The territory did not experience the rapid growth in population that other parts of coastal China experienced, rising from 189,000 in the early 20th century[2] to just 209,000 in 1935.

Kwangchouwan was leased to the French for 99 years, or until 1997 (as the British did in Hong Kong's New Territories) according to the Treaty of 29 May 1898, ratified by China on 5 January 1900, during the "scramble for concessions".

The colony was described as "commercially unimportant but strategically located"; most of France's energies went into their administration of the mainland of French Indochina, and their main concern in China was the protection of Roman Catholic missionaries, rather than the promotion of trade.

[9] However, as in the rest of French Indochina, the civilian administration of the territory was to remain in the hands of officials of Vichy France following the Fall of France; in November 1941, Governor-General Jean Decoux, newly appointed by Marshal Philippe Pétain, made an official visit to Kwangchow Wan.

[10] In mid-February 1943, the Japanese, after having informed the Vichy government that they needed to strengthen the defence of Kwangchow Wan, unilaterally landed more troops and occupied the airport and all other strategic locations in the Territory.

From then on, Kwangchow Wan was de facto under full military Japanese occupation and the French civilian administration was gradually reduced to a mere façade.

[14] During the Japanese occupation of Hong Kong, Kwangchow Wan was often used as a stopover on an escape route for civilians fleeing Hainan and Hong Kong and trying to make their way to Thailand, North America and Free China; Patrick Yu, a prominent trial lawyer, recalled in his memoirs how a Japanese military officer helped him escape in this way.

[16] The territory was formally returned to the Republic of China on 18 August 1945 after a meeting[clarification needed] between the French and Chinese.