History
Jiaozhou Bay was known formerly as Jiao'Ao. The area became widely known to Europeans after a lease was concluded by the German Empire during March 1898 with the Qing government of China.
In 1898 the area was transferred to Germany on a 99-year lease, and became known as the Kiautschou Bay concession. The village of Qingdao became the German colony of Tsingtau, and the area became a focus for German commercial development in China, while for the Imperial German Navy it was the naval base for their Far East Squadron.
Because of land speculation in Germany's African colonies, Land Valuation Tax was introduced being the only tax in the colony. It was a great success bringing wealth quite rapidly to the colony and also financial stability. The colony was the only authority ever to use the Single Tax and is used as an academic study example to this day.
With the outbreak of World War I, the Republic of China canceled the Kiautschou lease with the German Empire. This came into force on 23 August 1914, the day of Japan’s declaration of war on Germany, after a Japanese ultimatum for unconditional German evacuation of the colony had expired. The area was occupied subsequently by British and Japanese forces after the Siege of Tsingtao.
China declared war on Germany on 14 August 1917. As an ally of the victors, China expected the formal return of the region at the end of hostilities. However, the Treaty of Versailles acceded to Japanese claims at the Paris Peace Conference and assigned all confiscated German Pacific territories and islands north of the equator to Japan, including Jiaozhou Bay. This arrangement caused China-wide protests known as the "May Fourth Movement", which is regarded as a significant event of modern Chinese history. As a result, the Beiyang government refused to sign the Treaty.
This was known as the "Shandong Problem". It was eventually resolved following mediation by the United States which led to a return to Chinese sovereignty in February 1922.
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