The so-called tea administration (chafa 茶法) was a system by which the imperial government controlled the taxation and market distribution of tea. It was introduced as soon as tea became a widespread beverage and was only abolished during the Republican period (1912-1949). The strictest control over the sales of tea was carried out through the tea monopoly (quecha 榷茶) of the Song dynasty 宋 (960-1279).
The term "tea administration" is first mentioned in a document compiled by Pei Xiu 裴休 (791-864), Chafa shi'er tiao 茶法十二條, a collection which included twelve regulations of the system. The oldest complete set of regulations, Chafa tiaoguan 茶法條貫, dated from 1009 and was compiled under the supervision of Li Te 林特 (951-1023), Vice Commissioner for Salt and Iron of the Central Finance Commission (sansi yantie fushi 三司鹽鐵副使). This document also presented statistical data about the tea tax (keli zongshu 課利總數). Other Song-period documents on the tea monopoly were Zhenghe chafa 政和茶法 (also called Hetong changfa 合同場法) and Shaoxing chafa 紹興茶法, compiled under the supervision of Chen Kangbo 陳康伯 (1097-1165) between 1138 and 1151.
Further information can be found in the chapter on Food and Commodities (121 ff. Shihuo 食貨) in the statecraft encyclopaedia Song huiyao jigao 宋會要輯稿. Of lesser quality are some books on the tea monopoly dating from the Ming 明 (1368-1644) and Qing 清 (1644-1911) periods, like Hu Yan's 胡彥 (jinshi degree 1541) Chama leikao 茶馬類考 and Cai Fangbing's 蔡方炳 (1626-1709) Lidai chaque zhi 歷代茶榷志. Tan Xuan's 譚宣 (juren degree 1432) Chamazhi 茶馬志 and the book Chashi huiji 茶事彙輯 by Zhu Yuefan 朱曰藩 (jinshi degree 1544) and Sheng Shitai 盛時泰 (1519-1578 or 1529-1589) are lost. The administrative and penal codes of the Ming and Qing dynasties, Da-Ming lü 大明律, and Da-Qing lüli 大清律例, respectively, include each a chapter on tea administration.
Tea was consumed in China as early as during the 3rd century CE, mainly in the southeast, but for a long time, it was only used beyond that region as a tribute material presented to the imperial court (see gongcha 貢茶, tribute tea). Yet during the 8th century, the consumption of tea was already so widespread that the government decided to control its marketing and to levy a tax on it.
The taxation on the sales of tea is first attested for 782, when Zhao Zan 趙贊 (dates unknown) suggested to the central government of the Tang dynasty 唐 (618-907) to levy a tax of ten per cent for the production of tea, lacquer, bamboo and timber. This tax tea was collected under the supervision of salt-and-iron transport commissioners (yantie zhuanyunshi 鹽鐵轉運使) and delivered to the court and the markets of the capital. The collection was carried out by tea offices (chawu 茶務). The tax levied in that year, called "tea money" (chaqian 茶錢) or "ever-normal fee" (changpingqian 常平錢), was only collected for one accounting period, and not introduced as a regular taxation before 793. At that time, tax stations (shuichang 稅場) were established in the production regions where merchants had the opportunity to pass by and purchase it.
Tea was classified into three quality levels and taxed at ten per cent, yielding annual revenue of 400,000 strings (guan 貫) of cash (see money). The tea tax thus constituted a substantial part of the government revenue. The first official document on the tea monopoly dates from 821, when the tax (ke 課) on the sales of tea was, after recommendation by Zheng Zhu 鄭注 (d. 835), lifted from 50 wen 文 (copper cash) to 100 wen per weight unit (not further defined), or fifteen per cent of the commodity value. This means that at least in some regions of China, the government had already in earlier times taxed the commodity.
In 835, Wang Ya 王涯 (d. 835), who was supervisor of the tea collection by the transport commissioners, introduced the tea monopoly (quecha 榷茶). The levies were to be collected by *tea monopoly commissioners (quechashi 榷茶使). In practice, the government acted as a monopsonical purchaser of all leaves produced by the tea farmers. Wang ordered the tea farmers to plant their tea shrubs in the vicinity of government factories, where the freshly plucked tea leaves could be processed and packed. He also ordered to burn all stocks from earlier years, in order to assume total control over the production, processing and marketization of tea leaves, and to prevent private trade. These measures immediately met fierce resistance, not only among the farmers, but also at the court, and were therefore abolished before long.
