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Chapter 3

Ten Years of Reconstruction under the Nationalist Government

in Nanjing: Achievements and Failures (1928-1937)

1. Solving the problem of regime legitimization: the implementation of political

tutelage and reconstruction

1.1 The enactment of the Programme of Political Tutelage in October 1928: the

end of the period of military rule and the beginning of the period of political

tutelage

In order to build up the legitimacy of the Nationalist Government in Nanjing

(henceforth referred to as the Nanjing government), Chiang Kai-shek declared that all

of its policies would be based on Sun Yat-sens Three Peoples Principles. According

to Suns theory of revolution, the national revolution will have to pass through three

stages: (1) the period of military rule, with a government under military law; (2)

the period of political tutelage, with a government under a provisional

constitution; and (3) the period of constitutional rule, with a government under

the Constitution. Military rule came to an end with the completion of the Northern

Expedition in 1928. In compliance with Suns theory, the Nanjing government

enacted the Programme of Political Tutelage in October of the same year.

In carrying out political tutelage, the ruling party (that is, the KMT) was

supposed to play the role of: (1) training the Chinese people to exercise the four basic

rights of suffrage, recall, initiative, and referendum; (2) leading the whole nation in

the march toward local self-government; (3) implementing democratic elections; (4)

handing state power back to the people; and (5) inaugurating constitutional rule. In

theory, political tutelage was to last six years. Hence, in 1934, the Nanjing

government instructed the Legislative Yuan to draw up a Draft Constitution of the


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Republic of China, which was adopted in 1935 and promulgated in May 1936. The

Legislative Yuan had intended to convene a national assembly on 12 November 1936

to discuss and finalize the Constitution. The plan failed because of the chaotic

political situation at the time, which seriously impeded the task of electing delegates

to the national assembly. As a result, the Nanjing government continued to practice

political tutelage up to the latter part of the Chinese Civil War (1946-1949).

1.2 Political tutelage and reconstruction

Political tutelage and reconstruction were inseparably interrelated. In his

Fundamentals of National Reconstruction, Sun Yat-sen remarked: Revolutionary

destruction and revolutionary reconstruction are correlated and supplementary to each

other. There will be no revolutionary reconstruction if we do not start the work of

revolutionary reconstruction after revolutionary destruction is over. And if there is no

revolutionary reconstruction, what is the use of having a revolutionary President?

According to Sun, the military rule phase is the period of destruction, whereas the

political tutelage phase is the period of renovation and reconstruction. By

reconstruction, Sun meant what we now refer to as modernization.

1.3 Sun Yat-sens ideas of reconstruction

Sun Yat-sens ideas of reconstruction can be seen in three of his works:

(1) Jianguo fanglue (Fundamentals of National Reconstruction), written in

1917-1919. It consisted of three parts: Easy to Carry Out but Difficult to Know

(Psychological Reconstruction), Plans for Industrial Development (Material

Reconstruction), and The First Step of Democracy (Social Reconstruction).

(2) Guomin zhengfu jianguo dagang (Outline of the National Governments

Plans for National Reconstruction), submitted to the First National Congress of


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the KMT for deliberation on 23 January 1924. It outlined the procedure of

reconstruction and the setting up of government organizations.

(3) Sanmin zhuyi (The Three Peoples Principles), draft notes of his lectures

delivered at the National Higher Normal School in Guangzhou from January to

August 1924, and published after amendments had been made by Sun himself. It

consisted of three parts: Nationalism, Democracy, and Peoples Livelihood

(unfinished).

In his Outline of the National Governments Plans for National Reconstruction,

Sun Yat-sen succinctly highlighted what he considered to be the three paramount tasks

of reconstruction:

(1) The foremost task of reconstruction concerns peoples livelihood. Hence, with

respect to the four main needs of all the people of the nation (that is, clothing,

food, housing, and travel), the government should join hands with the masses in

a common effort to develop agriculture so as to produce enough food for the

people, to develop textiles so as to produce plenty of clothes for the people, to

build different kinds of houses and on a large scale so as to let people live

happily, and to construct and regulate roads and canals so as to facilitate travel.

