In the 1910s, Chiang built up a lot of connection in Shanghai when he was still a stockbroker. Chiang used this as his financial base. He relied on the support from the city. During Nanjing decade, the Nationalists government almost only receive customs revenues and commercial tax. Nevertheless, Chiang was keep on fighting the warlords and the communists. His military expenses had been increasing each year. Chiang asked the bankers and financiers to contribute to his military campaigns. Although they already denoted 3 million yuan to Chiang, it was not enough. Chiang then forced them to contribute more. A western observer wrote, “Wealthy Chinese would be arrested on their homes or mysteriously disappear from the street. Under no previous regime in modern times had Shanghai known such a reign of terror.” Using forces still could not balance the budget. Hsu pointed out that from 1928 to 1935, the nationalist government never achieve a fiscal balance, “but subsisted on deficit spending.” Chiang’s government chose to print more money to pay off its debt. This method created hyperinflation in the beginning of the civil war. Though out the Nanking decade, although Chiang built up a central government and had been doing certain type of reform for modern china, he faced a lot of difficulties. In terms of politics, he was too busy to fight with the warlords and kept them loyal; in terms of the economy, …show more content…
After the Xian incident, the Nationalist party and the CCP formed a second United Front against Japan. Mao knew that this was a best chance to expand his forces while Chiang was too busy for fighting against Japan. Mao said, “Our fixed policy should be 70 percent expansion, 20 percent dealing with the Kuomintang, and 10 percent resisting Japan.” At the same time, Chiang still did not trust the CCP. He sent his best troops to blockade the Communist area. In other words, Chiang would fight a civil war after the Anti-Japanese war. This blockade did not hurt Mao, but helped the Communist movement in Yenan. By ignoring the Japanese forces, Mao had more time to address his land reform to the peasants and to encourage them to get into politics. A lot of western observer praised Mao’s model will become the future of China. In July 1936, Edgar Snow, a foreign journalist, broke into the blockade and entered the Communist area. Although he used to say think that Chinese Communism is a form of “Agrarian Communism”, after visiting Yenan, Snow changed his mind that “the Chinese had developed a unique and indigenous brand of communism.” In terms of military, because the mobilization of the peasant, the Communist troop included a lot of high spiritual soldiers to fight for the land and the better future. Theodor White, an American journalist, described the Red soldiers in 1943 “about the best nourished troops I had yet