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The Formation of the Modern East Asian Economy
      By 1898, Indian opium exports to China would be worth 3,570,000 pounds as opposed to its yarn exports worth 4,170,000 pounds. The appearance of Indian raw cotton imports to Japan, exports of Indian and Japanese yarn to China, and exports of Japanese cotton textiles to China would provide the basis for the expansion in the flow of goods between these Asian countries and for their eventual industrialization. Whereas India's exports to southeast Asia were principally jut (*), both its and Japan's principal exports to China were cotton yarn and cotton cloth. In fact, by 1913 close to half of the contents of the overlapping Asian international division of labour was centered around trade directly related to cotton. A chain of Asian cotton cloth production and consumption thus was built on the Indian production of raw cotton, the Japanese weaving, and Chinese hand-weaving production. In the 1880s, Indian cotton yarn and goods began to be exported to China and Japan, and in the early 1890s the exports to China increased dramatically. This increase signaled a change in the direction of India's cotton exports away from the West and towards East Asia. In 1890, 68% of its cotton crop was shipped to Europe and North America, but by 898 this had changed. It consumed 37% of the crop itself and exported 23% to Japan, allowing for 60% to be consumed within Asia. In 1913, the figures are even clearer: 41% for domestic consumption and 28% to Japan, for a total of 69% consumption within Asia. Its rise, however, was not completely smooth, as in 1913 it for the first time yielded first place to Japan in the exports of cotton textile goods to China. Yet even on the eve of the First World War, Indian cotton yarn was still central to Chinese cotton weaving.

     If the Chinese role in manufacturing these products was weak, its merchants nonetheless played a crucial role in their distribution. Their traditional domination of maritime trade in East Asia certainly proved persistent, as we can see in what happened to the transport of first cotton goods and then marine goods in northeast Asia during the late nineteenth and early twentieth century. Satisfactory research on the southeast Asian junk trade has not yet been done, but doubtless will be done in the next few years.

     Let us look, then, at the fate of two ports in Western Japan, Kobe and Osaka, as the centers of Japanese trade to and from China. Whereas Yokohama flourished as the port for the export of tea and silk yarn to America and was thus dominated by Western exporters, Kobe and Osaka specialized in their trade with China and southeast Asia. That is, in 1880 Yokohama was the base of 62% of the 360 Western firms in Japan, whereas Kobe and Osaka together had just 31% of them.

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