(2) The second [task of reconstruction] concerns democracy. Hence, with respect to

knowledge of and capacity for politics, the government should teach and guide

the people in order to enable them to exercise the rights of suffrage, recall,

initiative, and referendum.

(3) The third [task of reconstruction] concerns the nation. Hence, with respect to

the small and weak nationalities of China, the government should help them

develop their capacity for self-determination and self-rule; with respect to

powerful foreign invaders, the government should resist their aggression and

simultaneously renegotiate existing treaties with foreign nations in order to


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restore Chinas national independence and its position of equality with other

nations in the world.

What Sun Yat-sen actually meant when he advocated revolutionary

reconstruction was the building of a modern, independent (that is, possessing

national sovereignty), democratic, and economically advanced China.

2. Ten years of internal disturbance and external aggression: the predicament that

the Nanjing government faced

Any attempt to assess the Nanjing governments ten-year efforts at

reconstruction should take account of the fact that it faced challenges from different

quarters over an extended period of time, which drained all of its strength and

seriously impeded its efforts at reconstruction. Of course, the Nanjing government

could not absolve itself of all responsibilities and put all the blame on others. To

arrive at a fair appraisal of its performance in reconstruction, it is necessary to take

both subjective and objective factors into consideration.

From the standpoint of the Nanjing government, the main threats to its rule came

from the Communist Party of China (CPC), the local warlords (referred to by

historians as the new warlords or local factions that held power), and Japan. Since

the activities of the CPC and Japan are familiar topics among students, the following

will examine the new warlords in greater details. Although these new warlords

constituted an important force in Chinese politics after the Northern Expedition, their

activities are seldom discussed in textbooks.

2.1 Threats from the new warlords or local factions that held power

2.1.1 The persistence of the warlord scenario

Chiang Kai-sheks strategy of buying over local warlords enabled him to gain


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quick victories during the Northern Expedition, but it was also the source of endless

trouble. Until the mid-1930s, only Jiangsu, Zhejiang, Anhui, and Jiangxi provinces

were under Chiangs direct control. The warlord scenario persisted. Local

warlords who were active under Chiangs rule have been referred to by historians as

new warlords or local factions that held power. Well-known figures of this genre

of warlords included: Li Zongren and Bai Chongxi of Guangxi province; Chen

Jitang of Guangdong province; Long Yun of Yunnan province; Liu Xiang of Sichuan

province; Sheng Shicai of Xinjiang province; Feng Yuxiang of North and Northwest

China; Yan Xishan of Shanxi province; and Zhang Xueliang of Northeast China.

Chiang Kai-shek believed that the first step to take power was to bring

disarmament into effect. In 1928, he convened the National Conference for the

Reorganization of Troops and the Discharge of Surplus Personnel, which aimed at

reducing the size of local armies. The decision aroused widespread discontent. In

1929, the New Guangxi Clique invaded Hunan province. They were driven back to

Guangxi, but Chiang failed to quash them. The political situation was still unstable

when Feng Yuxiang and Yan Xishan rose in rebellion in the North, which sparked off

the War of the Central Plain in 1930. Joined by the so-called Reorganizationists under

the leadership of the KMT Left-wing leader Wang Jingwei, the insurgents formed a

separatist regime in Beiping (N.B.: Beijing was renamed Beiping in 1928). It was

only after the Manchurian warlord Zhang Xueliang threw his weight behind Chiang

and led his Northeast Army into China Proper that the incident was drawn to a close.

In 1931, anti-Chiang forces once again congregated in Guangzhou and inaugurated

the Guangzhou National Government after Chiang put KMT Right-wing leader Hu

Hanmin under house arrest. Although this separatist regime in Guangzhou was

dissolved in 1932, Guangdong and Guangxi provinces remained semi-independent

until 1936. Another dissident regime, the Peoples Revolutionary Government of the


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Chinese Republic, was established in Fujian province in 1933. At the time, many

provinces in Southwest and West China did not pledge allegiance to the central

government until they felt threatened by the Red Armys Long March. It is clear that

for a greater part of the Nanjing Decade (1928-1937), Chiang Kai-shek did not have

real control over China. National reunification by Chiang was nominal rather than

real.

