineage militia surrounded and attacked a group of soldiers sent to uproot the poppy crop. North China Herald January 9, 1909; New York Times December 28, 1908.

40. For an overview of poppy taxes on a national level, see Bianco 2000, 292–322.

41. These institutions are also explored in Baumler 2008; Marshall 1976, 19–48; and Slack 2001.

42. See e.g. Kim 2020; Trocki 1990 and 1999. On the United States prohibition of opium in the Philippines after 1908, see Foster 2000, 253–273.

43. There is a growing and exciting scholarship that takes a translocal approach to the history of the Chinese diaspora. See e.g. Chan 2018; González 2017; Keong 2021; Macauley 2016, 755–779; Macauley 2021; Sinn 2014, 220–237; Soon 2020; Zhou 2019.

44. See Rimner 2018.

45. For a thorough introduction to the Japanese pharmaceutical industry during these years, see Yang 2021.

46. Zhou 2005, chapter 6.

47. Lin 2001, 1003–1004.

48. On the enrollment of Fujianese as citizens and the Japanese “southern strategy,” see Brooks 2000, 109–121; Wang 2007, 2006, 1–48. See also Ambaras 2018; Peattie 1989, 166–209. See also Keong 2021, chapter 4.

49. For the southwestern provinces before 1850, see Bello 2005. For a brief survey of cultivation and poppy taxes in the twentieth century across China, see Bianco 2000.

50. Chen 1995, 263–298.

51. Celebrated in the first decade of the twentieth century, the Japanese opium monopoly in Taiwan was by the late 1920s coming under criticism from China and the United States for continuing to profit from the drug, see Kingsberg 2013 and Yang 2021.

52. Wu Jierong is a figure who features prominently in Liu 2020, see especially introduction and chapter 7.

53. Dikötter, Laaman, and Zhou 2004; Zheng 2005. See also Spence 1975, for an early example of historicizing opium use.

54. See e.g., Baumler 2007; Madancy 2003; Rimner 2018; Slack 2001.

55. Hong 1983, 47–68.