In 836, Counsellor-in-chief Li Shi 李石 (768-847) revived the old system with a taxation of ten per cent. During the reign of Emperor Wuzong 唐武宗 (840-846), the monopoly system was firmly established. Tea farmers were ordered to sell their whole harvest to the authorities. The tax was deducted (zhe shui 折稅), and the rest of ninety per cent sold to merchants, which in turn payed several types of taxes, like a lodging tax (zhushui 住稅), a passing-by tax (guoshui 過稅), and a living tax (tadiqian 塌地錢).
Emperor Xuanzong 唐宣宗 (r. 846-859) raised the tax to 5 cash coins (qian 錢) per "pound" (jin 斤, see weights and measures). This tax was called "tea surplus money" (shengchaqian 剩茶錢) and served to cover the transport cost.
The tea monopoly was continued by the Southern Tang 南唐 (937-975) and the Later Shu 後蜀 (934-965) empires. Tea from Hubei was produced privately and sold to north China by *barbarian trade offices (huituwu 回圖務), where a high tax was levied. In north China, where no tea was produced, the sale of tea was regulated by the *Storehouse Office (zhichangyuan 置場院), where likewise a sales tax was collected.
During the early Song period, the tea monopoly was supervised by the *Salt-and-Iron Monopoly Bureau (yantiebu 鹽鐵部) of the State Finance Commission (sansi 三司) and the monopoly tax commission (quehuowu 榷貨務) of the imperial capital. During the Yuanfeng reign-period 元豐 (1078-1085), the responsibility was given into the hands of the Treasury Bureau (jinbu 金部) of the Ministry of Revenue (hubu 戶部) and the Court of the Imperial Treasury (taifusi 太府寺). The Southern Song 南宋 (1127-1279) gave the administration over the monopoly directly into the hands of the central government, but in practice, the collection of taxes was controlled by the monopoly tax commission and the official tea factories (chachang 茶場), which were either supervised by officials dispatched from the capital, or by local officials. Emperor Huizong 宋徽宗 (r. 1100-1126) created the office of the Tea-and-Salt Supervisorate (tiju chayan si 提舉茶鹽司), with one section in each tea-producing circuit (lu 路).
The basic system of the tea monopoly was created in 964 with the imperial decree to control the tea markets in the capital Kaifeng 開封 (today in Henan), Jian'an 建安 (today's Jian'ou 建甌, Fujian), Hanyang 漢陽 (today part of Wuhan 武漢, Hubei), and Qikou 蘄口 (today Qichun 蘄春, Hubei). A year later, Su Xiao 蘇曉 (904-976) was appointed transport commissioner (zhuanyunshi 轉運使) of Huainan 淮南. He controlled the purchase and sales of tea in the five prefectures of Qizhou 蘄州 (today's Qichun 蘄春, Hubei), Huangzhou 黃州 (Gangshan 黃岡, Hubei), Guangzhou 光州 (Huangchuan 潢川, Henan), Shuzhou 舒州 (Anqing 安慶, Anhui), Luzhou 廬州 (Hefei 合肥, Anhui), and Shouzhou 壽州 (Shouxian 壽縣, Anhui).
The tea leaves were processed in fourteen factories (chang 場), and the government at these places reaped a tax from the ready-made commodity. The annual revenue of the tea tax was said to be more than a million strings (min 緡) of cash. A decade later, there were thirteen factories subordinated to six monopoly tax commissions (quehuowu 榷貨務), which were Jiangling 江陵 (today in Hubei), Zhenzhou 真州 (today's Yizheng 儀征, Jiangsu), Haizhou 海州 (Lianyungang 連雲港, Jiangsu), Hanyang 漢陽 (today part of Wuhan 武漢, Hubei), Wuwei 無為 (today in Anhui) and Qikou close to Qizhou.
The tea monopoly was carried out according to two different models strictly applied in different production regions. In the free trade model (tongshangfa 通商法), tea farmers paid a rent to the government, while the merchants paid a trade tax (shangshui 商稅), but were allowed to buy directly from producers and to sell wherever they wanted, as long as it was in an assigned zone. This model was used in the regions of what is today Guangdong, Guangxi, and Sichuan before 1074, and in southeast China between 1059 and 1101.
The other model, the strict control of purchase, defined tea-producing farmers as "tea garden households" (yuanhu 園戶), and required that part of their harvest was delivered to the government as a kind of tax in kind. The local authorities defined the height of this tax. It was geared to the height of seed capital (benqian 本錢) granted as a credit to the farmers as working capital for the next season. The tax in kind constituted the main part of the tribute tea delivered to the imperial court.