It was Chiang Kai-sheks greatest and ultimate wish to make real the

reunification of China. He failed to have his wish come to fruition because he did not

have the power to strike simultaneously on all fronts and eliminate all local factions

that held power in one go. Any move to this end would backfire, for it would serve to

unite all his political enemies against him. In order to divide his opponents, Chiang

resorted to the strategy of playing one faction against another. In this regard, he

gained the upper hand over his opponents: they had practically nothing in common

apart from the wish of doing away with Chiang. No wonder China in the 1930s was

mired in decentralization, separatism, and a state of equilibrium of fragmented

military forces, all of which were reminiscent of warlordism in the 1920s.

2.1.2 Why do historians regard 1928 as the end date of the period of warlordism?

Why do historians regard 1928 as the end date of the warlord period when

warlords were still active throughout China in the 1930s? The answer to this

question lies in the fact that the all-important question of legitimacy was finally

resolved when the Northern Expedition was consummated in 1928. Prior to the

aforementioned event, the Beiyang government, which the foreign powers recognized

as the legitimate government of China, was regarded as an illegitimate regime by all

of Chinas local warlords as well as political parties and groups. The Northern

Expedition drew this chapter of Chinese history to a close. Many local warlords,


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through participating in the Northern Expedition, had become KMT members and

presented themselves as loyal disciples of Sun Yat-sen. They therefore recognized the

Nationalist government that Chiang Kai-shek established in Nanjing as the sole

legitimate government of China, for Chiang avowed that it would follow Suns Three

Peoples Principles.

There is no suggestion here that these warlords who held power in their

locality after 1928 were followers of Chiang Kai-shek. Whenever the Nanjing

government issued a policy that posed a threat to their rights and interests, they would

raise the banner against Chiang on the pretext that he had violated the true spirit of the

Three Peoples Principles. They would even set up separatist regimes (self-styled

National governments) in open defiance of the Nanjing government, although they

only targeted their attack on Chiang.

2.1.3 The influence of the new warlords on national reconstruction

It goes without saying that the conflicts between the local and central authorities,

which took different forms ranging from feigned compliance to armed confrontation,

had detrimental effects on national reconstruction. What affected the central

government most was local fiscal autonomy, which seriously reduced state income.

During the Nanjing Decade, taxes collected by the provincial authorities fell under

two broad categories: national tax and provincial tax. The land tax was designated a

provincial tax and was at the disposal of the provincial authorities. Although

provincial governments were supposed to turn all national taxes over to the state

treasury, Nanjing seldom received any revenue from the provinces because provincial

military expenses were paid out of the state treasury, and they were usually so

enormous that no money was left for submission to Nanjing.

The Nanjing government could only rely on taxes collected in a small number of


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provinces under its direct jurisdiction. The consequences would be too dreadful even

to think of had it not been for the fact that the KMT controlled the Yangtze

(Changjiang) Delta, which was the richest commercial hub of China. The main

revenue of the central government consisted of customs duty (48.5%), salt tax (22%),

and commodity tax (12.6%), which together accounted for 83.1% of its total annual

revenue. The main expenditures of the central government, on the other hand,

consisted of military expenses (46%) and debts service (34%), which together

accounted for 80% of its total annual expenditures. Apparently, little money was

budgeted for reconstruction purposes. Since reconstruction was getting into full

swing, one wonders where funds for reconstruction came from. The truth is that

new taxes would be levied to finance new reconstruction projects. This certainly

increased the burden of the common people.

2.1.4 The new warlords and local reconstruction

Quite a number of new warlords in the 1930s belonged to what historians refer

to as reformist warlords. They vigorously carried out reconstruction within their

own spheres of influence and strove to turn their territorial bases into model

provinces in order to outshine Chiang Kai-shek in revolutionary reconstruction.

