20 January 1841: Britain takes possession of Hong Kong

On this day in 1841, Hong Kong island was ceded to Britain following the Chuenpi Convention, along with a resumption of the opium trade.

Hong Kong island was handed over to Britain following the Chuenpi Convention

The 1830s came as a rude shock for China. For centuries, the Chinese empire had been the preeminent power in the region, where it boasted the best bureaucracy, and the latest technology. It had got used to being revered.

So when a band of uncivilised' Westerners came knocking on the palace gates, the Chinese could be forgiven for thinking all was as it should be. The problem was the Chinese world view was badly out of date.

Advertisement - Article continues below

By the 19th century, China's glory days had long since passed. By contrast, Europe was revelling in the industrial revolution, and Britain was busy carving out a global empire. To do that, Britain needed China or rather, what it had to offer.

True to the stereotype, the British had developed a sweet spot for tea. So much so, in fact, that tea imports accounted for 16% of customs revenue. It's been said that 83% of the Royal Navy's running costs could be met by levying taxes on tea alone.

Britain felt it had to address this unequal balance of trade. So, it searched its new territories in India and came up with just the export opium.

Opium was no big deal in Britain, where it was ingested as medicine. But the Chinese took a dim view of the narcotic. In China the drug was smoked and took a devastating toll on the health of the nation. The trade also consumed valuable reserves of silver used as currency, and of which China was running short.

None of this stopped British traders from unloading the drug at Canton, modern-day Guangzhou. In March 1839, the Chinese ordered the traders to surrender the cargo worth £2m, which at the last moment was guaranteed by the British government.

The Chinese seized and destroyed 20,283 chests containing opium, outraging the government in London (who would have had to pick up the bill) and public opinion.

Faced with a modern army and navy, China found itself outmatched in the fighting that followed. On 20 January 1841, Hong Kong island was ceded to Britain at the Chuenpi Convention along with a resumption of the opium trade.




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019

Are we back on the road to serfdom?

The coronavirus crisis has led to levels of state intervention unprecedented in peace time. The Austrian School reminds us of the challenges, say Dan …
22 May 2020

MoneyWeek's quiz of the week, 16-22 May

Test your recollection of the events of the last seven days with MoneyWeek's quiz of the week
22 May 2020
UK Economy

What are negative interest rates and could they happen here?

Negative interest rates – where banks pay you to borrow money – now exist in many parts of the world. John Stepek explains why they are a terrible ide…
18 May 2020

Most Popular

UK Economy

What bounce back loans can tell us about how we’ll pay for all this

The government will guarantee emergency "bounce back loans" for small businesses hit by Covid-19. Inevitably, many businesses will default. And there'…
1 Jun 2020

This looks like the biggest opportunity in today’s markets

With low interest rates and constant money-printing, most assets have become expensive. But one major asset class hasn’t. John Stepek explains why com…
2 Jun 2020

These seven charts show exactly why you must own gold today

Covid-19 is accelerating many trends that were already in existence. The rising gold price is one such trend. These seven charts, says Dominic Frisby,…
3 Jun 2020