“The Original Qi of the State”: Zheng Guanying’s Democratic Trade War

Trade war, protectionism, ‘industrial policy’: the concepts used by today’s ascendant nationalists to articulate their political economy are a marked departure from decades of neoliberal consensus on international trade. But different does not mean new. More than intellectual innovation, the resurgence of protectionist discourse around the world signals a return to an older vision of how states should manage international commerce: mercantilism’s zero-sum logic, with its fixation on trade imbalances, industrial subsidies, and interstate commercial warfare.

In today’s United States, most mercantilist policy and projection—whether Donald Trump’s tariffs or Joe Biden’s ‘Buy American’ campaign—is directed against China. Ironically, however, many of the key themes of the American mercantilist position—anxiety over trade agreements, attempts to protect industries from foreign competition, a bellicose tariff strategy—resemble a program that a generation of nineteenth-century Chinese nationalists developed to defend their own markets. Before the tariff returned to the American policy arsenal as an anti-China cudgel, the idea of “trade war” (shangzhan) cast a long specter over the late Qing Dynasty (1644-1912) and early Republic, as Chinese mercantilists confronted the West’s “imperialism of free trade.” With the current trade war between the United States and China unlikely to end soon, the career of shangzhan is an episode in the history of economic ideas worth returning to, and one not without subtleties.

The idea of treating economic policy as a species of warfare did not originate with either Chinese or Western mercantilists but has a long history in early-modern China. Many Chinese reformers like Huang Zongxi and Gu Yanwu, living through the chaos of the Ming-Qing transition (1618-1683), proposed a political economy that integrated agricultural and defensive capabilities through a system of self-sufficient military colonies. Although these proposals were met with scant support from the state, the idea of an agrarian political economy that stationed troops as farmers remained influential in the eighteenth and nineteenth centuries. What distinguished nineteenth-century Chinese mercantilism from this earlier discourse was its emphasis on state support for commercial development—radical in a political culture outwardly hostile towards mercantile activity—as well as the unprecedented nature of the Western challenge.

The first Chinese reformer to advance an explicitly mercantilist political economy was Zheng Guanying (1842-1922), the pioneering late-Qing theorist of “trade war.” Zheng came to appreciate firsthand the connection between mercantile and state power and the severity of China’s crisis through his work as a Shanghai comprador. Influenced by earlier statecraft writers like Feng Guifen (1809-1874) and Wei Yuan (1794-1857), Zheng published a mercantilist tract titled Shengshi weiyan, or Words of Warning for a Gilded Age (hereafter SSWY) in 1893.^[1] Especially after China’s defeat in the 1895 war with Japan, SSWY was hugely influential in the final decades of Qing rule, reaching a readership that included both the Guangxu Emperor and a young Sun Yat-sen. By the 1910s, SSWY was still widely read by reformers, including in Hunan, where Zheng’s essays were included in Mao Zedong’s political economy reading list.

Zheng’s passionate rhetoric in SSWY introduced a radical, new approach to international politics. Where the Mencius—the mainstay of classical Confucian education—began with a denunciation of any profit basis to politics, Zheng announced in SSWY that the rules of engagement had fundamentally changed. “Today all under heaven,” Zheng proclaimed, “is all about profit” (SSWY, 9.9a). This was lamentable; “fraud follows profit,” he conceded, “like shadow form.” But “making good use of” the profit impulse and its effects, Zheng argued, was key to appreciating the novelty of, and responding to, the political-economic challenge Western imperialism posed to China.