The rest of the harvest was completely sold to the government. Private trade was strictly forbidden. The authorities thereafter sold the tea to merchants at a fix price far above the purchase price, and thus also reaped a substantial income. Most critical was the requirement that even tea farmers were not allowed to keep tea for their own consumption (shicha 食茶), but had to rebuy tea leaves from the government. They delivered then their harvest to the mountain factories (shanchang 山場) as redemption for the credit from which was deducted the tea tax in kind (zhecha 折茶, zheshui 折稅, also called tuodiqian 拓地錢). This served as tribute tea (gongcha) that was delivered to the court. The leftovers were purchased by the government and handed over to licensed merchants who paid a certain fee (in money or in textiles, jinbo 金帛) for the license and had thus the sole right to sell the tea leaves on the market. After 1030, tea farmers were allowed to sell directly to merchants, which in turn collected the tea tax (chou xi 抽息).
Merchants were ordered to deliver grain and fodder (liangcao 糧草) to border garrisons, a service for which they received certificates (wenquan 文券, jiaoyin 交引), by which they were allowed to obtain a certain amount of tea in the monopoly tax commissions. This commodity was to be sold in predefined cities and prefectures. This procedure was called "certificate method" (jiaoyinfa 交引法) or "central import method" (ruzhongfa 入中法). The amount of tea for purchase indicated on the certificates depended on the amount of the grain delivered, but also on the urgency with which the border garrisons needed those commodities.
This form of the tea monopoly system was part of the so-called three-tax system (sanshuifa 三說法, 說 standing for 稅, also called sanfenfa 三分法). This term denoted the delivering of fodder, grain and cash coins by merchants to garrisons in the borderland or around the capital city, for which service the merchants were given vouchers allowing them to purchase three types of commodities (tea, salt, and incense/drugs) and sell them on the market. In later years, they were also alternatively given vouchers for the marketization of ivory and copper cash; the extension of commodities led to the designation "four-tax system" (sishuifa 四說法 or sifenfa 四分法). This system was also known with the designation "imports to the centre" (ruzhong zhidu 入中制度), meaning that merchants brought monopoly commodities from the place of production to certain central markets. Tea was the main commodity to be delivered, but when the procurement of the border garrisons with necessities expanded, the government had to integrate other commodities, and fixed quotas for the whole system. 40 per cent of the vouchers were issued for the sales of incense/drugs, thirty per cent for ivory, and another 30 per cent for tea. According to other models, the percentage of tea vouchers was 40. The value of vouchers depended on the urgency by which commodities had been were delivered to garrisons, as well as the geographical distance and the current price of the commodities.
Yet soon, merchants began to manipulate the price and quality of grain and achieved higher loads of tea than would actually correspond to the amounts and quality of grain delivered. Because the tea handed out to the merchants was taxed, the revenue from the tea tax was consumed by the loss of buying additional military supplies. The government therefore preferred the "monetary method" (xianqianfa 現錢法), by which the purchase of tea was depegged from the delivery of grain.
Li Zi 李諮 (968-1036) suggested in 1023 to restrict the purchase of tea by merchants to the official state-run tea factories, to which the tea farmers delivered their harvest. During the purchase, the authorities collected the tea tax (xiqian 息錢) from the merchants, who handed over the assigned duty to the government (tiena 貼納). An officially fixed sales price of 56 wen, for instance, was composed of 31 wen of tax and 25 wen for the commodity. The government thus saved the granting of "seed capital" to the farmers. Yet the 25 wen were paid for quite a large volume of tea leaves including an amount of "surplus tea" (haocha 耗茶), which was officially handed over to cover eventual losses during the transport. With the introduction of this new method, called "assigned tax method" (tieshefa 貼射法), or "ticket method", the surplus tea, making out 20 to 35 per cent of the volume handed over for sale, was converted into a so-called "lubrication adjunct" (raorun 饒潤), which made out between 40 and 60 per cent of the commodity – all substantial parts for which tea farmers were actually not paid.
According to the "ticket method", the merchants were forced to opt for tea at a fix price in the tea factories, with a tax (xi 息) for each jin "pound" of tea. The negotiated amount, determined by a "ticket" (tieshe 貼射), would then be purchased directly from the tea producers. The chapter on Food and Commodities (126 ff. Shihuozhi 食貨志) in the official dynastic history Songshi 宋史 explains that a pound was sold at 56 qian, of which the commodity itself cost 25 qian, which means that the tax amounted to no less than 31 qian (or 55 per cent). In order to attest the correct purchase of tea, merchants were given a receipt (quan 券, juandui 券兌). When the stocks of tea farmers were not sold out, the government purchased the leftovers, and if the farmers were unable to deliver the necessary commodity in time, they were made liable for the losses and had to stand for the tax.
