A review of Smuggling, State-Building, and Political Economy in Coastal China, 1927-1949, by Philip Thai.
The history of smuggling in China offers an intriguing window through which to observe law and society. On the one hand, dynastic rulers and local governments continuously banned the import and export of certain commodities, particularly along coastal regions. On the other hand, smuggling continued to flourish, and many regional authorities even engaged in the business they were supposed to quash. During the Ming-Qing period, the rise of local powers and successive waves of commercialization expanded the network of illicit trade. Whether or not this suggests a “decline” of state authority and “lawlessness” in the local world, the state’s law and institution provoked resistance, compliance, and varied strategies toward the order and market of this “informal economy.” Regulations and local politics gave rise to what Michael Szonyi calls the “regulatory arbitrage”—the practice in which different individuals and groups took advantage of various regulatory systems in order to generate political resources. During the nineteenth century, while the smuggling network was embedded in the trend of what Philip Kuhn calls “local militarization,” the members of “valiant smugglers” and their collaborating groups—including the widespread “braves”—continued to drift between orthodox and heterodox realms despite strict laws enacted by the Qing government. All these strategies and the paradoxical structure continued to be vital to Republican-era smuggling, while the Nationalist government (1927-1949) gradually resumed its sovereignty and initiated a series of campaigns against smuggling. How did an illegal activity relate to the new wave of state-building? How did the Nationalist’s regulatory spaces eradicate or—on the other hand—exacerbate the very crime they aimed to battle? How did merchants, smugglers, and local governments respond to the suppression and strategize their actions? Philip Thai’s dissertation explores these questions and extends the discussion to a broader scholarship of state-building, law-and-economy, and world history.
The dissertation focuses on the Nationalists’ “war on smuggling” from the recovery of tariff control (1928-1934) to the Second Sino-Japanese War (1937-1945) and its aftermath. Prior to this, the Chinese state had been troubled by insufficient revenue and the loss of tariff autonomy following the Treaty of Nanjing. The Chinese Maritime Customs Service founded by the British, American, and French consuls in 1854 offered a reliable source of income. Although the treaties constrained the Qing state from increasing the tariff rate, customs duties became a significant source of income and helped secure the payment of indemnities and the fund of military suppression. The Customs Service thus enjoyed continued backing by foreign creditors, while for the Chinese state, the Service “operated as a bureaucratic arm of successive Chinese governments on a largely uninterrupted basis from 1854 to 1949” (p. 17). Putting aside its foreign-staffed structure, the Customs Service was deemed an indispensable component of state-building, particularly when warlords and competing authorities encroached on the central authority to tax (pp. 19-20). The Nationalist government then initiated an aggressive campaign, suppressing illicit trade and “‘muscling out’ its competitors at the provincial and local level” (p. 8). This process, as Thai asserts, “shows how, in coastal China as elsewhere in the nineteenth and twentieth century world, suppressing illicit maritime activities contributed significantly to modern states’ ability to assert sovereignty and extend control over society, economy, and territory” (p. 11).
Chapter 1 examines the change in the Customs Service’s policies that led to an upsurge in both smuggling and interdiction. Following the recovery of China’s tariff autonomy in the late 1920s, the Nationalist government inaugurated a series of policies related to the operation of the Customs Service and taxes. The main goals behind the reform were “protecting domestic industries, strengthening public finances, and building a unified, modern state” (p. 33). It was crucial to the war on smuggling, which not only helped the state to secure financial stability, but also enabled the state to resist domestic and foreign challenges (p. 34-35). Ironically, it was such a coercive campaign and increased customs duties which triggered the rise of the very crime the measures aimed to prevent. The smuggling of high-value industrial products and ordinary consumer goods sharply increased following the imposition of higher taxes on them. Contrary to this, the previously flourishing trade in narcotics and arms gradually decreased due to lower profits made from the market (pp. 39-40). Foreign suppliers and domestic smugglers linked by motorboats and junks expanded from Shanghai and Hong Kong to the northeast coast and southeast regions, where the merchants had connections with Manchuria, Japan, and Taiwan (pp. 40-46). In response, the state placed the Customs Service under the jurisdiction of the Ministry of Finance’s Customs Administration and utilized the Preventive Department, raids, and fines to fight the epidemic of smuggling (pp. 43, 47, 49-54). The central government also “sinicized” the staff of the Customs Service, which inevitably prompted outrage among foreign countries (pp. 42-44). The authorities and social media paid more attention to the new categories of impoverished individuals, especially “runners,” “vagrants,” “peddlers,” and a noticeable number of female smugglers (pp. 54-60). On the other hand, the smugglers “proved remarkably adaptable to new coercive measures by adopting various countermeasures of their own— some primitive, some sophisticated, but all ingenious” (p. 64).