“Since the advent of Sino-foreign trade relations,” Zheng wrote, “the foreigners have engaged in endless deception, while our people are endlessly humiliated.” Revenge fantasies were only human; “of all those living,” Zheng asked, “is there anyone who does not wish to be the man, to grab a dagger and decide things once and for all?” (SSWY, 2.35b) This was the attitude that had inspired the Tongzhi Restoration, a suite of conservative reforms introduced under the Tongzhi Reign (1862-1874). But those reforms, Zheng insisted, were misguided. “We bought warships, created forts, firearms and naval mines, reformed our navy and infantry, and have endlessly discussed military policy,” Zheng wrote, “all for naught; the foreigners laugh at our expense.” The Western “scheme against us,” he continued “is an attempt to devour our flesh and blood, not our skin and hair; they attack our capital and assets, not our troop formations,” using “treaties as weapons of war” (SSWY, 2.36a). It was time to beat the West at its own game. “Studying military war,” Zheng concluded, “is inferior to studying shangzhan—trade war.”

Zheng then outlined his shangzhan program. First, the state needed to assemble statistics to understand “its gains and losses in commercial affairs” (SSWY, 2.41a). China’s trade deficit was severe, the result of unequal treaties and industrial stagnation. But there were solutions. The first step was to redirect the state’s energies, distracted by militarism and agrarian conservatism, towards commercial matters: “at its core,” Zheng explained, “the program of trade war aims to revive the domestic tea and silk industries” through state investment and collaboration with merchant groups. Zheng continued with a ten-point plan that would, among other things, allow domestic cultivation of opium, subsidize modern textile factories, facilitate import substitution, develop forges, copper and coal mines, and remove silver currency from circulation.

Each measure would “win a specific victory.” But a broader economic strategy was still necessary. While insisting that China fight to restore its tariff autonomy lost in the Opium Wars, Zheng promoted a deregulated system of internal trade, abolishing or reducing the internal tariffs on domestic trade that the Qing had relied on to raise funds since the Taiping Rebellion. This, combined with boycotts on foreign goods and import substitution, he hoped would “reverse currency outflow.” Identifying the state’s interests with those of its merchants—no small matter in an officially agrarian, anti-commercial political culture—Zheng insisted that the government  “use the power of its officials when merchants are in need,” which would “solidify the basis for trade war and amplify warlike power” (SSWY, 2.38b; 2.40b).

Beyond boosting domestic industries, Zheng’s concept of trade war in SSWY entailed a holistic program of state-building. Zheng encouraged the reorganization of the (long-underfunded) national postal service, state-sponsored development of railroads, and the formation of a network of free libraries to provide readers with “useful knowledge.” As part of an assertive foreign policy, modeled on Meiji Japan’s diplomatic successes, Zheng encouraged state visits abroad as a means of comparing different development strategies. In domestic administration, he demanded a role for merchants in commercial policy decisions, and advocated for the creation of a Department of Commerce with branches in every province, each run by an elected merchant-director, as, “commercial affairs,” Zheng concluded, “are the original qi of the state” (SSWY, 2.9a; 2.15b).

It is for shangzhan that SSWY is remembered today. But Zheng’s mercantilism is not the full story of his ideas. In the book’s 1894 edition,Zheng grouped a dozen chapters together in a section titled “On Developing Resources.” Rather than focusing on economic development, the volume’s four initial chapters addressed very different themes: “Parliaments,” “Public Elections,” “Public Law,” and “Newspapers.” Here, Zheng the mercantilist abruptly became Zheng the constitutional democrat. Relying on the age-old Confucian dialectic of substance and function (ti and yong), Zheng’s preface to SSWY insisted that any “functional” reforms China adopted on its way to “wealth and power,” among them railroads and technological upgrades, could not be separated from “substantial” reforms, chief among them “the discussion of politics in parliaments,” necessary for achieving “unity between sovereign and people, and common spirit between higher and lower classes” (SSWY, “Author’s Preface,” 1b).

