Sources from the Spanish conquest of the Phillippine Islands reveal an increasing orientation toward trade with China on the part of the colonists. Thus, Legazpi relocated the Spanish headquarters from less lucrative sites in Cebú and Panay to Manila in 1571. Arriving in the islands in 1565, Legazpi encountered indigenous settlements along well-established trade routes connecting the Sultanate of Brunei, the Moluccas (islands in present-day Indonesia), and Ming China. Spanish outposts at Cebú and Panay in the late 1560s failed to thrive, however, because of the lack of surplus agriculture for trade in local indigenous villages.  Spaniards often obtained adequate food supplies only by plundering native granaries, or by resorting to eating rats and dogs, as a Spanish explorer in Legazpi’s party, Diego de Herrera, wrote to King Philip II in 1570.[5] Legazpi himself wrote to the King in 1570 that he sought to relocate the Spanish capital in the Philippines to a strategic point of trade with China, as well as an area with better agricultural prospects; he then sent his grandson Juan de Salcedo to explore the island of Luzon for a more suitable location for a Spanish settlement. (For English-language documents related to the Spanish conquest, settlement, and Christianizing in the Philippine Archipelago, see The Philippine Islands, Vol. 3 1569-1576, by E. H. Blair, 1904-09.)

Spaniards took possession of Manila by burning to the ground an existing Muslim trading outpost, which was strategically positioned in a natural harbor at the mouth of the Pasig River, and then building rudimentary bamboo huts over the outpost’s remains.[6] Before Spanish conquest, the Muslim trading fort at Manila had established trading links with the Chinese. From its founding in the spring of 1571, Spanish Manila continued to function as an entrepôt for trade with China, becoming the site of a lucrative exchange of Asian commodities like silk, porcelain, ivory, and spices for the Spanish silver extracted from mines in in north-central Mexico Potosí, Upper Peru.[7]
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^{[5] Boxer, “Plata es sangre;” Kendall W. Brown, A History of Mining in Latin America: From the Colonial Era to the Present (Albuquerque, NM: University of New Mexico Press, 2012); Carmen López Yuste,  Emporios Transpacíficos: Comerciantes Mexicanos en Manila, 1710-1815 (México, D.F.: Universidad Nacional Autónoma de México, 2007); Marichal, “The Spanish-American Silver Peso;” William Lytle Schurz, The Manila Galleon (New York, NY: E.P. Dutton, 1939); Edward R. Slack, Jr., “Sinifying New Spain: Cathay’s Influence on Colonial Mexico Via the Nao de China,” Journal of Chinese Overseas 5, no. 1 (2009).
[6] Robert R. Reed, Colonial Manila: The Context of Hispanic Urbanism and Process of Morphogenesis (Berkeley, CA: University of California Press, 1978), 18-19.
[7] Ibid., 21-22.}