Seen from the side of the government, the tieshe "ticket" method made administration much easier and secured a well calculable income to the state treasury. For the tea merchants, the earlier possibilities to illegally purchase low-quality tea from private producers were annihilated, but the new method helped them to earn high profits from the tea trade. The tea farmers did not receive credit in advance any more, suffered under the low government price at which they had to sell their tea, and under the increased levy of surplus tea. It was furthermore only first-class tea which could be purchased by the merchants; this restricted the merchants' tendency to buy sub-quality tea while bringing it to the account as "good" tea. Tea of minor quality was bought by the government, and in such large volumes that the state lost quite a substantial amount of tax revenues.
Sun Shi 孫奭 (962-1033) therefore criticized this procedure, and it was abolished in 1025. Emperor Renzong 宋仁宗 (r. 1022-1063) in 1059 even abolished the tea monopoly in the southeast altogether, but it was revived under Emperor Huizong 宋徽宗 (r. 1100-1126). The free trade of tea (tongshangfa 通商法) was given up in 1074, first in Sichuan, and then in the southeast.
In 1036, Sun Juzhong 孫居中 (dates unknown), supported by Sun Shi, initiated a similar method, which was suggested to the throne by Yang Jie 楊偕 (980-1048). Yang explained the twelve shortcomings of the three-tax system and the twelve advantages of a coined-money method (xianqianfa 見錢法). This system was introduced in the same year. Tea traders delivered commodities to border garrisons, where they were handed in tea vouchers (chajiaoyin 茶交引) to be cashed at one of the monopoly tax commissions, and paid in money. It was forbidden for tea merchants to deliver tea directly to the capital and the metropolitan region. Many merchants had purchased and sold tea secretly and thus bilked the state of as much as 5.68 million cash, according to Sun Shi. In 1038, during the military conflict between the Song and the Western Xia empire 西夏 (1038-1227), the need to supply the troops in the border zones was so urgent that the government deviated from the new method by a system called "mediated method" (zhuozhong zhi fa 酌中之法), which allowed the merchants to obtain not just money, but also tea and other commodities.
Yet the conversion or the "prices" of tea had substantially changed. While 70 strings of cash formerly earned tea with return of 100 strings, the proceeds at that time had declined to 65. From 1050 on, the government often changed its policy and sometimes preferred the four-tax system, and in other instances the exclusive redemption in money. The system was given up during the Jiayou reign-period 嘉祐 (1056-1063) in order to prevent abuses of and speculation with the system.
In 1102, Counsellor-in-chief Cai Jing 蔡京 (1047-1126) reinstituted the tea monopoly in the southeast, but in an altered modus, namely the tea-certificate method (chayinfa 茶引法). The government-organized sales of tea leaves was abolished, but instead, merchants were ordered to purchase tea certificates (chayin 茶引, chaquan 茶券) at the monopoly tax commissions of the production regions or in the capital. With these certificates, they bought tea leaves directly from the producers. These commodities were then checked, weighed, and sealed by the authorities, and thus made ready for legal sales, to be delivered in fixed quantities at a fix time to a fix destination. There were short-distance certificates (duanyin 短引) and long-distance certificates (changyin 長引), the latter for the sales in other circuits, but with a restriction of one year. Tea bought by short-distance certificates was to be delivered to markets within the circuit of production, and in a time shorter than three months. This new method gave both the tea farmers and the tea merchants a certain grade of liberty, and thus boosted the production and marketization of tea in Song-period China. Moreover, it eventually raised the government's income from the monopoly, too.
The certificates were issued by the monopoly tax commissions and fixed in which region or city the tea was to be sold. The merchants bought the tea directly from the producers and at the same time collected for the government the tea tax (zhengsuan 征算).
Extraordinary regulations were applied to the distribution of "wax tea" (lacha 蠟茶, see tribute tea) from Fujian which was an important type of tribute tea, or "water-milled tea" (shuimo cha 水磨茶), which was a widespread consumption tea (shicha 食茶).
The Song dynasty protected the tea monopoly with harsh punishments for violations against the state monopoly. The forgery of certificates and private exchange were punished with execution. Notifications of abuse to the authorities were rewarded.
In Sichuan and Shaanxi, a *supervisorate (tijusi 提舉司) was created, which controlled the production of tea in order to purchase those amounts which were necessary to buy horses from the northwestern borderlands. In this way, the control over tea production was combined with the horse administration (mazheng 馬政) to the famous tea-horse trade or tea-horse administration (chamafa 茶馬法). In Chengdu, the *Chief Tea and Horse Supervisorate (duda tiju chama si 都大提舉茶馬司) was founded which supervised the exchange of tea against horses at the markets in the northwestern borderlands. The tea produced in Sichuan was therefore in total bought by local factories ("state-owned factories" guanchang 官場), from where the commodity was transported to Zhixi 至熙 (today's Lintao 臨洮, Gansu) or Qinzhou 秦州 (Tianshui 天水, Gansu), where it was bartered or traded against horses. Alternatively, the transport was taken over by merchants, who bought the tea in the factories, paid a certificate tax (yinshui 引稅) of ten per cent, were given long-distance certificates, and transported the tea to the border markets, where they sold the tea in "tea-selling factories" (màichachang 賣茶場) and purchased with their proceeds horses in "horse-purchase factories" (mǎimachang 買馬場). The factories themselves traded with the border tribes. The revenue from this trade served to finance the border defence. Tea sold in the region of Sichuan was taxed at a rate of thirty per cent and was directly sold to merchants, who distributed the tea on the markets of the four circuits of the Sichuan Basin.
