Rise of a Lonely City: From Exiled Prince to Ruler of the Nine Provinces

The glorious victory of recovering Taiwan and establishing the Dongning Military Command was like a boulder thrown into the empire's dull court and bustling southeastern coast, stirring up waves that have lasted for a long time.

Throughout the court and among the public, awareness of the ocean and the importance attached to maritime power were elevated to an unprecedented level. Emperor Xiao Chen's prestige and the merits of generals like Zheng Zhilong all rose accordingly.

However, Xiao Chen was not blinded by victory.

He knew that while conquering territory was no easy task, the real challenge lay in governing it, transforming the benefits gained from the sea into the empire's national strength in an orderly and effective manner, and preventing potential drawbacks.

In particular, overseas trade, a complex system that connects the empire with the outside world, bringing in vast amounts of silver and rare goods, but also harbors risks of smuggling, tax evasion, loopholes in maritime prohibitions, and even information infiltration, urgently needs a systematic and forceful overhaul.

The Battle of Liaoluo Bay and the recapture of Taiwan dealt a heavy blow to the influence of maritime powers such as the Netherlands and Spain in East Asia, and greatly enhanced the voice of the Great Xia in the regional maritime power structure.

In the past, although the imperial court had established the "Maritime Trade Office" to manage overseas trade, the system was outdated, the officials were corrupt, the efficiency was low, and smuggling was rampant. In reality, it was mostly controlled by coastal gentry, powerful families, and even maritime merchants who colluded with officials.

With substantial profits lost and limited tax revenue for the imperial court, prohibited items such as ironware, saltpeter, sulfur, grain, and even books continued to flow overseas despite repeated bans, with some potentially even aiding the enemy.

Now that the maritime situation has calmed down and authority is at its peak, it is the perfect opportunity to eliminate long-standing problems and reshape the rules.

Inside the Wenhua Hall, Xiao Chen convened a high-level meeting on the management of overseas trade with key officials from the Ministry of Revenue, the Ministry of War, the Ministry of Works, and the Ministry of Rites, as well as Zhang Juzheng, who had just returned from an inspection tour of the southeastern coast, and several officials from Quanzhou and Guangzhou who were familiar with maritime trade and participated in the meeting through special channels.

"Your Majesty," the Minister of Revenue began, "since our dynasty opened the seas, the annual revenue from maritime trade in the southeast has gradually increased, but numerous problems have also arisen. Powerful families control the market, corrupt officials embezzle funds, smuggling is rampant, and tax revenue is lost by less than half. Even worse, ironware, saltpeter, military supplies, and even grain are smuggled overseas, flowing to Japan, Southeast Asia, and even the Western barbarians, posing endless hidden dangers. If this continues, not only will the national treasury be insufficient, but coastal defense will also be in jeopardy."

The Minister of War immediately echoed, "What the Minister says is absolutely right. In particular, ironware, saltpeter, and sulfur are essential military and national resources. How can we allow them to flow out of the country? Now that Taiwan has been acquired, our dynasty's profits from sulfur have greatly increased. We should tighten control over them to ensure their military use."

"I have heard that the cannons and warships of the Western countries are constantly being improved."

An official from the Ministry of Works also stated, "Their skills may have some merit. However, in the past, trade mainly resulted in the outflow of our silk, porcelain, and tea in exchange for silver, spices, and precious objects, with limited benefits to our country's technology. We should establish regulations to encourage the import of beneficial skills and goods."

Xiao Chen listened quietly, his fingers tapping lightly on the imperial desk.

After the discussion subsided, he spoke slowly, his voice steady and clear: "What you have said is all very relevant to the current problems. The profits from maritime trade are like the waters of a river; they can carry a boat, but they can also capsize it. In the past, mismanagement led to profits going to private individuals while harming the nation. Now that the maritime borders are newly secured and we hold authority, it is the right time to adapt to the times, establish new regulations, promote benefits and eliminate abuses, so that the profits from maritime trade can all go to the court, benefit the people, and strengthen our national power."

He swept his gaze across the crowd: "My mind is made up. I will regulate the maritime trade and promulgate new regulations. I hereby order the Ministry of Revenue, the Ministry of War, the Ministry of Works, and the Ministry of Rites to work together with the Grand Secretariat to discuss the terms in detail, ensuring they are thorough and feasible, so as to benefit both merchants and the nation."

"Your Majesty, we obey!"

Under Xiao Chen's personal guidance and promotion, and after months of repeated discussions and deliberations, a detailed draft of the "New Regulations for Maritime Trade" was finally completed.

After being approved by the emperor, it was officially promulgated throughout the country and immediately implemented in major foreign trade ports such as Quanzhou, Guangzhou, Ningbo, and Fuzhou, as well as the newly established "Dongning Port".

The core content of the "New Regulations on Maritime Trade" can be summarized as "strict export and lenient import, standardized management, unified tariffs, and crackdown on smuggling," as detailed below:

I. Implement a "ticket system" to regulate overseas trade.

All merchant ships wishing to go out to sea for trade, regardless of size, must apply to the local maritime trade office in advance, submitting detailed information such as the ship owner, cargo owner, ship condition, crew list, cargo carried, destination country/region for trade, and estimated round-trip time.

After verification that there were no prohibited items and after paying the fixed amount of "ship permit" silver, the Maritime Trade Office would issue a specially made "ship permit" with a serial number and anti-counterfeiting mark.

Any ship without a "ship license" is considered to be smuggling, and the ship and cargo will be confiscated by the authorities, and the personnel involved will be punished.