Notable cases of reformist warlords and their reconstruction projects are: Chen

Jitangs Three-Year Administrative Plan of Guangdong Province, Li Zongrens and

Bai Chongxis Reconstruction Movement of Guangxi Province, Yan Xishans

Ten-Year Reconstruction Plan of Shanxi Province, and Han Fujus Rural

Reconstruction Movement of Shandong Province.

The new warlords fully understood the importance of highways in facilitating

transportation and military deployment. They therefore devoted major efforts to

developing highway networks in the 1930s, which put in place a modern highway


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system that has undergone little change up to this very day. In order to enhance their

economic strength as a means to contend with the central authorities, many new

warlords also set up industries in their areas of jurisdiction, which had beneficial

effects on local economic development.

2.2 Threats from the CPC

The rise of the Chinese communist movement will be dealt with in the next

Chapter. A few words about Chiang Kai-sheks attitude toward the CPC will suffice

here. Undeniably, Chiang regarded the CPC as his arch enemy. He launched five

encirclement and suppression campaigns against the communist bases in 1930-1934.

Chiangs priority, in the face of threats from both Japan and the CPC, was to achieve

internal peace before resisting the foreign foe. Addressing his subordinates at

Nanchang (the capital of Jiangxi province) in April 1934, Chiang explained that the

Japanese were only a minor disease of the skin, whereas the communists were a

disease in our vital organs. One may have good reasons to criticize Chiang for not

resisting Japanese aggression at an early date, but one ought to recognize the fact that

he was a man of foresight: he knew Japan cannot beat him; only the CPC can. History

proved him right, for it was not Japan but the CPC that finally toppled him from

power in 1949.

2.3 Threats from Japan

After the outbreak of the Mukden Incident on 18 September 1931, Chiang

Kai-shek was severely criticized for not putting up an early resistance to Japanese

aggression. Perhaps Chiang had his own reasons for refusing to engage in an early

war with Japan. Apart from his wish of eliminating the communists first, Chiang

probably believed that China was not yet ready to fight Japan, and that large-scale


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warfare would destroy most of the modern facilities that were already in place and

would make havoc of China. By refusing to declare war on Japan, Chiang had

certainly missed a chance to rally the nation. The records of the eight-year war with

Japan (1937-1945) nevertheless bear testimony to the huge costs that China had to

pay in fighting a full-scale war. Prior to the outbreak of war with Japan, Chiang had

also infuriated many patriotic Chinese by ruling out a proposal from some quarters

that China should unilaterally abrogate the unequal treaties. Chiang probably knew

that China had to depend on the help of its Western allies once Japan started war;

hence the need to maintain good relationships with the Western powers. History again

proved him right.

The points made above should not be taken as apologetics of Chiang Kai-sheks

policy toward Japan. They only serve to drive home one point: granted that there are

good reasons to disapprove of Chiangs behaviour, there is no denying the fact that his

behaviour had rational underpinnings. Chiangs reluctance to hit back when Japan

stepped up its offensive against China is no conclusive evidence that he was

unpatriotic. He might well have a whole set of rationale making decisions on Japanese

advances in China. The task of an historian, in my opinion, is not to moralize, but to

explain why things happened the ways they did. It helps to look at issues from the

vantage point of the person(s) under study, for that will enhance our understanding of

happenings that may appear to us as irrational. In this way, we can understand history

better. What is important is to make an effort to understand the past. To understand,

however, does not predispose one to agree or to accept.

3. Ten years of reconstruction: review and analysis

3.1 Political development

With respect to reconstruction in the political sphere, the KMT practised what


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was then referred to as the governing of the state by the party or, simply put, party

rule. The following assesses the effectiveness of party and state building in

1928-1937. On the whole, the setup of the KMT and that of the Nanjing government

were no different from those of a modern party and a modern government. But the

KMT and the Nanjing government both failed in their attempt to reintegrate the

Chinese nation.

