Spain and China in the Age of Globalization (Part I)

The Spanish philosopher Ortega y Gasset once famously said that Spaniards are the Chinese of the Western World, since both nations have gone through many ups and downs but have always managed to bounce back.

There are other similarities apart from their roller coaster historical experiences.

Both China and Spain (together with Portugal) were pioneers in the rise of the first modern wave of globalization. The Manila Galleon, also known in Spanish as the “Nao de China,” was its most visible symbol.

Most remarkably, ever since that early encounter, both countries’ fortunes followed a similar pattern. They transitioned from their peak of glory to decline — and now both are experiencing a kind of re-emergence.

From a Eurocentric point of view, the Age of Exploration is considered to be the starting point of modernity and the herald of western supremacy over the rest of the world.

Using their superior weapons, technology and organizational capacity, the Iberian Empires — followed by the English and the Dutch — discovered, conquered and exploited large parts of the globe. Hegel concluded in the XIX century that regions not under European control were simply unworthy of attention.

But as we move from a Eurocentric to a global perspective, there is another way of telling the story. The early European expansion pioneered by Spain and Portugal was part of a larger narrative.

True, by (re)discovering America, girding Africa, reaching Asia and circumnavigating the globe, the Iberian explorers, traders, missionaries and conquistadores extricated Europe out from a long period of introspection and limited contacts with other cultures. But they were also doing something far more important than that. They were connecting worlds that had remained apart.

For sure, dislocated regional networks had existed before the Iberians, partially linking centers of civilization with one another. The overland Silk Roads or the maritime trading routes between the Muslim world and East Asia were precursors of a proto-globalization.

On the other side of the world, China had spearheaded efforts from the East to stitch together some of those fragmented networks.

Travelers like Zhang Qian, Fa Hsien and Xuanzang were daring trailblazers whose exploits enlarged the reach of the early Asian regional system encompassing China at its core, the Indian Ocean, Central Asia and the near East — with branches in peripheral areas, such as western Europe.

However, the truncated maritime expeditions of Zheng He (between 1405 and 1433) under the Ming dynasty represented the great hiatus in Chinese overseas expansion. From a traditional historiographic perspective, the Ming decision to halt the voyages and dismantle the fleet was a grave mistake. The decision placed China on the road to irreversible decline and facilitated the rise of the West.

In reality, as we know now, the Ming renunciation of overseas empire building did not entail the end of Chinese predominance in the nascent world economic system. Quite on the contrary, until the late XVIII century China remained the most dynamic centre of production and the biggest market. This feat was possible, to a large extent, due to an extraordinary convergence of apparently disparate trends.

In fact, as China was turning its back to the sea, the world was about to reconnect with China by maritime means.

When the Iberian navigators appeared on the Far Eastern horizon, it seemed that they would be submerged in the immensity of Asia, becoming nothing more than redundant intermediaries in the existing channels of intra Asian trade.

But as the first permanent Portuguese and Spanish trading posts were established in Macao and Manila, a different and more complex pattern emerged. At the core of this new relationship was money — great amounts of it flowing from the Hispanic world to the emerging world market.

By the time the Iberians started infiltrating the Far East Spain had already conquered the pre-Columbian Empires of the Incas and the Aztecs.

By putting into circulation in massive quantities the gold and silver found in its new possessions, Spain revolutionized the global economy and became the minting fabric of the world. As even Adam Smith recognized in 1776, the Spanish- American silver was the main means by which “distant parts of the world are connected with each other”.

For Ming China, the formation of the Spanish Empire and its essential role in the emerging financial networks were an unexpected bonus.

From the Song dynasty, China had relied on paper money as a means of exchange. After a succession of fiscal crises, trust in the value of paper money decreased. As the Chinese economy under the Ming continued manufacturing huge amounts of goods, the only way to avoid a collapse was to find alternative means to finance trade.

American silver was the solution. Under Spanish rule, from 1500 to 1800, the mines of Mexico and Peru produced around 85% of the world’s available silver. Over 40% of that silver ended up in China.

So by an extraordinary twist of history, the exploits of the Spanish conquistadores in America contributed to the health and survival of the Chinese Empire for the next two centuries.

The twin questions are: why, and how, did this happen? Exploring the answer will give us an unexpected perspective on the origins of early modern globalization.

Editor’s Note: Part II of this series can be read here.