Smoke and Mirrors: Tobacco and Opium's Effects on How China Sees Itself and the Modern World

   In 1823, a 24-year-old American merchant made his way to China to cash in on the ongoing illegal opium trade. For several years, the British had been growing opium in India and bribing Chinese officials to allow chests of the addictive drug into Chinese ports. By 1851, this American trader, named Warren Delano, was rich and had returned to New York to start a family. His grandson Franklin would inherit his name, his fortune, and grow up to become the 32nd President of the United States (Meyer, Karl E. “The Opium War’s Secret History.” New York Times, June 28, 1997.).

    As another story has it, James B. Duke, president of American Tobacco Company, was eager to tap into foreign markets on the heels of mass-produced cigarettes, which were becoming popular around 1880. He promptly called for an almanac. Upon seeing China’s population of 430,000,000 potential consumers, Duke declared, “This is where we're going to build our empire!” (Kremer, William. “James Buchanan Duke: Father of the modern cigarette.” BBC World Service, November 13, 2012.). By 1905, he was chairman of the joint-venture British American Tobacco Company (BAT), and his firm had made Shanghai the hub for its cigarette trade (Tinari, Philip. “China Trade: The Art and Commerce of Tobacco.” Duke Magazine, August 1, 2005). In just two years, BAT had already sold 1.3 million cigarettes. Ten years after that, “in 1919, BAT was producing more than 243-million cigarettes a week in Shanghai alone” (Tinari). Buck Duke, rich off China’s growing tobacco industry, would later use his fortune to found Duke University.

    The history of tobacco and opium, as these two narratives demonstrate, is startlingly similar. Countless foreign merchants made it rich by selling one of the two drugs in China during the 19th and 20th centuries. But the history of these two drugs, while deeply intertwined, diverge in a significant way. Opium, recognized for its destructive effect on the Chinese populace and a mark of colonial exploitation, left China decades ago. Tobacco, on the other hand, remains a fixture of the Chinese economy and cigarettes a part of daily life. Tobacco’s lasting presence before the Opium Wars, during China’s Century of Humiliation, and up through today make it a particularly interesting target for analysis. Tobacco’s history and China’s reactions thereto reflect the profound impressions that colonial intervention has left on China’s historical consciousness. By considering China’s former opium trade and its current tobacco industry, one may discover a paradox that is both a product of and a response to its modern history.

    Around 1643, shortly after its introduction to China, a Ming scholar named Fang Yizhi voiced concerns about tobacco’s effects on human health (“A History of Tobacco in China,” China Daily, January 13, 2014.). The Ming emperor, Chongzhen, quickly responded by banning its use. As fate would have it, the Ming Dynasty met its demise a year later, and Chongzhen’s cognizance of tobacco’s harmful effects died with him. Later, tobacco took on a particularly important historic role as a vehicle for opium’s 19th-century increase in popularity. Opium had been brought by Arab traders to China in the seventh or eighth century, but due to its scarcity and therefore high cost, it was largely used as medicine or enjoyed as a luxury until the 18th century (China Daily).

    Around 1817, Britain began its infamous opium trade in China, producing the drug more cheaply than ever before in nearby India (China Daily). Over the next hundred years, a period that is now referred to as China’s Century of Humiliation, opium ravaged Chinese society and led to the First and Second Opium Wars in 1839 and 1856, respectively. The subsequent treaties at Nanking (1842) and Tientsin (1858) legalized opium and pried open Chinese markets on British terms. These developments created a China scarred by its earliest encounters with the world and wary of the future.

    Throughout the 19th and 20th century, the tobacco industry experienced significant changes. During the years from its founding in 1902 to 1915, James B. Duke’s BAT controlled the Chinese market. Duke would not go unchallenged forever though, and BAT soon encountered a rival in the form of the Chinese-owned and Shanghai-based Nanyang Brothers Tobacco Company (Cochran, Sherman. Big Business in China: Sino-Foreign Rivalry in the Cigarette Industry, 1890-1930.). Both companies had benefitted from the Treaty of Shimonoseki which concluded the First Sino-Japanese War (1895) and required that China open its treaty ports to Japan. In effect, this agreement gave Britain, the United States, and other global powers ‘most-favored nation’ status in China, and allowed them to build factories and increase investment in a rapidly emerging market (Cochran). It is no coincidence that the language used to describe China’s economy then is being echoed today (e.g. “tap” into “emerging” markets). Companies today are eager to take advantage of the unprecedented number of Chinese consumers. Apple, for example, prides itself on its growth in the Asian market, and it is no secret why the release of gold iPhones and larger screens coincided with Apple’s entry into China (Wakabayashi, Daisuke. "Apple’s Big Growth Driver: China." The Wall Street Journal. 22 July 2015.). The eerie sense that foreign companies know what Chinese people want before they know they want it is not a new phenomenon.