3.1.1 Party building

The KMT established a national congress system when it underwent

reorganization under the leadership of Sun Yat-sen in January 1924. In theory, the

highest organ of party power was the National Congress of KMT Delegates: it elected

the Central Executive Committee of the KMT, which in turn elected the Standing

Committee of the Central Executive Committee of the KMT. Existing side by side

with the Central Executive Committee was the Central Political Council (also called

the Central Political Committee), which Sun created in June 1924 as the final

decision-making organ (see Section 2.2 of Chapter 4). Organizationally, the Central

Political Council was a sub-committee the Central Executive Committee; its members

were also elected by the Central Executive Committee, though not confined to Central

Executive Committee members. In reality, however, the Central Political Council

possessed the power to deliberate and resolve major issues, such as those pertaining to

legislative principles, administrative policies, and the appointment of government

officials. The resolutions it passed were sent directly to the Nanjing government for

implementation.

The existence of serious flaws at the organizational and functional levels

explains why the KMT failed to serve as an instrument of national reintegration in

1928-1937:


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In the first place, the KMT lacked a popular base of support. Its members were

exclusively elites belonging to the upper classes of society, as no attempt was made to

recruit members at the grassroots level. The geographical distribution of KMT

members shows that they came from certain cities and districts (mainly the so-called

bandit-suppression zones). As a matter of fact, the KMT had set up party branches

in only 11 provinces, six cities, and 348 counties (out of a total of 1,890 counties) in

China.

Secondly, the KMT paid little attention to the training of new members because

of budgetary constraints. This directly affected the quality of party members in the

long run.

Thirdly, communication between the party centre and the provincial and

municipal party branches was poor.

Fourthly, the KMT was internally divided. It is fair to say that the existence of

rival factions or cliques within the KMT was the most serious problem that it faced.

Factions within the KMT can be divided into two broad types, each of which can

be further divided into smaller factions or cliques.

The first type consisted of people who were dissatisfied with Chiang Kai-shek.

They belonged to one of the following groups:

(1) The KMT Right Wing, headed by Hu Hanmin. From 1928 to 1930, Chiang drew

the Right-wingers over to his side to counteract the influence of the Left-wingers.

Yet, when Hu firmly opposed his proposal to call a national convention and to

draw up a provisional tutelage constitution in February 1931, Chiang had Hu put

under house arrest at Tangshan in Nanjing. This event led to rupture between

Chiang and the Right-wingers.

(2) The KMT Left Wing, headed by Wang Jingwei. From 1931 to 1937, Chiang

changed tactics by drawing the Left-wingers over to his side to counteract the


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influence of the Right-wingers.

(3) Local factions that held power, which included such important figures as Li

Zongren, Bai Chongxi, Chen Jitang, Feng Yuxiang, and Yan Xishan. Their

relations with Chiang Kai-shek have already been discussed in Section 2.1.1.

Quite a number of leaders of the three factions were veteran revolutionary party

members, some of whom were close followers of Sun Yat-sen in the early days of the

revolution. They made Chiang Kai-shek extremely uneasy because they doubted his

suitability as inheritor of the KMTs revolutionary legacy and challenged his position

of leadership in the party.

The second type consisted of people who wielded power within Chiang

Kai-sheks power structure. They belonged to one of the following groups:

(1) The CC (Central Club) Clique, headed by Chen Guofu and Chen Lifu. With the

Organization Department as their power base, members of this clique were

mostly civilian bureaucrats who controlled party and government organizations

at the provincial, municipal, and county levels, commanded an intelligence

network, and took charge of propaganda work. They supported Chiang Kai-shek

as the supreme leader, resolutely opposed communism and imperialism, and

advocated the restoration of traditional morality.

(2) The Whampoa (Huangpu) Clique, headed by Dai Li and He Zhonghan. Members

of this clique were without exception high-ranking military officers who were

alumni of the Whampoa Military Academy and who had been under Chiang

Kai-sheks direct command. They belonged to several organizations which bore

different names: the Vigorously-Carry-Out Society, Revolutionary Youth

Comrades Association, Chinese Revival Society, Blue Shirts Society, and Iron

and Blood Squad. In order to help consolidate Chiangs authority, the Whampoa

Clique used fascist methods to eliminate his political enemies. They also


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advocated the abrogation of the unequal treaties, the nationalization of industry,

and universal military service. Dai Li was in command of the Iron and Blood

Squad, which carried out espionage and assassinations. He Zhonghan, as head of

the Political Training Bureau of the Central Military Council, sent out spies to

infiltrate and sabotage the armies of local militarists. The Whampoa Clique came

into conflict with the CC Clique because both had a power base in propaganda,

cultural, and publishing works.

