System of trade that developed between Chinese and foreign merchants in the southern China city of Guangzhou (Canton).
From 1759 to 1842, all foreign trade coming into China was confined to Guangzhou and had to be conducted with authorized Chinese merchants. Foreign merchants were confined to a small area outside the city wall and were subject to Chinese law and other restrictions. British merchants' complaints grew during the early 19th century, and, with Britain's victory in the first Opium War (183942), China was forced to abolish the system. See also British East India Co. ; Treaty of Nanjing .