China during the Great Depression: Market, State, and the World Economy, 1929–1937 (Harvard East Asian Monographs)

The Great Depression was a global phenomenon: every economy linked to international financial and commodity markets suffered. The aim of this book is not merely to show that China could not escape the consequences of drastic declines in financial flows and trade but also to offer a new perspective for understanding modern Chinese history. The Great Depression was a watershed in modern China. China was the only country on the silver standard in an international monetary system dominated by the gold standard. Fluctuations in international silver prices undermined China's monetary system and destabilized its economy. In response to severe deflation, the state shifted its position toward the market from laissez faire to committed intervention. Establishing a new monetary system, with a different foreign-exchange standard, required deliberate government management; ultimately the process of economic recovery and monetary change politicized the entire Chinese economy. By analyzing the impact of the slump and the process of recovery, this book examines the transformation of state-market relations in light of the linkages between the Chinese and the world economy. China During the Great Depression: Market, State, and the World Economy, 1929–1937 3 Acknowledgments 7 Contents 11 Figures and Tables 15 Abbreviations 17 China During the Great Depression: Market, State, and the World Economy, 1929–1937 19 Introduction 21 China on the Silver Standard: Influences of the International Monetary System 23 Mass Expectations and the Financial Crisis 24 Market and State and the Monetary System 26 Linkages Between China and the World Economy: The Two Crises and Beyond 30 The Organization of the Book 31 PART I THE YEARS OF INFLATION AND LAISSEZ-FAIRE: ECONOMIC TRENDS PRIOR TO 1931 33 1. The Silver Standard: China in the International Monetary System 35 China’s Silver Standard 35 Silver as a Currency or a Commodity 44 Banks as Silver Traders: Parity and the Market Exchange Rate 47 The Price of Silver and Its Impact on China’s Money Supply 49 Conclusion 55 2. The Coming of Industrialization: The Textile Industry in the Lower Yangzi Delta 57 The Cotton-Spinning Industry 62 The Silk-Reeling Industry 71 Conclusion 79 3. Companies in Debt: The Capital Accumulation Problem 80 Capital Accumulation: The Initial Problem for Entrepreneurs 82 Searching for Loans and the Terms of Contracts 87 Debt and the Management of Companies 98 Conclusion 105 PART II THE DEPRESSION YEARS, 1931–1937: THE TRANSFORMATION OF ECONOMICS AND POLITICS 109 4. The Agrarian Depression 111 The Decline in Agricultural Prices 112 The Terms of Trade for Rural Areas 114 The Fall of Rural Financial Institutions 123 The Collapse of Rural Villages: An Urban Problem 131 Conclusion 133 5. Businesses in a Slump 134 The Silk-Reeling Industry 134 The Cotton-Spinning Industry 144 Conclusion 159 6. The Shanghai Financial Crisis, 1934–1935 160 The Illusion of Urban Prosperity: From October 1929 to August 1931 161 Banks’ Delayed Liquidation: From September 1931 to June 1934 168 The Shanghai Financial Crisis: From June 1934 to November 1935 173 Conclusion 187 7. Coping with the Crisis: The Currency Reform of November 1935 188 The Diplomatic Background to Currency Reform 190 The Currency Reform of November 4, 1935 203 Recovery from the Great Depression 215 Conclusion 218 8. Reaches and Limitations: Economic Policies and the Nationalist Government Reconsidered 220 The Recovery of the Silk-Reeling Industry 221 The Recovery of the Cotton-Spinning Industry 227 The Rehabilitation of Rural Finance 236 Conclusion 246 Conclusion 249 The Silver Standard and Chinese Industrialization 249 The Political Economy of the Monetary System 251 The Chinese State and the World Economy 256 Appendix 261 Estimates of China’s International Balance of Payments 262 Reference Matter 265 Notes 267 Bibliography 309 Character List 333 Index 337 Harvard East Asian Monographs 347 The Great Depression was a global phenomenon: every economy linked to international financial and commodity markets suffered. This book examines the transformation of state-market relations in light of the linkages between the Chinese and the world economy by analyzing the impact of the slump and the process of recovery after the Great Depression. The Aim Of This Book Is Not Merely To Show That China Could Not Escape The Consequences Of The Great Depression - In Her Case It Led To A Slump And Forced Her To Adopt A New Monetary System - But Also To Offer A New Perspective For Understanding Chinese History.