(3) The Political Study Clique, whose members came from different backgrounds.

They consisted of military men (such as Huang Fu, Zhang Qun, and Xiong

Shihui), intellectuals (such as Yang Yongtai and Wang Chonghui), as well as

bankers and industrialists (such as Wu Dingchang and Zhang Jiaoao). This clique

had no mass following, no definite organizational structure, and no definite

political platform. Its members were only interested in the pursuit of power,

wealth, and status, which brought them into conflict with the CC Clique and the

Whampoa Clique.

It must be pointed out that factionalism was an integral part of Chinese politics.

It was not created by Chiang Kai-shek, although he constantly resorted to the

expediency of bribery, intimidation, divide-and-rule, and playing one faction against

another. These were not only tricks that he was good at, but also tactics that enabled

him to survive in Chinas rough sea of politics. He had no other choice. In the words

of Guy Alitto, Chinas political arena at the time was a veritable sea of particularistic

relationships, from patronage networks to cliques. Those significant political actors

that emerged and survived did so because they could swim in it. [Condemning Chiang

Kai-shek for playing with factionalism] is the equivalent of condemning the strongest

swimmer for swimming! The only alternative Chiang had, after all, was to drown, as

many of his fellow political figures in fact did (Guy Alitto, Chiang Kai-shek in


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Western Historiography, Proceedings of Conference on Chiang Kai-shek and

Modern China, Vol. 1, Taipei, 1987). Undeniably, Chiangs recourse to the

expediency made factionalism more acute and national reunification more difficult. In

order to maintain his personal power, Chiang had to tolerate the corrupt and decadent

behaviour of contending factions within the KMT whose support he desperately

needed. Such was the sorry state of affairs in Chinese politics at the time.

3.1.2 State building at Nanjing

The Nanjing government enacted Sun Yat-sens five-power constitution; that is,

the five-Yuan system which was meant to ensure the separation of power between

the Executive, Legislative, Judicial, Examinations, and Control Yuan. Unfortunately,

these organizations which were delegated the power to govern were not properly

institutionalized.

For illustration purpose, let us take a look at the Examinations Yuan whose

functions were carried out by two separate departments: the Examinations

Commission and the Ministry of Personnel. According to stipulated rules and

regulations, any person who wanted to be considered for appointment by the

government must first pass a civil service examination. In 1928-1937, the

Examinations Commission held a total of 20 examinations, comprising three higher

examinations, eleven general examinations, and six special examinations. Only

8% of the candidates who sat these 20 examinations passed, and not all of the passed

candidates were recruited by the government. In fact, less than 1% of the civil

servants under Nationalist rule had taken and passed civil service examinations of any

kind. It was actually the Ministry of Personnel that made decisions concerning the

appointment and promotion of civil servants. The divorce between theory and practice

testifies to the low level of institutionalization of the Nanjing government. This


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smacked of the rule of man.

3.1.3 A highly centralized power structure: locating the seat of authority

In theory, overall political authority was vested in the Nanjing government. But

given party rule, all top government officials (including the chairman and state

councillors of the Nanjing government, the presidents of the five Yuan, as well as the

heads of various ministries and commissions) were recommended by the KMT for

appointment. They were responsible for carrying out the resolutions passed by the

Central Executive Committee of the KMT.

The Central Executive Committee of the KMT was the supreme organ of party

power. Its members had risen from 24 in 1924 to 36 in 1926, 71 in 1931, and 119 in

1935. This was the outcome of Chiang Kai-sheks practice of awarding prestigious

Party positions in return for political support. New increases in the number of Central

Executive Committee members do not imply greater power enjoyed by this institution;

on the contrary, its power had been on constant decline. Membership on the Central

Executive Committee had become nothing more than status symbol: its members

enjoyed high prestige, but possessed less and less real power.

