nder their opium supply. Lin confiscated 20,283 chests of opium (approximately 1210 tons or 2.66 million pounds). The British government responded by dispatching a military force to China and in the ensuing conflict, the Royal Navy used its naval and gunnery power to inflict a series of decisive defeats on the Chinese Empire, a tactic later referred to as gunboat diplomacy. In 1842, the Qing dynasty was forced to sign the Treaty of Nanking—the first of what the Chinese later called the unequal treaties—which granted an indemnity and extraterritoriality to foreigners in China, opened five treaty ports to foreign merchants, and ceded Hong Kong Island to the British Empire. The failure of the treaty to satisfy British goals of improved trade and diplomatic relations led to the Second Opium War (1856–60). The following social unrest within China was the background for the Taiping Rebellion, which further weakened the dynasty. In China, the year 1849 is considered the beginning of modern Chinese history.
Direct maritime trade between Europe and China began in 1557 when the Portuguese leased an outpost from the Ming dynasty at Macau. Other European nations soon followed the Portuguese lead, inserting themselves into the existing Asian maritime trade network to compete with Arab, Chinese, Indian, and Japanese merchants in intra-regional commerce. After the Spanish conquest of the Philippines the exchange of goods between China and Europe accelerated dramatically. From 1565 on, the Manila Galleons brought silver into the Asian trade network from mines in South America. China was a primary destination for the precious metal, as the imperial government mandated that Chinese goods could only be exported in exchange for silver bullion.
British ships began to appear sporadically around the coasts of China from 1635 on. Without establishing formal relations through the Chinese tributary system, by which most Asian nations were able to negotiate with China, British merchants were only allowed to trade at the ports of Zhoushan, Xiamen, and Guangzhou. Official British trade was conducted through the auspices of the British East India Company, which held a royal charter for trade with the Far East. The East India Company gradually came to dominate Sino-European trade from its position in India and due to the strength of the Royal Navy.
Trade benefited after the newly risen Qing dynasty relaxed maritime trade restrictions in the 1680s. Taiwan came under Qing control in 1683 and rhetoric regarding the tributary status of Europeans was muted. Guangzhou (known as Canton to Europeans) became the port of preference for incoming foreign trade. Ships did try to call at other ports, but these locations could not match the benefits of Canton's geographic position at the mouth of the Pearl River, nor did they have the city's long experience in balancing the demands of Beijing with those of Chinese and foreign merchants. From 1700 onward Canton was the center of maritime trade with China, and this market process was gradually formulated by Qing authorities into the "Canton System". From the system's inception in 1757, trading in China was extremely lucrative for European and Chinese merchants alike as goods such as tea, porcelain, and silk were valued highly enough in Europe to justify the expenses of traveling to Asia. The system was highly regulated by the Qing government. Foreign traders were only permitted to do business through a body of Chinese merchants known as the Cohong and were forbidden to learn Chinese. Foreigners could only live in one of the Thirteen Factories and were not allowed to enter or trade in any other part of China. Only low level government officials could be dealt with, and the imperial court could not be lobbied for any reason excepting official diplomatic missions. The Imperial laws that upheld the system were collectively known as the Prevention Barbarian Ordinances (防範外夷規條). The Cohong were particularly powerful in the Old China Trade, as they were tasked with appraising the value of foreign products, purchasing or rebu