The "ship permit" system aims to obtain information on merchant ships going to sea from the source, which facilitates management and taxation, and also restricts disorderly and potentially troublesome overseas trade activities.

II. Strictly restrict and encourage the import and export of goods.

Restricted export goods: Silk, porcelain, and tea, the three largest export commodities, are subject to a "quota system".

Each year, the Ministry of Revenue would determine the total export volume of each port based on domestic production and market demand. Then, the Maritime Trade Office would allocate specific export quotas and issue "trade permits" based on the strength and credit of the applicant merchants.

Exporting without a "trade permit" or exceeding the permitted limit is illegal. This provision aims to prevent excessive exports from causing domestic price increases and to maintain control over the trade of these high-profit goods.

Goods strictly prohibited from export include: ironware, copperware, saltpeter, sulfur, grain, books (especially those related to geography, military affairs, and science and technology), and horses. These items are listed as prohibited from export and are not allowed to leave the country regardless of quantity.

Those who violate this law will be treated as "colluding with the enemy and aiding thieves," with severe penalties including death and exile of their families. This law is fundamental to national defense and economic security, and its wording is extremely harsh.

The import of goods such as silver (silver dollars), copper, saltpeter, Western cannons, clocks, precision instruments, technical books, and seeds of rare crops is encouraged.

Importing such goods not only entitles the importer to tariff preferences, but the Maritime Trade Office may also provide rewards as appropriate.

In particular, the imperial court will purchase Western craftsmen and books that can bring advanced artillery manufacturing technology, shipbuilding technology, and astronomical and geographical knowledge at high prices, and will properly resettle the relevant personnel.

This policy aims to guide the trade structure, supplement scarce domestic resources, and especially to consciously absorb advanced Western technologies, reflecting Xiao Chen's visionary foresight.

Third, reform the management agency, unify the tax rules, and crack down on smuggling.

Customs offices were established: Customs offices directly under the Ministry of Revenue were set up in major foreign trade ports such as Quanzhou, Guangzhou, Ningbo, Fuzhou, and Dongning to replace or integrate the original Maritime Trade Offices, which were often infiltrated by local forces. The chief officials of the customs offices were directly appointed by the imperial court and rotated regularly. They enjoyed independent powers of inspection, taxation, and anti-smuggling, and were not subject to the constraints of local governments.

Unified tax rates: The previous numerous and arbitrary exorbitant taxes were abolished, and a unified, transparent, and simplified import and export tariff was promulgated. Fixed "ship tax" (tonnage tax) and "goods tax" (ad valorem tax) were levied based on the type and value of goods. The tax rates were more reasonable than before, intended to encourage legal declaration and increase the government's annual revenue.

Strengthen the navy's anti-smuggling functions: The Royal Navy of Great Xia is officially authorized to inspect smuggling activities and crack down on vessels without proper permits, in addition to patrols and training. The navy is granted the power to inspect, seize, and arrest vessels. Utilizing the navy's newfound strength and mobility, a maritime anti-smuggling network will be established.

Smuggling will be severely punished: Smuggling activities, especially the smuggling of contraband, will be subject to extremely heavy penalties. Not only will the ship and its cargo be confiscated, but the ship owner, cargo owner, and sailor's leader will all face severe criminal charges. Whistleblowers will be encouraged, and those who successfully combat smuggling will be heavily rewarded.

The promulgation of the "New Regulations on Maritime Trade" was like a thunderbolt in the trade circles of the southeastern coast.

In the past, powerful and wealthy families who relied on smuggling, bribery, and smuggling to make huge profits complained bitterly, and there were quite a few who secretly resisted and complained.

Meanwhile, those small and medium-sized maritime merchants who operated honestly and suffered from the exploitation by bureaucrats found, after the initial discomfort, that although the new regulations were strict, the tax system was transparent and reduced layers of exploitation. As long as they operated legally, their profits were more secure.

The imperial court encouraged the import of silver and Western technology, which also brought new business opportunities.

More importantly, with the strict implementation of the new regulations, especially with the frequent appearance of naval warships along the coast and the inspection of vessels without proper permits, the once rampant smuggling activities have been greatly curbed.

Merchant ships from Japan, Ryukyu, Southeast Asia, and even Europe gradually accepted this new set of trade rules, which bore the distinct will of the Great Xia Empire.

They must first obtain a "ship license" to trade in accordance with the prescribed ports, goods, and quotas, and pay clear taxes.

The establishment of the Dongning Commandery provided an excellent practical and regulatory foothold for the "New Regulations on Maritime Trade".

The Dongning Customs, located in Taiwan, not only manages the growing trade between mainland China and Taiwan, but more importantly, it is situated at a crucial juncture on the busy East Asian trade route from Japan to Ryukyu, Luzon, and Southeast Asia.

All merchant ships heading north or south with the intention of reaching ports in mainland China may be subject to inspection by the Daxia Navy, based in Dongning, to check their "ship licenses" and cargo.

This allowed the empire's trade management to extend to even more distant oceans.

With the Dongning Commandery as its "sword," guarding the sea frontier and radiating influence to the surrounding areas, and the "New Regulations on Maritime Trade," as its "reins," regulating trade and extracting profits, Xiao Chen and his Great Xia Empire are taking an unprecedentedly proactive approach to firmly grasp the challenges and opportunities of the vast ocean.

After military conquest, the imperial path to sea power began to extend into more complex and profound economic and institutional dimensions.