Foreigners Knocking on the Door: Trade in China During the Treaty Port Era By Wolfgang Keller, Javier Andres Santiago, and Carol H. Shiue∗ Draft: January 4, 2015 We employ a new, commodity-level dataset on the flow of goods be- tween fifteen major treaty ports to estimate a general-equilibrium trade model for China around the year 1900. The distribution of welfare effects depends critically on each port's productivity, China's economic geography because it affects trade costs, and the extent of regional diversity in production because this affects the po- tential gains from trade. We utilize this framework to quantify the size and distribution of welfare effects resulting from new technol- ogy and lower trade costs that came with the treaty ports. Find- ings show that domestic markets resulted in ripple effects which transmitted the effect of the international trade opening beyond the foreign concessions. However, because differences in relative pro- ductivity across regions were relatively low, the welfare gains from domestic trade improvements were limited. Keywords: domestic trade, welfare gains, 19th century China ∗ Keller: University of Colorado, CEPR, NBER, CESifo,
[email protected]. Andres Santi- ago: University of Colorado,
[email protected]. Shiue: University of Colorado, CEPR, NBER, CESifo,
[email protected]. We thank Greg Clark, Kris Mitchener, Noam Yuchtman, and work- shop participants at the All UC Group in Economic History Conference 2015 for useful comments. Bill Ridley provided excellent research assistance. Keller and Shiue gratefully acknowledge support by the National Science Foundation (grant SES 1124426). 1 China's economic development has taken major turns over the last couple of cen- turies.