Abstract: The Cohong system of Early Qing dynasty was the monopolistic in its separation of ownership and management, which made the Hong merchants a type of official businessman and the autocratic state’s instrument for controlling foreign trade. The Hong Merchants monopolized and controlled foreign trade, and simultaneously took on many official duties: collecting tariff, managing foreign traders, and dealing with foreign affairs on behalf of Qing dynasty. In the practical operation of the Cohong system, interests of the different groups were involver, including the state, the Guangdong customs, the Hong merchants, foreign traders, and private Chinese businessmen. The transformation of relations between these interests led to the Cohong system’s decay. This demonstrated the relationship between autocratic government and economy institutional change in traditional China.