If you know about the 19th century Qing, it’s probably because of the Opium Wars, the catastrophic Taiping Rebellion, and the Boxer Rebellion - "the Century of Humiliation" starting with the first Opium War in 1839. And if you know a bit more, you’ve probably heard that the British selling opium to China drained their economy of silver, destabilizing the economy, and setting the stage for the 19th century downward spiral. If you know even a bit more, you might have heard of the "Great Divergence" debate: that is, why did the West industrialize so much faster than China or India starting around 1800 or so?
As far as "pop history" goes, this isn’t bad. But it’s quite a bit more complicated.
The Qianlong Emperor was the longest reigning emperor in Chinese history, over the "prosperous age" (shengshi). But signs of corruption, fiscal oppression, and building social tension exploded in the 1790s White Lotus rebellions, costing the government gigantic sums of money. The Jiaqing Emperor attempted to reform some of these problems, but now was on a tight budget. His successor, the Daoguang Emperor, was not as astute. By this period, ecological deterioration from the 18th century boom was exacerbating droughts and famines, adding strain to an already strapped budget, although the granary system still functioned. Yet inter-regional trade within China appears to have largely maintained, and even diversified beyond the rice exports to other goods, such as cotton and tea. The looming fact of this era however was the deflation of commodity prices in silver terms; copper:silver exchange went from around 700:1 in the 18th century, to 1700:1 by the 1830s (and higher by the 1840s). This put a huge burden on peasants, who now had to pay more taxes and rent, while being paid less for their production. And the resulting tension exploded in mid-19th century rebellions, most famously the Taiping. The controversy is over the cause of this depression.
Many have argued this was due to a silver drain, with net balances turning negative into the millions of taels by the 1820s. For long this was thought due to opium imports from British India, although this idea has come under fire. Man-houng Lin has argued that the silver drain was due to a global silver shortage rather than opium (for which the annual total was only 6% of the govt revenue), and Richard von Glahn has contested if silver balances even had an effect, pointing instead to internal market contraction, although he does not contest the negative ballance by 1826 (only the reasoning, although a firm account of this phenomena isn’t provided, but rather an account of why this phenomena may not be strongly linked with changing copper:silver exchange rates). Yet William Rowe, pointing to the viable internal market of the time - even diversified - doubts if declining domestic market vitality was the cause. He Liping has pointed out that opium silver outflows were 3.6-6.7% of the empire’s entire silver - not enough to account for the massive price deflation, yet still significant. Yet the quantity of outflow may not be the only issue - there are also ramifications on silver liquidity, and the currency circuits and regions that are affected. On the first point, in 1983, Peng Zeyi argued that this silver outflow prompted hoarding in the 1840s, decreasing investment, hitting especially hard regions like Jiangnan (near the Yangtze delta), Hunan and Sichuan (on the upper Yangtze and tributaries). This lead to a credit crisis, less payment to producers, and tenant-landlord tensions. (CITE: ROWE)
EDIT This entire Yangtze circuit, by virtue of its riverine development, was quite integrated, but wasn’t the entire empire. It ought be considered the variable geographic impact of silver depletion; notably, the Taiping rebellion began in southern China - most exposed to foreign trade - and roared through the Yangtze region. While these were substantial parts of the empire, they were not the whole, and thus a relatively strong silver depletion here may be out of proportion with other parts.
Von Glahn argues that there was both an internal market contraction, and that there was a shortage in bronze actually, and that bronze coins depreciated against silver due to their debasement, while arguing that due to a variety of currency circuits, there was some buffering between international drain and local currency exchange variations. Yet a few things are worth noting: von Glahn notes that silver imports were in form of silver dollars, whereas much of the export of silver was in the form of ingots (the form the Qing demanded as tax paymen) to British India. Based on this, he argues that we can’t simply argue that the balance of trade is balanced in terms of silver’s value as a metal, considering the currency circuit argument of Kuroda (see Kuroda 2008). In effect, this means that different forms of silver acted as different currencies altogether, largely independent of their shared metallic content, with their exchange determined by the market, similar to how foreign currency exchange works today.
Yet as Man-Houng Lin observes, silver ingots suggest a drain that has reached the periphery, as silver ingots were more commonly circulated there (ie further from cities, Shanxi, north China (north of Yangtze), central China (ie Wuhan, Anhui), western China) (in the core and south/southeast China (ie Jiangsu, Zhejiang, Fujian, Guangdong)), the more common silver form was the silver dollar) (Lin, pg 47-48). It could also mean the melting down of silver coins into silver ingots, which was carried out by private (and public) furnaces (Lin pg 41). At the time, there were also government complaints of ingots being exchanged for silver dollars for foreign trade (Lin, pg 22). Thus silver export of ingots means either a disproportionate drain of silver from peripheral areas (Lin 75), or the conversion of silver dollars into silver ingots, and thus linking the two silver forms through their metallic nature. An argument for local and specific impact of international trade on economic conditions is compatible with these points. In fact, this could explain the striking observation that bronze depreciated against silver more in Northern China than in Jiangnan observed by von Glahn (2016, pg 614) - the latter had more prominent silver dollar currency circuits, and thus the continued, even if ebbing, inflow of silver dollars would keep these elastic, yet a potentially national drain on silver ingots could hit areas harder with more prominent silver ingot currency circuits - such as North China. Von Glahn argues that North China saw a depreciation of bronze due to issuance of bronze coin denominated paper notes (qianpiao), but this seems difficult to interpret in light of his argument that North China was both more dependent on bronze coin, and and that price followed demand of money in currency circuits. Was there more supply (via bank notes) than demand in a traditionally bronze-dependent area? Why then does he argue that there was a bronze shortage? (615)
Rowe argues that actually that interregional commerce wasn’t fragmenting, but changing, as well as the commodity base diversifying. Thus the result wouldn’t so much be a nationwide shift in currency demand, but perhaps affecting different localities and currency circuits. Rowe argues, for example, that while trade volume may have decreased from middle to lower Yangtzi, that trade in the middle and upper Yangtzi may have increased (Ma, von Glahn 103). Further, if domestic trade patterns shifted towards new regions and commodities, new currency circuits ought be considered - for example, if silver ingot circuits were more prominent in new regions (as is the case upstream of Jiangnan, where various silver dollars were prominent in commodity currency circuits (Kuroda 2008)), then the reduction of silver ingots would have a disproportionate impact. Further, silver was medium for inter-province exchange (Lin pg 54-57).
Undoubteably, internal factors played a role in the Daoguang Depression. But the impact of international trade is important here as well...