In 1128, Zhao Kai 趙開 (1065-1141) abolished the direct purchase of tea for internal sales, and introduced the tea certificate method in Sichuan. This system secured a substantial part of the state revenues and the supply of horses for the military.
The Jin dynasty 金 (1115-1234), which controlled northern China, had to rely on the import of tea from the enemy, the Southern Song, and therefore strictly controlled the sales and consumption of tea. The first *Government Tea Office (guanzhicha 官制茶) was introduced in 1198, but soon abolished. A year later, government-owned factories were established in four prefectures, where tea imports from south China were processed, packed, and taxed.
The common bag of tea was worth 600 cash (wen 文). The tea was distributed to all regions of the empire according to the population statistics, but the distribution was laid into the hands of merchants who purchased the tea from the government factories, paid a certain fee for a licence (yin 引), delivered a certain proportion of commodities (tea?) to the government and had then a free hand in selling the tea. This procedure was first carried out in the circuits of Shandong 山東 and Hebei-Xi 河北西.
This system was again abolished in 1205. At that time, the import of tea became more difficult, and it was only allowed to state officials with a rank higher than 7 to drink tea. They were furthermore not allowed to sell or give away their portions. Hoarding of tea was strictly forbidden, as was the private barter of salt and silks against tea. In 1223, these prohibitions were reinforced, and only Princes, Princesses and officials with a rank of 5 and higher were allowed to consume tea. Offenses against these regulations were punished with five years penal servitude (tu 徒), and indications were rewarded with no less than 10,000 strings (guan 貫, see money) of cash.
The Yuan dynasty 元 (1279-1368) was founded by the Mongols, which had no problem with the supply of war horses, and therefore abolished the tea-horse trade. Yet the tea certificate system (chayinfa 茶引法) remained in use, and was applied for all tea regions. Tea certificates were issued by specialized agencies (yinzao chayin ju 印造茶引局). The *Chief Tea Monopoly Transport Office (quecha du zhuanyun si 榷茶都轉運司) was located in Jiangzhou 江州 (today's Jiujiang 九江, Jiangxi). It collected the tea tax from the regions Jiang-Huai 江淮 (Anhui, Jiangsu, Zhejiang), Jing-Hu 荊湖 (Hubei, Hunan), and Fu-Guang 福廣 (Fujian, Guangdong, Guangxi). In the tea regions themselves, tea monopoly transport bureaus (quecha zhuanyun si 榷茶轉運司) and tea-and-salt transport bureaus (chayan zhuanyun si 茶鹽轉運司) were founded. Close to the tea garden areas, the government founded tea monopoly supervisorates (quecha tiju si 榷茶提舉司), tea monopoly control stations (quecha piyan suo 榷茶批驗所) and tea retail bureaus (chayouju 茶由局). All these were institutions that collected taxes and sold tea certificates.
The long-distance certificates were abolished. A common certificate was valid for a volume of 90 jin of tea. Before picking up their commodity at pre-defined tea gardens, the merchants would have to purchase certificates and pay the corresponding tax. Apart from the certificates (yin), there were tea retail certifications (chayou 茶由), made out for an amount of 9 jin in the beginning, but later on, such of various amounts were issued, ranging from 3 jin to 30 jin.
The tax was in the beginning 4.28 qian per certificate (valid for 90 jin), which yielded a tax revenue of just 1,200 tael/liang. It was therefore raised, and amounted to 12.5 liang per certificate in 1320, making a total tea tax revenue of 289,200 liang annually. This means that within a time of just forty years, the tax was raised by almost 3,000 per cent.
The punishments for those not adhering to the rules were severe: Merchants passing a control station (piyansuo 批驗所) without being able to proof the validity of their certificates, were punished with 70 blows with the heavy stick (zhang 杖), and those not delivering their short-distance ware within three days received 60 blows. Merchants transporting more than allowed, farmers selling more than allowed, carters or boat owners knowing that they transported more than allowed, or merchants changing the data in a certificate were likewise punished. Forgery of certificates or retail certifications was punished with execution, and indications were rewarded. Officials involved in malfeasance were subject to punishment, too.
