A China silver miner's holiday 
The Wallace Street Journal
By David Bond
Associate Editor, Free-Market News Network
Editor, Silver Valley Mining Journal
Kunming, Yunnan Province, China – The haze of a hundred cigarettes hovers over this jam-packed saloon of vaguely Anglo-American-nautical theme. A series of bands, some live, some karaoke, bangs out a mix of killer hard rock and the ubiquitous sappy Japanese-redux-style Roger Williams whiner Muzak. Rock-n-roll, not whiner-music, is clearly the favorite in Kunming.
On the dance floor there is a beer-can stacking contest, four feet high seeming to be the theoretical limit, wild hoots and applause if the theoretical altitude is exceeded; the hookers are chugging Heineken on dares twixt one another, chasing their beers with wine; you can save money if you order rounds of Heineken or Dali bottles, or Tingtsao cans, by the case for your table; a game of Liar's Dice is under way; a gold-miner with fine property in Henan Province is being hustled by (yet another) Canadian major – his property package went beggaring a year ago for $2 million, now a world-famous gold miner has just paid $10 million for some of it and he gets to keep the best part; the miner orders another round and introduces the hookers as his new wives, which one is the prettiest? he asks; in addition to the "working girls" the fabulously groomed female office workers and engineers of Kunming wait patiently at their own tables – if you like one of them you fill out a ticket identifying your table and inviting them over, and give it to the barkeep, if she likes you she'll drop by, the sociology of a law where Chinese parents are allowed only one son, but daughters were looked at the other way at; all seem to marvel at the ponderous belly of the wide-eyed bewildered round-eye in their midst.
The deep waters of Dianchi Lake lap placidly on nearby shores. This 2,400-year-old city of 1 million folks descended from 26 ethnic minorities is ablaze in neon, and rockin' on this typical Monday night. Close your eyes to the neon, tune out the electronic music, just listen instead to the triumphant boisterous chatter, and you could be in Wallace, Idaho in 1890, Comstock, Nevada in 1847, San Francisco in 1850, or the Klondike or Dawson or Seattle of 1898. There's gold and silver in them there hills! Forget the TSX-V-censored press releases, with their cautions and warnings. China knows that, after 200 years in the hole, they're hot, expletives un-deleted and hyperbole all in.
Technology, silk, gunpowder, spaghetti, ceramics and tea are what China offered the West, and for millennia the Persians, the Romans, the Italians, the Russians and the Brits bore silver over the Silk Road and the oceans to procure them. To stand on these streets is to tread on the cobblestones trod by Alexander the Great, by Caesar's Legions, by Marco Polo. China's love-affair with silver as money pre-dates recorded time, but was well-established before the birth of Christ. By 475 BC silver was informally monetized by China as a rational and unimpeachable means of exchange. The Yuan Dynasty of 1279-1369 AD declared silver to be China's official money, a tradition followed by the ensuing Ming and Qing Dynasties – indeed the tradition of silver money continued uncontaminated until 1935, when the Middle Kingdom became the last civilized culture on the planet to succumb to paper money.
Demand from both sides of the Urals and oceans for China's advanced technologies and precious commodities over the four decades between 1400 AD and 1800 AD was so intense that by 1800, China possessed at least half of the world's silver in European, Asian and even American denominations.
The non-Chinese world howled. Savvy Brits, unable to make their tea, silk and ceramic purchases from China with silver Her Majesty's treasuries no longer contained, did what any great superpower would do: they looted more silver from elsewhere, mainly the New World, and they inveighed war and enslavement against China. Being civilized, the Brits tried enslavement first, shipping tonne upon tonne of Indian-grown opium to China in exchange for tea and silver. Not to be out-done the Yanks jumped in, and the great clipper ship merchant fleets were born. Yes, the homeward-bound clipper ships hauled tea, but they weren't running dead-head to China: their east-bound holds teemed with dope.
Other than silver, dope was the only thing the Western world had left to trade. China and India possessed most of the prevailing technologies and had all the access they needed to natural resources in their provinces; all the West had to offer this new global economy were dope and an advanced military culture.
Its money and its youth threatened, an infuriated China outlawed opium in the early 1800s, first to preserve the mental health of its people, second to preserve the integrity of its silver treasuries, which by 1500 AD had made Asia the major player in what was then arguably the first fully integrated global economy. But mercantilist China, used to thriving on peaceful trade and innovation rather than war and conquest, was at a total loss to confront the Royal Navy, which sailed and later steamed to Chinese ports escorting boatloads of British merchantmen larded with the dreaded drug.
By the 1830's, writes historian Richard Hooker:
"(T)he English had become the major drug-trafficking criminal organization in the world; very few drug cartels of the twentieth century can even touch the England of the early nineteenth century in sheer size of criminality. Growing opium in India, the East India Company shipped tons of opium into Canton which it traded for Chinese manufactured goods and for tea. This trade had produced, quite literally, a country filled with drug addicts, as opium parlors proliferated all throughout China in the early part of the nineteenth century. This trafficking, it should be stressed, was a criminal activity after 1836, but the British traders generously bribed Canton officials in order to keep the opium traffic flowing. The effects on Chinese society were devastating. In fact, there are few periods in Chinese history that approach the early nineteenth century in terms of pure human misery and tragedy. In an effort to stem the tragedy, the imperial government made opium illegal in 1836 and began to aggressively close down the opium dens."
Fault the frustrated Chinese government for actually starting the Opium Wars, if you must. To enforce its prohibition (and its sovereignty) China sent a rag-tag fleet of junks out to intercept a British opium shipment in November 1839. Though the junks were hopeless outgunned, an indignant England dispatched the Royal Navy to exact revenge. For two years the Royal Navy mercilessly hammered China's shore batteries, ultimately prevailing. (The Chinese, it seems, did not embrace Klausewitz's philosophy that war is merely an extension of politics. They naively believed that reason and technology would trump all else.)
