The Impact Of The Sino-Japanese War On The Chinese Economy

883 Words 4 Pages
The impact of the Sino-Japanese war on the Chinese State’s economy was completely negative,because, the war, severely harmed China’s modernization efforts. At the same time, the Chinese government encouraged both foreign and domestic investment into the economy, invested in heavy industries, promoted internal unity, intervened in the private sector to prevent its collapse and pursued policies that lead to the rapid development of cities and towns throughout the country. Not to mention efficiency in land cultivation and utilization grew during the period. Therefore, Republican China was well on its way to becoming a developed economy. Once the Japanese invaded, the devastation they wrought upon China crippled the Nationalist controlled economy …show more content…
Why was the maritime customs so important to the state? According to professor Boeking, it provided for roughly 45% of taxes collected by the republic overall and 80% of the taxes in the port cities. Once the Japanese invaded and seized the ports, the nationalists lost them as sources of revenue. With the loss of one of their most important tax bases, the government was forced to raise taxes even higher on the rural regions. Although tax data on the period from 1937-1945 is not available, this paper assumes that because maritime customs revenue was collected in the ports, loss of ports lead to loss of revenue and the nationalist government in response raised taxes. In the process, the farmers, who had already suffered from being unable to sell their products, due to lack of access to markets, were forced to scale down the quantity of commodities that they produced leading to a decline in agricultural productivity. Based on figure …show more content…
High rice prices and taxes meant that the purchasing power of the Chinese consumer declined. As a consequence, consumption fell, which in turn negatively impacted the economy. To demonstrate, just how important this maritime revenue was for the Chinese state in preventing tax hikes, the Chinese government from 1893-1930 received 1284 million silver yuan from abroad. This massive influx of funds explains why the rate of increase of taxes was lower during the 1920s and 30s than during the war. The other big issue is that with access to foreign markets cut, the Republican government was also forced to mint more money. Earlier the government implemented a policy of withdrawing from circulation all silver. Why? This paper infers from figure 1.2 that the rise in silver stock between 1930 and 1940, that the government withdrew the silver so that when the eventual war with Japan broke out it would have enough reserves to mint silver yuan in excess amounts to pay for its military industry, Since, raising taxes on the farmers did not provide them with the funds they needed to pursue the eventual war against the Japanese empire. The rise in silver stock in turn raised inflation rates, since an increase in the volume of money supply causes an increase in inflation and by extension price. Based on the decline in maritime, one must infer that, the rise in inflation is directly connected with the loss of maritime customs revenue shown in

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