Canton system, System of trade that developed between Chinese and foreign merchants in the southern China city of Guangzhou (Canton).

1. CANTON
SYSTEM

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The Canton System was a trade policy imposed by the Qing Dynasty in China from the 17th
to the 19th century.
It aimed to regulate and control foreign trade, particularly with European merchants.
(Canton)

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The major characteristics of the system developed between 1760 and 1842, when all
foreign trade coming into China was confined to Canton and the foreign traders entering
the city were subject to a series of regulations by the Chinese government.

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Limited Trade
Closed Door Policy
Monopoly of the Cohong
Trade Regulations
Fixed Prices
Limited Goods
Payment in Silver
Control and Surveillance

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Limited Trade
Closed Door Policy
Monopoly of the Cohong
Trade Regulations
Fixed Prices
Limited Goods
Payment in Silver
Control and Surveillance
 Under the Canton System, foreign trade was
restricted to the port of Canton in southern China.
 European traders, primarily from Britain, were
only allowed to conduct business through a
designated group of licensed Chinese merchants
known as the Cohong.

6. 6
Limited Trade
Closed Door Policy
Monopoly of the Cohong
Trade Regulations
Fixed Prices
Limited Goods
Payment in Silver
Control and Surveillance
 Foreign merchants involved in Canton trade were
prohibited from learning Chinese language and
customs.
 They were obliged to obey Chinese criminal and
commercial laws in Canton.
 The entry of women and firearms into foreign
trading posts, the employment of female slaves
etc. were prohibited.
 At the end of the trading season, foreign
merchants who came to Canton had to leave this
port.

7. 7
Limited Trade
Closed Door Policy
Monopoly of the Cohong
Trade Regulations
Fixed Prices
Limited Goods
Payment in Silver
Control and Surveillance
 The Cohong was a select group of Chinese
merchants authorized by the government to
handle foreign trade.
 They enjoyed a monopoly on all trade activities,
including purchasing, selling, and exporting
goods.
 European traders were required to deal
exclusively with the Cohong.

8. 8
Limited Trade
Closed Door Policy
Monopoly of the Cohong
Trade Regulations
Fixed Prices
Limited Goods
Payment in Silver
Control and Surveillance
 Strict regulations were imposed on foreign
traders.
 They were only permitted to trade during the
Canton Trade Fair, which occurred once a year.
 European traders had to live in the foreign
factories (isolated areas) and were not allowed to
venture into other parts of the country.

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Limited Trade
Closed Door Policy
Monopoly of the Cohong
Trade Regulations
Fixed Prices
Limited Goods
Payment in Silver
Control and Surveillance
 The Canton System established fixed prices for
goods, determined by the Chinese authorities.
 This limited the bargaining power of foreign
traders and ensured a favorable balance of trade
for China.
 It also prevented direct contact between
European traders and Chinese producers.

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Limited Trade
Closed Door Policy
Monopoly of the Cohong
Trade Regulations
Fixed Prices
Limited Goods
Payment in Silver
Control and Surveillance
 The system permitted the trade of a select range
of goods, primarily luxury items such as tea, silk,
porcelain, and spices.
 Chinese authorities strictly prohibited the export of
certain commodities, including opium.

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Limited Trade
Closed Door Policy
Monopoly of the Cohong
Trade Regulations
Fixed Prices
Limited Goods
Payment in Silver
Control and Surveillance
 European merchants were required to pay for
their purchases in silver.
 This led to a significant outflow of silver from
Europe to China, as the Qing Dynasty only
accepted silver as a form of payment, further
exacerbating trade imbalances.

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Limited Trade
Closed Door Policy
Monopoly of the Cohong
Trade Regulations
Fixed Prices
Limited Goods
Payment in Silver
Control and Surveillance
 Chinese officials closely monitored foreign traders
and their activities.
 They enforced strict laws to prevent smuggling
and unauthorized trade.
 Foreign ships were subject to extensive
inspections, and severe penalties were imposed
for any violations.

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Over time, the Canton System faced growing criticism and resentment from European
traders who sought more favorable trade conditions. The system was progressively
weakened, and eventually abolished in 1842 following the First Opium War, which resulted
in the Treaty of Nanjing.
Decline and Abolition

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