Humiliated by this defeat, China signed the Treaty of Nanking in 1842, followed a year later by the British Supplementary Treaty of the Bogue. These provided that the ports of Guangzhou, Jinmen, Fuzhou, Ningbo, and Shanghai should be open to British opium trade and British residence; in addition Hong Kong was ceded to the British. Sensing blood France, Russia and the United States all piled in with similar treaties granting similar access. In essence, the West subdivided the Middle Kingdom.
A sort of 19th Century prototype of the Treaty of Versailles, the Nanking Treaty also called for the scalp of Lin Tse-hsü, the Imperial Commissioner at Canton – he was the author of China's anti-opium policy – and the poor guy was dishonoured and fell on his sword. Maggie Thatcher's return of Hong Kong to Chinese sovereignty wasn't an act of surrender at all; it was merely the return of stolen goods, maybe even an imperial act of contrition, a rare event in this nasty age.
To drive a freeway in Beijing is to discover the Brits' all-told influence in China. What we would call the truckers' lane is the "Carriage-Way." To visit the Forbidden City, the Summer Palace, is to hearken upon gut-wrenching tales of ancient places of prayer and worship sacked and burned by the British and the French. Delightfully transliterated informational signs invariably use British spellings.
The contemporary American historian Andre Gunter Frank, in his seminal book Re-Orient argues passionately for a re-thinking of our Euro-centric, Marxist view towards China, and the rotten things we've done to Asia because we could not trump their technologies. Follow the trade, not the bullets, Frank begs.
Think about it, please. When was the last time China invaded Mexico or Canada? To China, Mexico is as close as Viet Nam. Korea is as close as Canada. How do we look to them?
And what of our embrace of Japan, which, after the Brits were done with China, savaged what was left with a brutality in the 1930s and 1940s that makes Stalin, Hitler and even Mao look like absolute pikers? A Japan far less user-friendly to Americans than China ever has been: I am not making this up. Ask anyone doing trade in both countries. You can own fee-simple property, as an American, in China. You cannot do so in Japan.
At a banquet and drinking party in Lijiang, China, another stop along the Silk Road 9,000 feet above sea level at the foot of the 18,000-foot Jade Dragon Snow Mountain, I am seated next to a Taiwanese businessman who buys silver powder from China, converts it into semiconductors, and sells it back into the mainland. What is to become of you guys? I ask during one of our interminable China-style toasts. What is to become of Taiwan? Are you in danger from these people?
"Shee-yut," he replies in his best American slang. "We need them. They need us. That's friendly. I have many customers here. They have many customers in Taiwan. We do business, not war. You want my advice? Keep an eye on Japan."
Thus goes the talk, from the sea-level elevations of Beijing to the high-mountain wilds of Lijiang. Trade, not dreadnaughts, as the tools of diplomacy. Interesting stuff, considering that two Chinese astronauts have been returned safely to earth even as Brownspan and Rumsfeld are here, trying to bring the Chinese to Jesus – all in the past week.
Earlier this trip, with Zhu Lin Xian, the Magistrate of Louning County, Henan Province, we toast our complicated teenage daughters and the future of silver mining in China. No horseshit about international relations; we have just decided we are friends. He has graciously hosted lunch. Our company giggles politely, but not derisively, at the round-eye's ineptness with chopsticks. We swap packs of cigarettes; mine, American Spirits, his Luo Yan and locally made. He likes mine so much he fetches up his chauffeur to trade a carton for a pack. Smoking Luo Yans this week, I clearly got the better end of the deal. Zhu's smokes are good. A carton of decent ciggies in China sells for about a buck. Yes, wages here suck, a miner earns 1,000 RMB (about $100 US) a month, but he can buy a Bic lighter or a pack of Luo Yans for a dime, and have enough left over to make the strokes on his farm.
Despite the need for an interpreter the conversation flows easily. Xian is a guy you'd like instantly, meeting over a pool game. He was a schoolteacher, now a high-ranking official who can cut you a mining deal and wants only an amenable (and at 1 percent entirely reasonable) tax cut for his county in return for a decent 30-year mine lease. If he signs off, so does the central government. You don't have to "think Chinese" to like Mr. Zhu, or to appreciate the time he has carved from a busy day managing a county of 800,000 people to break bread. China wants, and except for a few brief bad moments, embraces capitalism. Let's get rich, he says. His message to this American, only one of which has ever visited this region before: Please come see us, and meet us. We like you guys; please come see us, because I think you will like us, too.
So I raise my Heineken or Dali high to the celebrating silver miners in Kunming who are stacking beer cans and expending American capital in their efforts, and are sharing, as per contract, the fruits. You can cut a 75-25 deal here if you are a bright Canadian miner, not bad, better than the 50-50 Schlumberger just got for a chemical plant in Beijing.
I toast the gutsy China Man who has left the farm, bet his equity on a ferryboat, to haul mining concentrates from the Ying Mine down the reservoir to the mill on a contract, or to drive his truck on the high-line.
I toast the upstart North American companies who are willing to take a chance on China, even as I toast a China willing to take a chance on us. The British cannon are gone. China's great test will be to see if it can keep these deals. So will be America's.
China is back, and in the long perspective of history, they've not been gone long. Which means silver is back. Which means honest money is back. Which means astuteness in trade, not violence, has a chance to determine the future of the human race. Which means, maybe even within the lifetime of my own daughters, and the daughters of Zhu Lin Xian, an honest America will return. The Pacific will have earned her name.