Similarly, the Central Political Council (Central Political Committee) of the

KMT exercised no real power under the rule of Chiang Kai-shek, although before the

death of Sun Yat-sen it was the final decision-making organ.

As regards the Central Military Council of the KMT, it was supposed to act on

instructions from either the Central Executive Committee or the Central Political

Council. But Chiang Kai-shek, in his capacity as chairman of the Central Military

Council, often made important decisions on his own. After assuming personal

command of the bandit-suppression campaigns, Chiang cultivated the habit of

making on-the-spot decisions in the name of the commander-in-chief of the


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headquarters for bandit-suppression. His decisions were sent back to Nanjing for

ratification, but only as a matter of formality. The Nanjing Decade thus witnessed a

repeat of an early Republican phenomenon: the militarization of politics.

The Nanjing government was in essence a one-man dictatorship or, more

specifically, Chiang Kai-sheks personal dictatorship. Chiang believed that resort to

force was the best option in solving problems and that force could be used as a lever

to expedite Chinas modernization. He did not have the faintest idea about the rule of

law and statutory procedures. It is therefore not surprising to find that Chiangs policy

decisions were usually arbitrary and opportunistic.

3.2 Economic development

It cannot be denied that the Nanjing government made important contributions to

the economic development of China.

3.2.1 Laying the foundation of a modern economic infrastructure

Chinas modern economic sector made considerable progress during the Nanjing

Decade. Credits should be given to the Nanjing government for laying down the

infrastructure that facilitated modern economic development. Government endeavours

in this regard included:

(1) The establishment of a modern banking system; that is, the Central Banking

Group which comprised:

(a) The Central Bank of China, charged with maintaining currency stability;

(b) The Bank of China, charged with directing foreign exchange and

developing foreign trade; and

(c) The Bank of Communications, charged with assisting domestic industries

and enterprises.


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The government authorized these three banks to buy and sell foreign currencies

without any limitations in order to stabilize foreign exchange rates. In this way,

China was able to control foreign exchange for the first time through its state

banks. Apart from these banks, the government also set up The Farmers Bank of

China, which handled farm credit and land mortgages. The number of private

commercial banks increased from 57 in 1927 to 138 in 1934, and 146 in 1936.

(2) The standardization of the currency through:

(a) Passing The Silver Standard Dollar Coinage Law in March 1933, which

substituted the silver dollar (yuan) for the tael (liang) at an exchange rate of

0.715 Shanghai tael for 1 silver dollar; and

(b) Substituting the foreign exchange standard for the silver standard in

November 1935 by introducing a new paper money (fabi) that was directly

convertible into foreign currencies, and which greatly benefited the

development of industry, commerce, and trade.

(3) The standardization of weights and measures through the adoption of the metric

system.

(4) The improvement and development of communication and transportation

networks through:

(a) Extending the railway network, which grew from 8,000 kilometers in 1928

to 13,000 kilometers in 1936 (N.B.: the Long-Hai Railwaythe east-west

trunk linewas extended to Xian in 1934 and to Baoji in 1935, whereas the

Guangzhou-Hankou Railwaythe major south-central trunk linewas

completed in 1936);

(b) Extending the highway network, which grew from 1,000 kilometers in 1921

to 115,703 kilometers in 1936;

(c) Developing domestic air services, with the establishment of the China


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National Aviation Corporation, the Eurasia Aviation Corporation, and the

Southwest Aviation Corporation in 1930, 1931, and 1933 respectively;

(d) Extending postal services, with post-roads increasing from 400,000 Chinese

mile (li) in 1921 to 584,800 Chinese mile in 1936; and

(e) Extending telecommunication services, with long-distant telephone lines

increasing from 4,000 kilometers in 1925 to 52,200 kilometers in 1937.