During the Ming period, the tea monopoly was laid into the hands of the Ministry of Revenue (hubu), which also fixed the tea tax. The control over the monopoly and that over the horse trade was carried out by regional investigators (xuncha yushi 巡察御史) who visited the tea tax bureaus (chakesi 茶課司) and tea-horse bureaus (chamasi 茶馬司). Control stations (piyansuo) along the trade routes controlled (jie yan 截驗) the authenticity of tea certificates. The Ming government discerned between commodity tea (shangcha 商茶) and government tea (guancha 官茶). The latter was used for barter against horses in the northwestern and western border regions, but the term was also generally used for tea produced in Shaanxi, the Hanzhong region 漢中 (between Shaanxi and Sichuan) and the Sichuan Basin.
Commodity tea was to be distributed on the markets. The Ministry therefore issued tea certificates (chayin) which were sent to the tea regions. Merchants first declared the amounts they were willing to vend, paid for an according certificate (including the tea tax) which allowed them to purchase tea directly from the producers. Each certificate was valid for 100 jin of tea leaves, and retail certifications for 60 jin. It was also possible to obtain smaller contingents, which were known with the name "fragments" (jiling 畸零).
As the certificates and retail certifications codified the destination of each load, the control stations clipped away a corner (jie jiao 截角) of the certificate to proof the correct shipping as well as the correct weight of the articles. Any violation of the rules of the monopoly was punished. Farmers, for instance, selling tea to merchants who had no certificate had to pay double the fixed tea price as a penalty. At the destination, merchants paid a further fee to the local commercial tax office (shuikesi 稅課司). When the whole transaction was finished, the local authorities sent the certificate to the original control station, which examined the documents and remitted them to the Ministry of Revenue for counter-checking. If the tea was not delivered in time or the certificate not delivered at the local office, the case was remitted to the provincial surveillance commission (tixing anchasi 提刑按察司), where the provincial investigating censor (jiancha yushi 監察御史) resided, or to the regional inspector (xun'an yushi 巡按御史) who investigated the case.
In Sichuan, the government issued certificates for commodity tea to be delivered to border regions (bianyin 邊引) and such for the interior (fuyin 腹引). The former was delivered to the mountain regions of Eastern Tibet (today's Garzê 甘孜 and Ngawa 阿壩, Sichuan), Qinghai (today's Golog 果洛) and Central Tibet.
Tea-horse bureaus were established in the places Qinzhou 秦州 (today's Tianshui, Gansu, later shifted to Xining 西寧), Hezhou 河州 (today's Linxia 臨夏, Gansu), Taozhou 洮州 (Lintan 臨潭, Gansu), Zhuanglang 莊浪 (Yongdeng 永登, Gansu), Minzhou 岷州 (Minxian 岷縣, Gansu), Yongning 永寧 (Xuyong 敘永, Sichuan) and Diaomen 碉門 in the prefecture of Yazhou 雅州 (Tianquan 天全, Sichuan). These places practically controlled the total market exchange between Ming China and the border regions of the west and northwest. Private trade of tea was strictly forbidden, and execution for contraband trade was even applied to persons of high standing, like Ouyang Lun 歐陽倫 (d. 1397), who held the noble title of imperial commandant-escort (fuma duwei 駙馬都尉). The harsh punishment was only relieved in the mid-16th century, when the sentence of execution was commuted to penal servitude in the army (chongjun 充軍). Smaller amounts of tea or monetary reserves were kept in stores for occasions of harvest failures.
The Ming introduced a new system called "intermediate method" (kaizhong fa 開中法) by which merchants transported tea to tea-horse offices (chamasi 茶馬司) in the borderlands where they received certificates allowing them to purchase and sell tea. The method was mainly applied for the salt monopoly, but also for the distribution of tea.
The tea-horse trade was carried out in three modes. The first one was fully organized by the government. It taxed the tea of private producers in Sichuan, Shaanxi and the Hanzhong region at a rate of ten per cent, and tea grown in gardens owned by military institutions by eighty per cent. The remainders were purchased by the government. The tax quota was fixed at 26,000 jin annually for the Hanzhong region, and 1 million jin for Sichuan tea. Tea from eastern Sichuan (Bacha 巴茶, i.e. the regions of Baoning 保寧 – today's Langzhong 閬中 – and Kuizhou 夔州 – today's Fengjie 奉節) was taxed and its distribution regulated by the regional investigator of Shaanxi, and Sichuan tea (Chuancha 川茶) from other regions by the chief tea-and-salt transport commission (chayan du zhuanyunsi 茶鹽都轉運司) of Sichuan. The authorities then ordered corvée labourers (see yaoyi 徭役) to transport the tea to a predefined tea-horse bureau.
