China's Rise, Fall, and Rise Again: From Maritime Power to the Abyss

Book: Financial Cold War by James A. Fok | ISBN 9781119862765

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James A. Fok opens Chapter 4 with a simple point that still matters today: China was not always poor, backward, and inward-looking. For much of history it was the most advanced civilization on earth. Understanding that arc is not nostalgia. It explains why modern China thinks about power, trade, and foreign pressure the way it does.

The world leader that walked away from the sea

In 1421, the Ming Emperor Yongle opened the Forbidden City in Beijing. The scale was staggering. Roughly one in fifty people in China had worked on the project. Foreign envoys came to pay tribute. China looked like the undisputed center of the world.

The Ming had already sent Admiral Zheng He’s treasure fleet across the Indian Ocean, decades before European explorers reached those waters. Zheng He’s ships dwarfed Columbus’s Santa María. The voyages projected power, fought piracy, and expanded China’s tributary trade system.

Then the Confucian bureaucrats won an internal fight. The voyages stopped. By 1500, building large ocean-going ships was a capital offense. China’s naval edge rotted away just as Europe was gearing up for maritime empire.

Fok’s lesson is blunt. China’s centralized system could mobilize huge resources, but one bad political decision could lock in decline for centuries. Fragmented Europe, by contrast, let a failed pitch in Portugal become a successful pitch in Spain. Columbus kept shopping his idea until someone funded it.

Opium, tea, and the first trade war

The 19th century collision was not just about arrogance on both sides. It was about money flows.

Britain loved Chinese tea. Tea taxes funded the British state. But China did not want British goods. Silver poured out of Britain into Canton. The East India Company found one product the Chinese would pay for anyway: opium from Bengal.

The trade was officially banned. In practice, everyone looked the other way. Hong merchants, corrupt officials, and country traders all profited. When Commissioner Lin Zexu seized and destroyed 20,000 chests of opium in 1839, the traders were furious. William Jardine lobbied London hard. Britain sent warships.

The Opium War was a military mismatch. But Fok stresses something else: bad information inside a rigid hierarchy. Local officials lied to the emperor about battlefield results. Beijing overplayed a weak hand. The Treaty of Nanjing in 1842 was a humiliation. Hong Kong was ceded. New ports opened. Fixed tariffs stripped China of future flexibility.

The moral case against Britain was clear even at the time. But the deeper lesson for Fok is financial. Unresolved payment imbalances, plus weak diplomacy, can spiral into violence. Chinese attitudes toward the West still carry the scar.

Revolutions on top of revolutions

The Qing dynasty was already under strain. Population tripled between 1741 and 1850 while arable land grew only 35 percent. Land concentrated in fewer hands. Corruption spread. Foreign encroachment made everything worse.

The Taiping Rebellion nearly toppled the dynasty. Tens of millions died. Prince Gong tried to modernize after the Arrow War and the burning of the Summer Palace. The Self-Strengthening Movement built schools, bought weapons, and started industry. It was too slow, too narrow, and too controlled by the state.

Japan modernized faster and crushed China in 1895. Navy funds went to rebuild Cixi’s Summer Palace instead. The Hundred Days’ Reform failed. The Boxer Uprising brought another crushing indemnity.

The Qing fell in 1912. Sun Yat-sen became provisional president but stepped aside for Yuan Shikai, who tried to make himself emperor. Warlords took over. A Shanxi farmer watching China’s first election in 1911 wrote what many still feel about money in politics: the ones with the most cash win.

The May Fourth Movement in 1919 burned a lesson into China’s memory. China fought with the Allies in WWI. Shandong was not returned. Versailles reinforced what the Opium War had already taught: weakness gets punished.

Chiang Kai-shek reunified China in 1929 but neglected the peasants. Corruption in the Soong and Kung families became legend. After WWII, the Communists won. Mao proclaimed the People’s Republic on October 1, 1949. Industrial output had collapsed. Inflation was out of control. China’s share of global GDP had fallen to about 1.3 percent.

A leap into the abyss

Mao’s revolutionaries knew how to fight. Governing was another story. Soviet aid between 1946 and 1960 was enormous, bigger than the Marshall Plan in relative terms. The First Five-Year Plan worked. Then Mao got impatient.

The Great Leap Forward called for backyard steel furnaces and impossible grain quotas. Cadres lied about output. The state exported grain during famine. At least 40 million people died. Peng Dehuai spoke up at Lushan in 1959. He was purged.

The Cultural Revolution followed. Schools closed. Historical sites were smashed. Millions were sent to the countryside. By 1976, China had hit bottom again. An entire generation lost education. The country could barely feed itself.

Fok ends this stretch of history on a cliffhanger. Mao was gone. The Gang of Four was arrested. But nobody knew yet whether China would reform or sink further. That question belongs to Part 2.

What stuck with me

Three threads run through this chapter. First, China’s size and centralization are a double-edged sword. Second, trade imbalances left unattended can explode into conflict. Third, bad data inside authoritarian systems leads to catastrophic decisions. All three show up again in China’s modern financial story.

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