#81 China’s Crises Years 1900-1949
I have chosen 1900 as the start of China’s severe crises as a matter of convenience. The destruction of the old regime was simply a matter of time. What might come after was a matter of history.
Old China had been battered on all sides in the 1840s. after the first invasion by the British. The Chinese intelligentsia had had no warnings of what was to come. There were no means of communication in the 1840s which traversed the world. The Japanese, as I have documented in an earlier blog had had sufficient warnings and were able to defend their island territory. The Chinese had no idea of the military technology that was about to be thrown at them.
During the century, the regime had had to deal with the risings of its own peoples: the Boxer Insurrection or the Yihetuan Movement was an anti-foreign, anti-colonial, and anti-Christian uprising in China between 1899 and 1901. She had had to be helped by the British in putting down the Boxer Insurrection. All the old colonial regimes took their turn at invasion. All the new up and coming colonial regimes, the USA, Japan, Italy, and Germany all invaded China during the 19th century. By the end of the century, the Empress’s silver reserves were empty, and she retreated with her entourage into inner China for safety.
The Chinese see this period of their history as one of deep humiliation. By 1900, the invading powers were planning to break up China into small states as they had done in the African continent in 1884. The collapse of the regime a few years later and the struggle for power in China commenced after 1913 until Mao came out victorious as I will deal with later.
Humiliation
Chinese writing will often give reference to the fact that their peoples felt they had been humiliated by the colonising British and then all the other nations that pilled in behind. In 1858, during the 2nd Opium War, the British invaded a second time. They looted and burned the Summer Palace, the imperial residence of the Qianlong Emperor of the Qing dynasty. It was said to be an architectural wonder, with extensive gardens, buildings, and numerous art and historical treasures.
Pictorial plan of the Summer Palace, c. 1888, showing Eight Banners Brigade barracks, temples, villages, bridges, mountains, and the Summer Palace gardens and structures. Pen-and-ink and watercolour pictorial map, with relief shown pictorially. Retrieved from the Library of Congress, www.loc.gov/item/2006626637/.
We should not be surprised; looting was a common practice throughout the 19th century. Only now is there a movement to return treasures from other lands and civilisations we know little about. More recently, the treasures from ancient Iraq were looted as the Americans invaded in 2002.
In China’s case, their children are taught about this event so people do not forget how the most prized possessions of the old society were treated by the invading forces. The knowledge of such histories filters present Chinese views when dealing with issues like Hong Kong or Taiwan.
China Between 1900 and 1949: An economy in severe crises
The period in Chinese history between the death of the last Emperor in 1911, the end of the last great Dynasty Qing - and the 1949 Revolution is one of constant chaos when no central authority had control of the whole continent. Europeans attempted to hive off parts of ancient China for themselves. These included Tibet, Hong Kong, and Taiwan. Japan invaded in 1936, intending to hive off parts of northern China for her colonial empire.
China's government had been invaded in the 19th century by all the old and new nation-states of Europe, by Japan and by the USA. In each case, as China lost a battle, she was forced to pay reparations in silver to the belligerent nation. China also began to lose control of her imports and exports. The British had set up their people to control foreign trade. Robert Hart served as the first Inspector General of China’s Customs service from 1863 to 1911. The Qing government was only allowed to charge an import duty of 5% which was insufficient to make up for the outflow of silver.
Invasion and internal civil wars had exhausted the Chinese central treasury, and the central state had begun to borrow money from western nations. By the 1930s, a large foreign debt had begun to build up. The Kuomintang or Chinese Nationalist Party government’s primary source of income was taxed on imports at only 5%. China's currency was based on silver, which she did not produce herself. The importing countries reneged on agreements to supply her with silver after the 1929 world crisis. So, China faced her own major financial crisis, which carried on throughout the 1930s leading to deflation and economic depression. At the height of this internal crisis, Japan invaded in 1936 and bought up whatever silver was available, pushing the outflow even further. China needed weapons from abroad that could only be bought with silver. By 1937, hyperinflation plagued China and lasted right through to 1949.
The Kuomintang government was held fast in a global currency system which only allowed a focus on import and export values. Everything else had become secondary. In 1948 the government moved onto a gold yuan currency system, and borrowed $48 million from the USA, under the new Bretton Woods system. Due to existing heavy trade deficits, there was no inflow of US dollars to pay the interest on her borrowings, and the USA refused to help economic resuscitation. The Kuomintang government lost control of their money and with it the country’s sovereignty. By the end of 1948, the Chinese fiscal and financial system of government was in a state of deep crisis. The Kuomintang government had failed to create a modern capitalist system of money that encouraged trade. The currency system had collapsed.
The state of national affairs was ready for the Peoples Liberation Army (PLA) to take power, even though their weapons were outdated: “millet plus rifles” as the CCP put it. The PLA had support from the peasants who brought them food motivated by the ideas of land revolution. As the PLA took power, hyperinflation roamed the country; whatever gold had been obtained was transferred to Taiwan.
The new government was faced with a monumental crisis that might have overwhelmed a lesser organisation. Their first task was to control hyperinflation. In the countryside, the CCP guaranteed the value of a basket of white rice, white flour and white cloth: the ‘three whites’. The banks committed to the people that they would honour the value of a bank deposit in cash equivalent to the three whites. Simultaneously, they instituted a large-scale land reform. Overall renewal of the land system renewed the peasant economy. Peasant ownership of land raised their motivation and productivity. Enough food was rapidly produced to feed the cities and simultaneously hyperinflation came under control in the countryside.
88% of the people lived from the land in 1949, and so the CCP enabled the peasants to break away from hyperinflation and created social stability. The CCP had created a de-modernised system - or at least unlinked China from Westernisation - as they took over the reins of power. 1949 is of course deeply significant in Chinese history today. Unlike Soviet Russia which was invaded in 1919 by the Western powers, China was not. The West had been devasted by the 1939-1945 war, and in 1949 were still recovering. China was left to its own devices at this time. Though as I shall show in later blogs, Mao was deeply aware that China needed to rapidly industrialize if she was to be strong enough to resist the West.
This is all part of the foundation story for modern-day Chinese children. Given this, it is not surprising that Mao, who led the CCP, remains a hero. He had brought China from deep crises over the previous 50 years, to stability by 1949. Mao took over the reins of political power of a China in very deep trouble.
Third Plenum of the Kuomingtang Central Executive Committee in March 1927. Mao is third from the right in the second row. Retrieved from Wikimedia.
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The peoples of Western Europe had risen from one world of relative poverty and had learnt how to take the wealth from the Americas and transfer it to their own countries. This was slavery and latterly until 1920, indentureship. A whole set up of banks, shipping companies, and insurance companies had arisen to make these transfers possible. From the 1750s the European invaders turned their attention to Asia and systematically began the colonisation process anew. At the same time, as they attempted to colonise and extract the wealth of Asia, the colonising countries began the process we now recognise as industrialisation alongside the rapid growth of cities. The surplus resources extracted through colonisation were used to finance the growth of new industries.