I would like to study China’s 1935 Currency Reform to investigate the central-provincial relations. After graduating from Stony Brook University, I worked at a business firm where I found that the current European debt crisis shares some similarities with Chinese economy of the 1930s. One of the most crucial issues of the euro crisis is the legitimacy of the European Central Bank. Some members, like Greece, argue that the monetary policy of euro only considers Germany’s interests, but neglects the interests of other member states. The early Republic of China experienced similar problems. At the beginning of the Nanjing decade, China was military unified, but was economical fragmented. Some KMT officers such as T.V Soong believed that in order to develop a modern economy, China need to build up a central financial authority, so the central government could be able to support the nation. Nevertheless, since the mid-19th century, local and provincial governments enjoyed a significant degree of financial independence which included coining money and collecting taxes for local use. Regionalism, an ideology that suggested that local governments should have more authority, was strong in the 1920s. Hence, one of the KMT’s economic reforms was to revoke economic power from local governments. In 1935, when the KMT decided to use legal tender as the national currency and to abolish local currencies, it did not have any mandates from local governments. Some provinces such as Guangdong and Yunnan simply refused to let the central government manage their currencies. The euro, a well-discussed European project, even has its own crisis that affects the political climate of Europe. I believe studying China’s 1935 Currency Reform can illustrate how modern economy and nation-building influenced local societies. My proposed study contains four research directions.
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First, I want to examine the debate on regulating local currencies in late imperial China. Studying this intellectual debate can explain why the Qing government did not regulate local currencies. Second, I will review the decision making process of currency reform. The way the KMT thought about the local interests was critical to the central-provincial relations. Third, I want to know how the currency reform impacted the provinces’ understanding of the nation and nationalism. The local currencies were not backed by any central institutions, but by local governments or local banks. When the new national currency was introduced to the market, the reform not only affected the economy, but the way the nation or nationalism was understood at the provincial level. Examining these changes can demonstrate how Chinese nationalism was understood in the 1930s. Finally, I am interested in the effects of currency reform on local fiscal policies. During the warlord period, local governments already knew how to use monetary policy such as increasing money supply to lower budget deficits. Once central government controlled monetary policy, local governments could theoretically not use this tool anymore. In the 1940s, the central government increased the money supply to fund the Sino-Japanese War and the Chinese Civil War. I am interested in how fiscal policy of local governments responded to hyperinflation caused by the KMT’s monetary policy Based on the nature of my project, I will gather three types of primary sources. First, I will check the documents of the Ministry of Finance in the Chinese Second Historical Archives. These documents demonstrate what the central government thought about central-province relations and the reaction from the local governments. Second, I will utilize local archives in cities such as Hangzhou, Shanghai, Canton, and Hong Kong to collect the quarterly journals of local banks and business organizations. These quarterly journals document the attitude of local business forces towards currency reform. As banks and business organizations form the core components of a modern economy, their opinions are important for the study of different voices of currency reform. Third, I will pay very close attention to local newspapers; local newspapers are often the best way to demonstrate events that occurr in a community. In summary, Government documents, local banking journals, and local newspapers will be the major types of primary sources for my research. My proposed research project is related to the current Chinese political debate of regionalism. Since the 1980s economic reform, the Chinese central government began decentralization which allowed
First, I want to examine the debate on regulating local currencies in late imperial China. Studying this intellectual debate can explain why the Qing government did not regulate local currencies. Second, I will review the decision making process of currency reform. The way the KMT thought about the local interests was critical to the central-provincial relations. Third, I want to know how the currency reform impacted the provinces’ understanding of the nation and nationalism. The local currencies were not backed by any central institutions, but by local governments or local banks. When the new national currency was introduced to the market, the reform not only affected the economy, but the way the nation or nationalism was understood at the provincial level. Examining these changes can demonstrate how Chinese nationalism was understood in the 1930s. Finally, I am interested in the effects of currency reform on local fiscal policies. During the warlord period, local governments already knew how to use monetary policy such as increasing money supply to lower budget deficits. Once central government controlled monetary policy, local governments could theoretically not use this tool anymore. In the 1940s, the central government increased the money supply to fund the Sino-Japanese War and the Chinese Civil War. I am interested in how fiscal policy of local governments responded to hyperinflation caused by the KMT’s monetary policy Based on the nature of my project, I will gather three types of primary sources. First, I will check the documents of the Ministry of Finance in the Chinese Second Historical Archives. These documents demonstrate what the central government thought about central-province relations and the reaction from the local governments. Second, I will utilize local archives in cities such as Hangzhou, Shanghai, Canton, and Hong Kong to collect the quarterly journals of local banks and business organizations. These quarterly journals document the attitude of local business forces towards currency reform. As banks and business organizations form the core components of a modern economy, their opinions are important for the study of different voices of currency reform. Third, I will pay very close attention to local newspapers; local newspapers are often the best way to demonstrate events that occurr in a community. In summary, Government documents, local banking journals, and local newspapers will be the major types of primary sources for my research. My proposed research project is related to the current Chinese political debate of regionalism. Since the 1980s economic reform, the Chinese central government began decentralization which allowed