Soon after, in 1557, Portuguese merchants established a colony on the island of Macau. Chinese authorities allowed the Portuguese to settle through an annual payment, creating a warehouse. After the Chinese banned direct trade by Chinese merchants with Japan, the Portuguese filled this commercial vacuum as intermediaries. Engaging in the triangular trade between China, Japan, and Europe, the Portuguese bought Chinese silk and sold it to the Japanese in return for Japanese-mined silver; since silver was more highly valued in China, the Portuguese could then use their newly acquired metal to buy even larger stocks of Chinese silk. However, by 1573, after the Spanish established a trading base in Manila, the Portuguese intermediary trade was trumped by the prime source of incoming silver to China from the Spanish Americas.