This Week in China’s History: The creation of the Shanghai International Settlement

Sept. 21, 1863

Listen to the narration in the embedded player above!

The historian of old Shanghai, F.L. Hawks Potts, put it with typical understatement in his descriptively titled 1928 book, A Short History of Shanghai: “On September 21, 1863, a union was effected and the International Settlement… came into existence.” This combination of concessions made to Great Britain and the United States in the 1840s created the Shanghai International Settlement, the de facto government for much of central Shanghai until World War II.

The Shanghai International Settlement was at the center of the story I wrote about in Champions Day. The fact that tens of thousands of people — mostly Chinese, but representing the full spectrum of nationalities that comprised Shanghai at the time — could occupy themselves with horse races while most of coastal China (and much of Shanghai) was engulfed in war says much about what the International Settlement was. On the anniversary of its creation, it’s worth a look back at this colonial outpost on the China coast.

The Settlement’s birth, growth, and demise were all grounded in war. The first Opium War opened Shanghai to European trade, according to the terms of the Treaty of Nanjing,  in 1842. A year later, the first British citizens arrived, granted the right to rent land — the start of the British concession —  not in the walled city of Shanghai, but a short distance away along the banks of the Huangpu River, what is now the Bund. 

Shanghai was by no means the most promising of the Treaty Ports, but it soon distinguished itself as the most successful. Divided into multiple jurisdictions, with ambiguous regulations within each, the city benefited from the possibility that came with uncertainty. An American concession was established in 1848, and a French concession a year later. 

The foundation of all these concessions was “extraterritoriality,” a system that essentially made colonial residents free of Chinese law even while residing in China. Even while documents made clear that the foreign concessions in Shanghai and elsewhere in China remained sovereign Chinese territory, extraterritoriality and imperialism rendered such assurances moot. Additionally, the mixture of jurisdictions — Chinese, British, American, and French, primarily, but a dozen other countries also had presences in the city — created vague boundaries that made enforcing law (and whose law?) even harder. Historian Isabella Jackson, in her book Shaping Modern Shanghai, adopts the label “transnational colonialism,” arguing that foreign power in Shanghai was defined in part by the competing jurisdictions: not more cosmopolitan or enlightened, but rather the power of individual imperial powers was limited by their need to cooperate, and perhaps compromise, with other imperial powers.

Whatever the process, foreign power in Shanghai was effectively unlimited. Yet, for the first several decades of the Treaty Port, that power was exercised primarily over quotidian municipal infrastructure matters: roads, sanitation, utilities. 

The Opium War opened Shanghai as a Treaty Port, but it was the Taiping Civil War that gave the International Settlement the power and identity that would distinguish it. Led by a man believing himself to be the younger brother of Jesus Christ, the Taiping War was the deadliest civil war in history, claming tens of millions of lives and laying waste much of southern and eastern China. The Qing dynasty teetered on the brink, and with the dynasty facing an existential threat, its ability to maintain order and provide services broke down. In response, the foreign powers in Shanghai took for themselves many of the responsibilities of government that the ruling Manchus were unable to fulfill, including raising military forces that could protect their population from both the Taiping and the various other rebel groups that had taken advantage of the chaos. The stability of the Settlement attracted people in the Yangtze delta. Shanghai’s population boomed.

“Chinese were not permitted to rent land in the foreign settlements,” Jackson writes in Shaping Modern Shanghai, “and neither the consuls nor the Chinese authorities anticipated Chinese living in them.” But all that changed during the 1850s. Fleeing the violence and disorder of rebellions, half a million Chinese moved into the Settlement, and from this time forward the population of the International Settlement would always be overwhelmingly Chinese. 

The 1850s thus presented colonial Shanghai with both internal and external challenges. Internally, the concessions faced a population that was both much larger and much more Chinese than it had ever been, or that the concessions founders probably ever expected. Externally, even if the Taiping and other rebellions were put down (as they eventually were) the threat of chaos outside the settlements’ boundaries was worrying. In response, and in order to both strengthen and streamline colonialism in Shanghai, a municipal council “that would be responsible for not only the public works…but also to oversee a new municipal police force” was created in 1854, and the three dominant foreign powers at the time — the British, Americans, and French — intensfied discussion about creating a unified foreign governance in the city. The French approached the arrangement with uncertainty — local actors generally favored allying with their anglophone colleagues, while the government in Paris preferred greater independence. When, in 1862, the French declared formally that they would not join, the unification that Potts wrote about was effected, creating the Shanghai International Settlement.

All colonial institutions are in some sense odd, imposing minority ru le remotely, often across vast distances. The Shanghai International Settlement was particularly so. For one thing, as mentioned before, it existed in the context of Chinese sovereignty, although its power was effectively unlimited within its boundaries. Those boundaries were another oddity: Shanghai was one city, but divided among (at least) three jurisdictions: the Chinese city, International Settlement, and French Concession. The oft-cited absurdity of needing three drivers licenses was not so impactful as the example intends, but the competing and conflicting laws and agencies did make for an administrative mess. Perhaps most uniquely for institutions of this kind, it was not controlled by foreign governments, or by any government at all. It was, in Jackson’s phrase “a transnational institution, answering not to the foreign consuls but to the ever-shifting foreign community, or at least those [of means].”

The Settlement was dominated by white Britons, but celebrated its diversity and cosmopolitanism (bearing in mind that while the great majority of the Settlement’s population was Chinese, no Chinese representation on the municipal council would exist until the 1920s). The Settlement would come to see itself as a “mini-league of nations,” exemplified by its flag, which featured elements of a dozen western flags.

The Settlement persisted as a defining feature of Shanghai’s existence into the 1940s, when it was ironically absorbed by another empire as Japan spread its colonial project across East Asia. The Settlement was formally dissolved in February 1943, as part of the treaty ending extraterritoriality, but this was moot since the city was controlled by Japan. Japan in turn ended the Settlement later that same year, and with the end of Japanese occupation in August, 1945, Shanghai’s colonial era came to an end.

The outlines of Shanghai’s International Settlement are still visible in the city’s map today, and a reminder of that city’s unique past