Shanghai’s trade, China’s growth: Continuity, recovery, and change since the opium wars

This paper provides an analysis of China’s trade performance from the 1840s to the present. Its focus is on Shanghai, the world’s largest port, which began directtrade relations with Western nations starting in 1843. The paper finds thatShanghai had, and continues to have, an important role in China’s trade structure.Applying the well-known gravity equation of trade for Shanghai’s treaty portperiod, the paper shows that this relationship fits today’s actual trade quite wellwhen projected into the modern period. Second, the foreign presence, as measuredby foreign direct investment (FDI), in Shanghai is shown to be related not only totrade in the past, but also to trade today, which suggests that FDI is one of thesources of persistence in foreign trade.