In other words: for trade war to succeed, a parliament was necessary. In “On Parliaments,” among the longer essays in the 1898 edition of SSWY, Zheng heaped praise on Britain, with its “lower house that initiates legislation,” its “upper house that comments on the legislation passed,” and its monarch who plays a key but non-initiatory role. While supporting an appointed upper house comprised of merchants, scholars, and gentry, Zheng recommended an open franchise for a representative lower house, in which “the members are elected by the people according to a population ratio” (SSWY,4.3b; 4.1b). Zheng argued from history that parliaments and constitutions were preconditions for national power. “Some may ask,” Zheng wrote, “whether parliaments suit the West but not China.” He dismissed such quibblers as “having no sense of the big picture, and no deep knowledge of the causes of [national] profit and affliction in either society.” A parliament was a precondition for national renewal and power; “how else can it be that Britain, that tiny country,” has an empire that encompassed “twenty times the territory of the original state?” It was, Zheng concluded, “the obvious effect of parliamentary government.” Here Zheng also mentioned Japan, which “instituted a parliament and quickly underwent revival, outpacing the West” (SSWY, 4.3a). Given the facts, “how,” Zheng wondered, “could anyone in China say that parliamentary government is impracticable?”

Constitutionalism would make the state powerful but would also render it moral. “Joining sovereign and people as one body,” parliamentary democracy was a precondition for the renewal of Chinese politics. “The rise and fall of states is the result of the human talent (rencai),” Zheng wrote, drawing on a pervasive meritocratic strain in Confucian discourse; “elections facilitate this perfectly.” Zheng further suggested that elections were the “lost meaning” of the “village examination system” instituted in the ancient Three Dynasties of lore, in which talents were rewarded by sage-kings (SSWY, 4.6b). Constitutionalism was therefore key to the moral revival of the Chinese state and, as the examples of Britain and Japan demonstrated, would also secure the state against international threats that might compromise its economic integrity and very existence. Thus as an economic strategy, trade war required parliamentary constitutionalism, and the national unity of purpose it would bring in its wake, to succeed. But a trade war was meaningful in the first place only because the state fighting it embodied constitutional, popular principles.

Zheng’s vision of international trade as a commercial war between states endured in China long after his death in 1922. Whether through Chiang Kai-shek’s campaign for tariff autonomy or Mao’s autarkic-nationalist version of Marxism, deformed versions of Zheng’s mercantilism have continued to inform Chinese political economy to this day. But Zheng’s original formulation, in which constitutional democracy was the prerequisite for interstate economic warfare, disappeared. Racial nationalism and then Marxism filled the ideological void left by constitutionalism and served as justifications for an aggressive international political economy. Trade war and constitutional democracy were entirely separable.

How, then, to evaluate Zheng’s program and its fate? Far from being simply a product of 1890s China, SSWY underscores a broader trend in the history of economic ideas: efforts to join democratic development with a mercantilist policy in democracy’s defense. Zheng’s attempt to thread this needle connects him to a lineage of “reason of state” thinkers, both Chinese and non-Chinese, seeking to negotiate, as the German historian Friedrich Meinecke famously wrote, “between behavior prompted by the power-impulse and behavior prompted by moral responsibility” in the struggle to meet the “necessity of state” (5). In Zheng’s conception, trade war as “function” satisfied the needs for state power, while constitutionalism as “substance” met its moral needs, especially after Confucianism’s failure to confront capitalist modernity head-on.

Zheng insisted that there was a necessary relationship between trade war and democracy; his intellectual descendants called his bluff. But the concept of a dual commitment to economic nationalism and democracy retains significant appeal, as recent events would suggest. The failure of Zheng’s dual vision to materialize says little about what the future may bring, especially as the relationship between globalization and democracy remains contentious. The dream of a democratic state that can defend its economic interests is very much alive. Even if ultimately unsatisfying, by thinking through the relationship between international economic competition and democracy, Shengshi weiyan has us asking: trade war for what?

^[1] The version of the text cited in this piece is the standard expanded edition, Zengding zhengxu Shengshi weiyan (Shanghai; Liuxian shuju, 1894). I am grateful to McKinsey Crozier for her help in retrieving the edition from Yale’s Sterling Memorial Library. The phrase shengshi usually has the sense of “golden age”; Zheng’s deployment of the term was ironic, and resonates well with Mark Twain’s (roughly contemporaneous) idea of a ‘gilded age.’