A second, not quite successful, method was a revival of an old distribution model, in which merchants were commissioned to transport tea to the tea-horse bureaus in the border regions, but were not allowed to conduct trade. Instead, they were given salt certificates (yanyin 鹽引) which allowed them to collect salt in eastern provinces, and to earn from that business instead of from the sales of tea. Merchants soon undermined this system by selling tea illegally, thus making it impossible for the government to barter tea against horses. The mode was therefore abolished in 1436.
The third mode was initiated in 1490. The authorities in Shaanxi published an announcement for the commission of merchants to transport 1.04 million jin of tea leaves to the border regions. Applicants bought certificates from the regional investigators which allowed them to purchase tea directly from the producers, and obliged them to transport it to defined tea-horse bureaus. After the tea was shipped to the border regions, the government requested forty per cent of the leaves for barter against horses, while the rest could be privately sold on the local markets. Both sides, the government as well as the tea merchants, were thus satisfied and earned from the business. For some years, the government stopped the private trade with tea in the border zones because merchants, earning from the tea business, skimmed off the best horses from the market, but in 1506, it was fully restored, even if the government often had problems to obtain sufficient numbers of good horses. In the regions towards Tibet, private mode of trade likewise outplayed the government monopoly on the trade of tea and horses.
The procedures of the trade of tea against horses was strictly regulated. The Ming even fixed quotas of horses to be bred and sold annually by each of the border tribes. The tea-horse bureaus only accepted such horses for which the vendors could present golden plaques (jinpai 金牌) issued by the Ming government.
The Qing dynasty followed these arrangements. The tea-horse trade with "government tea" (guancha) was carried out by the bureaus in Xijing, Taozhou, Hezhou, Zhuanglang and Ganzhou 甘州 (today's Lanzhou 蘭州), which were at first supervised by a tea-horse inspector (chama yushi 茶馬御史), but later by a commissioner from the Ministry of Revenue or the governor (xunfu 巡撫) of Gansu, and finally by the governor-general (zongdu 總督) of Shaan-Gan 陜甘 (Shaanxi and Gansu). The early Qing fixed the price of a quality horse at 120 jin of tea, that of an average horse at 90 jin, and that of a mean horse at 70 jin. The tea was transported from the production areas to the border regions by commissioned merchants.
The Qing discerned between "eastern merchants" (dongshang 東商) from Shanxi and Shaanxi, and "western merchants" (xishang 西商), i.e. Ugyhurs. The merchants were organized under a supervisor who was responsible for the tax collection. The transport of tea from the tea gardens in Shaanxi and Shanxi to the provincial borders was paid by the permitted sales of 14 jin of "add-on tea" (fucha 附茶) which the merchants were allowed to take with them. All administrators in the tea-producing regions were ordered to sell first government tea before the merchants requiring "commodity tea" (shangcha) were served.
The price for a certificate was different from place to place. In Zhejiang, for instance, it cost 0.1 liang, a sum to which a "paper compensation" of 0.0033 liang was to be paid.
Because the Qing dynasty was founded by the Manchus, who were good riders and horse breeders, and created horse pastures (muchang 牧場) all over the northern borderlands, there was less need for a regulation of the tea-horse exchange system, and the number of horses bought by tea was considerably lower than during the earlier dynasties. The tea stocks in tea-horse bureaus in the border regions therefore grew considerably. The government thereupon decided to sell the tea, and to use the profits to pay the army (see junxiang 軍餉), or directly distributed the tea leaves among the troops to use or sell them. Another solution was to have part of the tax or the full amount be paid in money, and not in kind. In 1735, the regulated tea-horse trade was officially brought to an end, and fell into private hands. Leftovers of the tea stocks were given away, either as part of the salary of soldiers, or sold to merchants, or bartered against rice. The tea tax, due in the tea-producing regions, was fully transformed into monetary payment.
With the decline of the trade in "government tea" (guancha) by "certificate merchants" (yinshang 引商), the trade in commodity or "merchant tea" (shangcha), carried out by travelling merchants (kefan 客販) became the dominant form of tea trade.
During the Muslim rebellion in the 1860s, the tea trade was suspended, and the economic landscape of the northwest changed thoroughly. In 1872, a new type of certificate was introduced, called "order" (piao 票), and tea merchants were invited to trade. Two years later, Hunan merchants – the "southern merchants" (nanshang 南商) - were commissioned to carry out the distribution of tea in Gansu. They became the dominant group in the northwest.