    A rivalry soon emerged between these two firms, one foreign, BAT, and one Chinese, Nanyang Brothers. One can draw helpful comparisons by considering this competition. For example, many historians, like those referenced in the Introduction to Sherman Cochran’s Big Business in China: Sino-Foreign Rivalry in the Cigarette Industry, consider the rivalry to have been inherently unequal. They cite foreign firms’ access to “capital, technical sophistication, entrepreneurial talent, managerial efficiency, and political and diplomatic privileges” as advantages (Cochran). Many historians rebut these claims by insisting that such advantages were neutralized by the “local knowledge, nationalism, and mobility” of Chinese firms (Cochran). No matter, the rivalry did not last, persisting only until about 1930. At that point, BAT asserted itself and regained dominance in the Chinese market.

    China’s later response to this massive and growing industry, controlled by foreign capitalists, reflects how it saw the western world in the early 20th century. At this point in China’s history, nearing the end of the 1940s, a long civil war divided the country between Nationalists and Communists. The latter led by Mao Zedong would of course emerge victorious, in part due to the nationalistic rhetoric which espoused Chinese independence and spurned foreign influence. Coming after not only the Opium Wars of the 19th century, but the world wars of the 20th, the Communist Revolution of 1949 was a direct rebuke to the last hundred years of China’s history. In terms of tobacco, China was not about to let a foreign power again become so profitably entangled in its economy, especially if it did so by selling a plant with tobacco’s characteristics. The combination of British and American influence that existed in the form of Duke’s BAT was a perceived threat to the domestic economy, and anathema to the rhetoric of the 1949 Revolution. China’s reaction to the growing industry epitomized its feelings toward the world after a century of abuse. In 1952, BAT was asked to leave China (Kremer).

    Today, the World Health Organization (WHO) estimates that China has over 300 million smokers (WHO). The rate of male smoking has only increased to the point that “Chinese men now smoke one-third of all the world’s cigarettes,” and as a Lancet study by Chinese and British scientists recently revealed, “a third of all young men in China are doomed to eventually die from the habit” (Koplan, Jeffrey, et al. “Smoking cessation for Chinese men and prevention for women.” The Lancet). Furthermore, although women in general may be smoking less, young women remain a target for the industry. Reminiscent of the United States’ in the 1950s, when cigarettes were represented as “Torches of Freedom” for women, cigarettes are romanticized in China as luxurious and as symbols of independence. This is particularly alluring for ambitious women, considering the role of smoking as a social activity and the gender inequality that remains a fixture of Chinese society. A supplemental editorial to the Lancet study also points out cultural myths that make smoking particularly persistent, such as “that Asians are less susceptible to its dangers, that it is an ancient Chinese tradition and that quitting is easy” (Koplan).

    When it comes to public health in China, these trends are not par for the course. In most cases, China’s health profile generally looks as it should for a developing country. Rates of “communicable, maternal, neonatal, and nutritional disorders to DALYs declined for all ages from nearly 27% in 1990 to about 10% in 2010” (Yang). This is no small accomplishment, but it also demonstrates that China’s priorities rest somewhere other than public health when it comes to its smoking problem. But after all, this makes sense. China’s tobacco industry is state-run, generates massive profits and tax revenues, and the regulatory system meant to supervise it is grossly intertwined with the government (McKenna, CMS Cameron. "Consolidation of the China Food and Drug Administration." Lexicology)

    The China National Tobacco Corporation (CNTC) earned a state-supported monopoly with BAT’s forced exit in 1956 and now controls 90 percent of the tobacco market (He). To say CNTC has since become a successful company would be a gross understatement. In 2013, CNTC manufactured 2.5 trillion cigarettes, about 40% of the global total (Martin). Philip Morris International, the next largest tobacco company in the world, manufactured just 880 billion. CNTC’s brands make up 7 of the top 10 global brands. Most revealingly, a recent study in The Lancet points out, tobacco sales contribute up to 7 percent of China’s tax revenue (Koplan). When examined on a local level, the dependency on tobacco is only magnified.

    In Yunnan, a fertile province whose tobacco production may be compared to colonial Virginia, more than half the government’s revenue comes from tobacco. This is a boon not only for the government, but for working-class families as well: “Some 60 million Chinese earn their living through farming tobacco, and manufacturing and selling cigarettes” (BloombergView). Herein lies the paradox that characterizes many of China’s modern industries. It stems from China’s effort to restrict foreign investment in order to boost the domestic economy. Often, these gains come at the detriment of the consumer. In the case of tobacco and cigarettes, China’s nationalized industry is forced by its perceptions of the world to balance competing values: tax revenue and public health.

