A Hong Kong story

The British demand for tea. A shortage in silver bullion to pay for it. A “barren rock” and a harbor with sheltered deep waters. How Hong Kong became a British colony is a bloody story. Literally. Tales of pirates and smugglers are irrevocably intertwined with the story of what was once British Hong Kong. It’s almost like a movie except that all of it happened for real.

Chinese tea culture

Chinese civilization is old — one of the oldest in the world. While our ancestors were hunting for food, the Chinese were already acquainted with refinements like drinking tea since the 10th century BCE.

Despite references to it as early as Marco Polo’s time, the Western world’s introduction to tea happened much later. The Portuguese who were the first foreign traders in China had established a colony in Macau by 1557 and quickly developed the habit of drinking the Chinese “chá”.

The British introduction to tea

By the 1600s, tea entered the ports of Amsterdam, France and Britain. When the British King Charles II married the Portuguese princess Catherine of Braganza in 1661, the new queen brought her tea-drinking habit to the British court. By 1750, tea had become a British national obsession.

Payment in silver bullion only

In those days, not just any British person can buy tea from the Chinese and bring it to British ports. By virtue of a royal charter, only the British East India Company had that right. Meanwhile, the Chinese traded with the British only through the Merchants Guild or the Cohong, and trading in the Chinese mainland was limited to the port of Canton (now Guangzhou).

So, there was a system. The British East India Company bought the tea from the Chinese Cohong and paid with silver bullion — the only form of payment that the Chinese imperial government would accept.

By the end of the 1700s, Britain was running out of silver bullion. And yet, the demand for tea just keep going higher and higher. How were they going to pay for the tea?

Enter the pirates and smugglers

Opium had been in use in China, purportedly for medicinal purposes, but only by the very rich who consumed the little home-grown supply. Opium importation was illegal but there was a demand for it, and the British exploited this demand.

Opium grew and thrived in Bengal, an area controlled by the British East India company. But it could not sell the Bengal opium in China so it auctioned the opium to independent foreign traders (pirates and smugglers, really, in those days) who shipped the contraband to Canton via Calcutta.

The traders demanded payment from the Chinese Cohong in the form of tea and silk and, if there were not enough supplies, in silver. Magically, the British no longer needed to pay for tea with silver bullion. Under the new system, they were even getting paid with silver bullion for Bengal opium.

After the British government ended the monopoly of the British East India Company in 1833, the independent foreign traders took over the opium trade and made huge fortunes. They came to be known as tai-pans.

The birth of British Hong Kong

Silver bullion was being handed over to the British in vast quantities and the Chinese imperial government wanted the opium trade stopped.

In 1838, Lin Zexu (Lin Tse-hsü), the newly appointed Commissioner in Canton, demanded a halt in the opium trade. When the British traders refused, he issued an embargo on all British trade. The channel leading to Canton was closed leaving the British traders on the port hostage.

After Charles Elliot, British Commissioner of Trade, promised the traders repayment by their government for the loss (construed as an official admission of the approval of the illicit opium trade), they surrendered the opium to the Chinese. It took over a month to destroy a staggering 1.2 million kilograms of opium.

Britain felt insulted and decided to go to war (which came to be known as the First Opium War) by sending an army to Canton. With steam-powered iron warships, coastal towns were laid waste, Canton was taken and tax barges were confiscated.

Humiliated, the Chinese sued for peace and signed what must be one of the most lop-sided treaties in history. In 1842, under the terms of the Treaty of Nanjing and its supplemental treaties, China agreed to allow free trade (no more dealing with the Cohong), open four other trade ports (Fuzhou, Xiamen, Linbou and Shanghai in addition to Canton — all allowed to have one military ship on port), exempt British subjects and all Chinese in their employ from Chinese law, pay war indemnity and cede Hong Kong to the British Crown. In perpetuity. Hong Kong became a Crown colony which was later extended to include Kowloon.

The end of British Hong Kong

So, the obvious question. If Hong Kong was ceded to Britain in perpetuity, why was it handed back to China? Short version: the British got too greedy. It had already extended the colony to Kowloon and still wanted to keep expanding. But China refused to allow Britain to exercise sovereignty over any additional area. What it allowed was a 99-year lease of the area that came to be known as the New Territories. The lease was signed in 1898.

The lease was a tactical coup, really. The New Territories became more than 80% of the total area of British Hong Kong and home to more than half of the colony’s population. When the lease was nearing its end, and with China unwilling to extend it, the British realized it would be impossible to administer Hong Kong without the New Territories. When the lease expired, all of Hong Kong was handed back to China.