The tea monopoly with the "order method" (piaofa 票法) was supervised by the circuit intendant of Lanzhou 蘭州. The order was only issued by the circuit intendancy, when the tea tax was paid. A commercial tax was to be paid in addition where there tea was distributed. This was the new likin tax (lijin 釐金, lishui 釐稅), introduced in 1853. Export tea shipped to Russia was likewise taxed when it was delivered at the border markets.
Commodity tea (shangcha) was distributed in the provinces of China. Like in the ages before, the Ministry of Revenue issued tea certificates (chayin) which could be bought in the districts where tea was produced. In a small number of regions, the trade of tea was free, but tea farmers had to pay the taxes. Normally, the tea tax was delivered by the tea merchants, who were in turn given a certificate, with which they bought tea and brought it to predefined markets.
The individual tea merchants (sanshang 散商) were organized under one supervising merchant (zongshang 總商), who was responsible for the correct payment of tea taxes. Apart from the tea tax, to be paid before purchasing the tea leaves, merchants had to stand for customs duties on the way to the markets. Alternatively, a "landing fee" (luodiqian 落地錢) was paid, where the tea was sold. In Sichuan, the authorities discerned not just between certificates for border markets (bianyin) and the interior markets (fuyin), but also such determined for markets located in the areas of native tribes (tuyin 土引).
Another criterion to discern between merchants was the field of specialization, namely "buyer merchants" (goushang 購商, in some places called luosi 螺司), who bought directly from the producers, "wholesale merchants" (chahangshang 茶行商), who bought from the "buyer merchants" or from tea farmers, transported the tea, and in some instances also owned tea gardens or tea-processing factories, and finally accredited wholesale merchants (yunxiao chashang 運銷茶商), who also operated the marketing system through their own tea shops (chahang 茶行).
The earnings from the tea business could be substantial, also by dishonest means, for instance, the delivery of fake tea (yangcha 樣茶) to the tea-horse stations, the manipulation of scales, payment by substandard money, the exaction of exploitative interest rates when lending money to tea farmers, or the selling of tea stretched by admixtures. Some of the Shanxi or Guangdong tea merchant families owned up a million liang or even more, and some of the merchant families from Zhejiang had an annual turnover of no less than 140,000 certificates (yin).
During the Taiping rebellion 太平, the whole tea distribution system of southeast China was disturbed, and the participants resorted to new types of certificates proving the correct and legitimate purchase and distribution. Part of the new fees collected, like the "tea contributions" (chajuan 茶捐, see contributions) or the "tea duties" (chali 茶釐) served to finance the Qing army. The contributors, being merchants or not, received "certificate duties" (yinli 引釐), "duty orders" (lipiao 釐票) or "contribution orders" (juanpiao 捐票) with which they were allowed to purchase and distribute tea.
In the late 18th century, a new type of tea business developed, the "tea estates" (chazhuang 茶莊), which either sold their produce directly after having delivered their taxes, or sold tea leaves to merchants, who cared for the taxation. In this constellation, tea farmers became entrepreneurs and invested in tea gardens as well as in factories where tea was processed. "Tea stations" (chazhan 茶棧) sold their produce on the large markets of Hankou 漢口, Shanghai and Fuzhou 福州, where more and more foreign traders bought their merchandise. Hankou was famous for its brick tea (zhuancha 磚茶), which was sold in Tibet and exported to Russia. In Shanghai, green tea from Jiangxi and Anhui was sold to European and American merchants. The latter had also a taste for tea from Shaoxing 紹興, Zhejiang, while the Japanese imported tea from Ningbo 寧波, Zhejiang. Fukienese tea found its way to South America and Oceania.
In the 19th century, tea was by far the most important export product of China. Even the tea produced in Shaanxi or Shanxi, the bulk of which had earlier served as "government tea" for the tea-horse trade, was transported to the trade cities of Tianjin 天津 or Zhangjiakou 張家口, both close to Beijing.
The opportunities to earn from the duties imposed on the export of tea incited the government to free export tea from the likin tax, so that only the customs fee (zikoushui 子口稅) was due. Even then, the revenue from the tea export was much lower than the taxes collected from the internal trade of the commodity. Tea merchants, meanwhile organized in guilds (huiguan 會館, gongsuo 公所), often had to lend money from the foreign exporting companies. Yet on the whole, the earnings from the export of tea were not bad.
In the late 19th century, the various types of "orders" (piao) were abolished, and a revenue stamp (shuipiao 稅票) was introduced, which much facilitated the formalities. The certificates were replaced by "tea bills" (chapiao 茶票). By and by, the tea monopoly was given up, and private sales allowed, as long as the tea tax was paid. During the Republican period, the sales of certificates was finally abolished.