Volume of silver imports into China by country of origin 1550-1700

From the 11^th to the 15^th century, China was the most powerful trading and military power in the Indian Ocean. However, in the 1400s, resources were diverted away from international trade in order to improve internal infrastructure and northern defenses, and domestic trade was prioritized. From this time, China's presence at sea decreased significantly, and whatever naval resources it had were spent on defense, not trade. Following the Portuguese arrival in India at the turn of the 16^th century, European merchants requested trade with China in the 1510s and 1520s, but were denied both times. This changed however in 1557, as the Portuguese took control of Macau, and the arrival of silver from the Americas opened entry into Chinese markets.

Portuguese seize opportunities

As part of its previous isolationist policies, Chinese authorities had prohibited its citizens from trade via sea with other regions of Asia, alongside many other trade restrictions. Smuggling and piracy were rampant, particularly between China and Japan, but this changed under the Portuguese. China removed many of its trade barriers in the 1560s, but maintained its embargo on Japan; this allowed Portuguese merchants to then become intermediaries and facilitate trade between China and Japan as formal relations between the two countries were often hostile. The discovery of rich silver deposits in Japan in the 1530s also made it one of the most prosperous trading partners for Europeans for roughly 100 years, and Japanese silver made up over 70 percent of the silver imported into China from the selected regions shown here. In early decades the Portuguese did export goods to China, but eventually prioritized their shipping networks in Asia, facilitating trade between China, India, Indonesia, and Japan. These routes were quicker, safer, and more profitable than the much longer trade routes with Europe, and this saw Portuguese prosperity soar for almost a century, before their position in Asia was usurped by the Dutch in the mid-1600s.

The Spanish Philippines

During the given period, Spanish colonization and overseas expansion was largely concentrated in the Americas, with the major exception being the Philippines. King Philip II, whom the country remains named after, ordered the annexation of the islands in 1564 and effective control was established by 1571. The majority of Spanish silver (taken from Mexico) then entered China via Chinese merchants trading in Manilla, unlike the Portuguese model which actively pursued trade on the Chinese mainland. In comparison to the wealth the Spanish gained from colonizing the Americas, profits from trade in Asia were relatively small, and eventually declined over the 17^th century.