1909, China, Kiau Chau (German leased territory). Cu-Ni 5 Cents Coin.  NGC AU53!

Obverse: Imperial crown above German heraldic eagle on anchor. Value (5 Cent) split at sides..
Lgend: DEUTSCH KIAUTSCHOU GEBIET  1909

Reverse: Four characters within circle of beads. Legend around.

The Kiautschou Bay Leased Territory was a German leased territory in Imperial and Early Republican China which existed from 1898 to 1914. Covering an area of 552 km2 (213 sq mi), it was located around Jiaozhou Bay on the southern coast of the Shandong Peninsula (German: Schantung Halbinsel). Jiaozhou was romanized as Kiaochow, Kiauchau or Kiao-Chau in English and as Kiautschou or Kiaochau in German. The administrative center was at Tsingtau (Pinyin Qingdao).

Germany was a relative latecomer to the imperialistic scramble for colonies across the globe, a German colony in China was envisioned as a two-fold enterprise: as a coaling station to support a global naval presence, and because it was felt that a German colonial empire would support the economy in the mother country. Densely populated China came into view as a potential market, with thinkers such as Max Weber demanding an active colonial policy from the government[citation needed]. In particular the opening of China was made a high priority, because it was thought to be the most important non-European market in the world.

However, a global policy (Weltpolitik) without global military influence appeared impracticable, so, assessing that Britain's great strength came from its navy, the Germans began to build one too. This fleet was supposed to serve German interests during peace through gunboat diplomacy, and in times of war, through commerce raiding, to protect German trade routes and disrupt hostile ones. Imitating Britain, a network of global naval bases was a key requirement for this intention.

Again intending to directly copy Britain, the acquisition of a harbor in China was from the start intended to be a model colony: all installations, the administration, the surrounding infrastructure and the utilization was to show the Chinese, the German nation and other colonial powers an effective colonial policy.

In 1860, a Prussian expeditionary fleet arrived in Asia and explored the region around Jiaozhou Bay. The following year the Prussian-Chinese Treaty of Peking was signed. After journeys to China between 1868 and 1871, the geographer Baron Ferdinand von Richthofen recommended the Bay of Jiaozhou as a possible naval base. In 1896 Rear Admiral Alfred von Tirpitz, at that time commander of the East Asian Cruiser Division, examined the area personally as well as three additional sites in China for the establishment of a naval base. Rear Admiral Otto von Diederichs replaced Tirpitz in East Asia and focused on Jiaozhou Bay even though the Berlin admiralty had not formally decided on a base location.

On 1 November 1897, the Big Sword Society brutally murdered two German Roman Catholic priests of the Steyler Mission in Juye County in southern Shandong. This event was known as the "Juye Incident." Admiral von Diederichs, commander of the cruiser squadron, wired on 7 November 1897 to the admiralty: "May incidents be exploited in pursuit of further goals?" Upon receipt of the Diederichs cable, chancellor Chlodwig von Hohenlohe counseled caution, preferring a diplomatic resolution. However, Kaiser Wilhelm II intervened and the admiralty sent a message for Diederichs to "proceed immediately to Kiautschou with entire squadron ..." to which the admiral replied "will proceed ... with greatest energy."

Diederichs at that moment only had his division’s flagship SMS Kaiser and the light cruiser SMS Prinzess Wilhelm available at anchor at Shanghai, the corvette SMS Arcona was laid up for repairs and the light cruiser SMS Irene in a dockyard at Hong Kong for an engine refit. The shallow draft small cruiser SMS Cormoran, operating independent of the cruiser division, was patrolling the Yangtze. Diederichs weighed anchor, ordered Prinzess Wilhelm to follow next day and Cormoran to catch up at sea. The three ships arrived off Tsingtao after dawn on 13 November 1897 but made no aggressive moves. With his staff and the three captains of his ships aboard, Diederichs landed with his admirals tender at Tsingtao’s long Zhanqiao Pier to reconnoiter. He determined that his landing force would be vastly outnumbered by Chinese troops, but he had qualitative superiority.

At 06.00, Sunday, 14 November 1897, Cormoran steamed into the inner harbor to provide inshore fire support, if necessary. Kaiser and Prinzess Wilhelm cleared boats to carry an amphibious force of 717 officers, petty officers and sailors armed with rifles. Diederichs on horseback and his column marched toward the Chinese main garrison and artillery battery, a special unit swiftly disabled the Chinese telegraph line and others occupied the outer forts and powder magazines. With speed and effectiveness, Diederichs’ actions had achieved their primary objective by 08.15.

Signalmen restored the telegraph line and the first messages were received and deciphered. Diederichs was stunned to learn that his orders had been canceled and he was to suspend operations at Kiautschou pending negotiations with the Chinese government. If he had already occupied the village of Tsingtao, he was to consider his presence temporary. He responded, thinking the politicians in Berlin had lost their nerve to political or diplomatic complications: "Proclamation already published. ... Revocation not possible." After considerable time and uncertainty, the admiralty finally cabled congratulations and the proclamation to remain in effect; Wilhelm II promoted him to vice admiral.

Admiral von Diederichs consolidated his positions at Kiautschou Bay. The admiralty dispatched the protected cruiser SMS Kaiserin Augusta from the Mediterranean to Tsingtao to further strengthen the naval presence in East Asia. On 26 January 1898 the marines of III. Seebataillon arrived on the liner Darmstadt. Kiautschou Bay was now secure.

Negotiations with the Chinese government began and on 6 March 1898 the German Empire retreated from outright cession of the area and accepted a leasehold of the bay for 99 years, or until 1997, as the British were soon to do with Hong Kong's New Territories and the French with Kouang-Tchéou-Wan. One month later the Reichstag ratified the treaty on 8 April 1898. Kiautschou Bay was officially placed under German protection by imperial decree on 27 April and Kapitän zur See [captain] Carl Rosendahl was appointed governor. These events ended Admiral von Diederichs' responsibility (but not his interest) in Kiautschou; he wrote that he had "fulfilled [his] purpose in the navy."

As a result of the lease treaty, the Chinese government gave up the exercise of its sovereign rights within the leased territory of approximately 83,000 inhabitants (to which the city of Jiaozhou did not belong), as well as in a 50 km wide neutral zone ("neutrales Gebiet"). According to international law, the leased territory ("territoire à bail") remained legally part of China but for the duration of the lease, all sovereign powers were to be exercised by Germany.

Moreover, the treaty included rights for construction of railway lines and mining of local coal deposits. Many parts of Shandong outside of the German leased territory came under German influence. Although the lease treaty set limits to the German expansion, it became a starting point for the following cessions of Port Arthur and Dalian to Russia to support Russia's Chinese Eastern Railway interests in Manchuria, of the transfer of Weihai and Liu-kung Tao Island from Japan to Great Britain, and the cession of Kwang-Chou-Wan to support France in southern China and Indochina.

The local language was the Qingdao dialect of Jiaoliao Mandarin. A German pidgin developed as well.