Chapter 2 examines the legal framework adopted by the Nationalists in the centralization of maritime trade and assertion of state sovereignty. Here, Thai particularly explores three major initiatives undertaken by the Nationalists: expanding the geography of enforcement, contesting the boundaries of extraterritoriality, and policing maritime borders (p. 79). The challenges faced by the government included a lack of regulations on duty evasion and the trafficking of ordinary products. Regional variations in legal enforcement also urged the Nationalists to prepare a uniform set of regulations and place local authorities under the command of the Customs Service (pp. 84-85). Moreover, ever since the implementation of extraterritoriality, many Chinese smugglers strategically claimed multiple nationalities in order to gain access to supplies and avoid charges from the authorities. Facing this challenge, the Nationalist government increasingly expanded territorial jurisdiction and intended to “make smuggling no longer a diplomatic issue but a routine, domestic law-enforcement issue” (p. 91). The Customs Service also managed its control over maritime borders by patrolling within 12 nautical miles of the coast and establishing a penalty appeal procedure (pp. 96-102). Local officials, while frequently resisting the reform of centralization, created a series of expedient approaches toward the prosecution of smugglers, primarily because of the scarcity of resources (pp. 103-106). All these reforms encountered inefficacy, fragmentation, and challenges from the locales. As Thai argues, “the new regulations on paper seemed draconian, yet their actual application in many instances was far less severe” (p. 109).
Chapter 3 explores the practice of smuggling from the perspective of its participants. It particularly examines three manifestations of smuggling: as a form of business, as an expression of tax resistance, and as an assertion of political independence (p. 118). Through the exploration of the situation in various coastal villages, Thai demonstrates how they “served as important nodes in smuggling networks and how they supplied the manpower to transport, house, and distribute the goods that evaded duties” (p. 119). The motivation behind smuggling ranged from profit to survival strategy and tax resistance (pp. 127-138). The business involved was generally not risky, but the goods remained vulnerable to fines and confiscation if the participants failed to buy protection from governments and military units (pp. 122-125). People with multiple nationalities—especially those from the Japanese colony of Taiwan— manipulated their privileges of immunity from Chinese customs duties (pp. 125-127). While the Nationalists intended to eliminate lijin barriers and Native Customs—both had practiced tax farming since the late imperial time—local mercantile communities argued over the tariffs and looked for ways to interfere in duty collection (pp. 132-144). Local officials who did not recognize the authority of the central government consistently resorted to “official smuggling,” through which “provincial authorities imported goods without paying import duties or securing permission from Nanjing” (p. 147). All in all, due to the complex dynamics behind the so-called “smuggling,” Thai argues that one should not perceive this activity as merely a deviation from standardization. Rather, it should be taken as “a byproduct of shifting expectations of what constituted the proper mode of tax assessment and collection” (p. 155).
Chapter 4 moves the story forward into the Second Sino-Japanese War. The Nationalist’s monopoly of trade was strained in this period particularly due to the changing condition of the war. Despite tightened trade restrictions that were initially used to prevent the potential flow of goods to their enemies, the Nationalists made a number of compromises in order to balance competing priorities. One of the exemptions, for instance, was to protect specific businesses in exchange for popular support and foreign assistance (pp. 165-166). Many Nationalist armies also engaged in smuggling and frequently traded with their Japanese enemies and “puppet pirates” (pp. 189-194). The wartime shortage and the decentralization of authority facilitated the expansion of smuggling and blurred the boundaries of such activity. Trading with the enemy, in the end, “might be strictly banned, tacitly permitted, or actively encouraged” (p. 195). Yet the flourishing trade between rival forces raises a critical question regarding the concept of criminality: “Was it really ‘smuggling’ when everyone was doing it?” (p. 194)
Chapter 5 focuses on the postwar period when the Nationalists battled the Communists. Despite the need to ease wartime restrictions and liberalize the economy, the problem of inflation forced the government to reassert control over the economy. However, such efforts, together with increasingly higher duties, continued to drive smuggling. Various options emerged including manipulation of the new system of trade permits (pp. 208-213). The degraded material assets and eroding staff discipline made it extremely difficult for the Customs Service to recover its enforcement capabilities (pp. 213-221). The gold market shows that the domestic and international regulations created opportunities to profit from regulatory arbitrage (pp. 245-249). While legal reforms eventually reached another height during the postwar period, the new challenges continued to limit the reach of the state.
To sum up, Thai’s dissertation makes an important contribution to the study of smuggling in modern China. It draws together a wealth of primary sources including the records of the inspectorate general, the monthly smuggling reports at regional stations, court cases, and newspapers, periodicals, and travelers’ accounts. The rich sources enable the author to illustrate the complex war on smuggling at both the national and regional levels. Contrary to the conventional approach that tends to separate illicit activities from the legal realm, Thai’s study of smuggling demonstrates that the process of state-building was systematically linked with the expansion of illicit trade through constant negotiation between the state, local authorities, and society members. The intriguing story of smuggling reminds us that illegal activities played an equally important role with legal practices in the shaping of Chinese legal culture. The curious dilemma that the regulatory spaces exacerbated the very crime they aimed to undermine arguably paralleled bandit suppression in a similar time period during which “the more authorities suppressed the more bandits emerged.” All in all, Thai effectively argues that a proper understanding of the dynamics of smuggling requires seeing the interaction between different players in both domestic and supranational settings.
Department of History
Simon Fraser University
Records of the inspectorate general (Second Historical Archives)
Monthly smuggling reports at regional stations (local archives)
Stanford University. 2013. 314 pp. Primary Advisor: Matthew Sommer.
Image: Shidai Manhua (Modern Sketch), No. 35, Feb. 1937, 18; Colgate University Library, Special Collections and University Archives. Used with permission.