    Considering the prevalence of smoking, one might think a lack of anti-smoking laws helps perpetuate the nasty habit. However, as is the case with many things in China, the laws exist, but poor enforcement diminishes any effect they're supposed to have. For example, the China Food and Drug Administration (CFDA) is tasked with “supervising and regulating drugs, medical devices, food and cosmetics” (McKenna). Its regulations are diverse and numbered, but scandals permeate Chinese and international media about gutter oil (cheap waste oil recycled and used most commonly in street food) (Fisher) and forty-year-old meat (Levin). In the case of tobacco, problems begin with how intertwined regulators and CNTC are. As a 2014 Bloomberg article titled “The Chinese Government Is Getting Rich Selling Cigarettes,” points out, “[f]or all practical purposes, China National and its regulator are the same entity: They share headquarters in Beijing and have the same organizational structure, the same website, and even the same chief executive” (Martin). The depth of the government’s involvement is telling: the deputy of the State Tobacco Monopoly Administration (STMA) is Li Keming, the younger brother of China’s premier, Li Keqiang (Martin).

    The regulatory situation in other countries also contributes to the tobacco problem in China and throughout Asia. As regulations in their home countries become more stringent, foreign companies like the U.S.-based Phillip Morris or Japan’s Japan Tobacco seek to tap Asian markets that sometimes bear no regulations at all. These tactics are reminiscent of those that opium traders took in the 19th century. China is responding to this foreign intrusion with the Century of Humiliation’s abuses in mind. For a long time, Phillip Morris had been the “only company to have a license agreement” with STMA (Forbes). The terms of this agreement include that PM cigarettes meant for China will be produced in CNTC factories on the condition that PM “introduce technology, training and human resources expertise to the CNTC factories” (He). Similar agreements were formed for Japan Tobacco and BAT in recent years, resulting in corporate relationships all defined by STMA and usually requiring foreign companies to improve factory machinery or agricultural methods in places like Yunnan (He). Of course, greater competition boosts the economy and promotes the development of luxury brands that serve as nice gifts (or bribes).

    In this way, China is trying to make the tobacco trade different from the opium trade of the 19th century. China is eager to develop its economy on its own terms, and while it may seem as if these licensing agreements are a loosening of regulations against foreign investment, or worse, weakness, they represent something very different. They signal that a company like PMI may be allowed to conduct some business, but China will dictate to what extent and will not allow its tax revenue to be diminished as a result. At second glance, China can be seen asserting itself, telling a massive foreign corporation how it will be doing business. Furthermore, China requires PMI to improve the country’s technology and help diversify their economy in such a way that they will be left more independent by PMI’s presence. Call it what you will, but the Chinese Communist Party is not one to conduct business in a way that weakens its hold on political power or its economy.

    Currently, because China’s tobacco industry is a state-run monopoly, the government receives more tax revenue when public health suffers. 2008’s “smoke-free Olympics” seemed to signal an awareness of these issues. President Xi Jinping has banned smoking for Chinese officials, whereas Mao Zedong and Deng Xiaoping were seldom seen not smoking. Peng Liyuan, wife of Mr. Xi, serves as China’s so-called anti-smoking ambassador and helped host 2012’s World Tobacco Day in Beijing along with the Bill & Melinda Gates Foundation (USA China Daily). Beijing’s public smoking ban took effect in June 2015, and although poorly-enforced rules have existed in the past, the newly enacted law shows signs of promise (BBC). Perhaps most interestingly, according to the Reuters news agency, “repeat offenders will be named and shamed on a government website” (BBC). These steps, mostly taken in the past five years or so, represent progress. On one hand, consequences like these promote awareness and discourage smoking. At the same time, public shaming is not the mark of a developed country, reminiscent of Saudi Arabia’s public lashings of bloggers in recent years. Sure, it has a thriving oil industry, plenty of money, and the government’s actions can determine the price of a barrel, but policies like public beatings will continue to curtail how seriously the international community views Saudi Arabia. The same applies in the case of China’s erratic behavior. Additionally, the success of new policies and regulations will be subject to sustained enforcement by officials on all levels.

    The government’s actions, such as increased investment in the industry, have done little to increase confidence this already tenuous effort (He). This is a disturbing state of affairs in a country where economic growth is first on the leadership’s agenda. Likewise, increasing pressure from the World Health Organization and other NGOs to enact policies that deter smoking can make one optimistic. But again, China’s entry into the World Trade Organization (WTO) in 2001 was approved only on the condition that it “reduce its import tariff on tobacco leaf; reduce the cigarette tariff; eliminate the export rebate for flue-cured tobacco leaf and cigarettes; and eliminate the export bounty” (He). Again, great for China’s economy and tobacco companies, not for its people.

    And so, China faces a choice. The government can continue propping up an industry that generates a massive public health issue. Recent studies make plain the sheer magnitude of tobacco’s effects: “the annual number of deaths in China that are caused by tobacco will rise from about 1 million in 2010 to 2 million in 2030 and 3 million in 2050, unless there is widespread cessation” (Lancet). But more likely, the Chinese government can choose - as it should - to sacrifice some tax revenue for the sake of public health. The past hundred years of China’s economy was fashioned by a hundred years of history before that. From the tobacco fields of Yunnan to the closed-door meetings of the Politburo, China’s Century of Humiliation continues to shape the future. The next hundred years of China’s tobacco industry will be a response to today’s increasing awareness of public health. As always, China’s historical consciousness will play a role in whatever decision it makes.

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