Abstract: China’s began to incur foreign debt in the later part of the Qing Dynasty. The origin of this debt can be traced back to the loans and “merchant arrears” to foreign traders of the Canton Cohong. In general, the Qing government’s foreign debt policy can be divided into three stages: the prohibition on borrowing foreign capital, followed by the cautious borrowing of foreign funds and eventually a reliance on foreign debt. These successive policies appeared to haphazard, one-sided and passive. In reality the Qing Dynasty had many specific provisions regarding foreign borrowing, and there was much debate over the merits of foreign borrowing. Assessing government policy, requires a concrete analysis of the actual conditions which avoids oversimplification of government policy.