3.2.2 Promoting industry and commerce

A number of factors worked for the development of industry and commerce

during the Nanjing Decade:

(1) The abolition of fixed tariff rates by foreign powers (that is, the regaining of

tariff autonomy by China);

(2) The abolition of inland transit taxes (likin or lijin) by the Nanjing government;

(3) The setting up of pilot factoriesincluding paper, industrial alcohol, vegetable

oil processing, steel, machine manufacturing, and electrical appliances

manufacturingby the Ministry of Industries and the National Resources

Commission of the Nanjing government, in conjunction with private

entrepreneurs;

(4) The encouragement of private investments in industry by the Nanjing

government through the enactment of new policies, such as exempting private

enterprises from raw material and export taxes, reducing railage, giving cash

awards, granting monopoly privileges to new enterprises, and providing

low-interest loans to private entrepreneurs through the Bank of Communications;

(5) The boycotting of Japanese goods by the Chinese people; and

(6) The promotion of the buy Chinese products movement by the Nanjing

government.


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An issue that is worth exploring is the relationship between the Nanjing

government and the capitalists. The reason for drawing attention to this issue is that

the Nanjing government had been labeled a bourgeois (capitalist) regime by many

people (especially by political commentators and scholars) from the 1930s to the

1970s. In other words, the Nanjing government was said to have represented and

worked for the interests of the capitalists. People subscribed to the above point of

view for the following reasons:

(1) Shanghai capitalists supported Chiang Kai-shek during the Northern Expedition;

(2) T.V. Soong (Song Ziwen) and H.H. Kung (Kong Xiangxi), who had served as

minister of finance of the Nanjing government, had close ties with capitalists;

(3) Both Chiang Kai-shek and capitalists were strongly anti-communist; and

(4) The influence of the Marxist school of thought, which asserted that any political

regime must have a class base and that the Nanjing government was clearly a

bourgeois regime since it had closer relationship with capitalists than with any

other classes.

The labeling of the Nanjing government as a bourgeois regime came under

challenge in the 1980s when new perspectives were advanced by a number of

American scholars who specialized in studying the nature of Nationalist rule in

1928-1937. Following are three representative views of this group of scholars:

(1) The Nanjing government was an autonomous regime it possessed an

independent power base, striving only for its own interests and serving no

particular class (see Parks Coble, The Shanghai Capitalists and the Nationalist

Government, 1927-1937(Cambridge, Mass.: Harvard University Press, 1986))

(2) The Nanjing government was a pluralistic regimeit tried to accommodate

the interests of different classes at the same time, which explains why its policies

were often rife with contradictions (see Richard Bush, The Politics of Cotton


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Textiles in Kuomintang China, 1927-1937 (New York: Garland Publications,

1982); Bradley Geisert, Power and Society: The Kuomintang and Social Elites in

Kiangsu Province, China, 1924-1937 (Ann Arbor, Michigan: University

Microfilm International, 1986))

(3) The Nanjing government was an authoritarian corporatist regime it

emphasized class conciliation and lacking a clear-cut ideology of its own (see

Joseph Fewsmith, Party, State and Local Elites in Republican China: Merchant

Organizations and Politics in Shanghai, 1890-1930 (Honolulu: University of

Hawaii Press, 1985)).

These new perspectives of the 1980s refuted the traditional view that the Nanjing

government only served the interests of capitalists. What then was it like between

Chiang Kai-shek and the capitalists? Apparently, Chiang regarded capitalists as

prospective partners to be won over, but he demanded their absolute obedience to the

government. He was extremely sensitive to the crucial role capitalists played in

funding the government. Chiangs relationship with capitalists depended on whether

or not they complied with government orders. His policy toward them thus oscillated

between two extremes, as he wielded both the carrot and the stick in dealing with this

group of people.

All in all, Chiang Kai-shek forbade any class or social group to develop an

independent power base, be they peasants, workers, landlords, capitalists, or

intellectuals. He saw the need to forestall the emergence of any force that might

challenge his authority.

3.2.3 Improving agriculture

Improvements were made in agriculture. Government endeavours in this regard

included:


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(1) The formation of the National Commission for the Promotion of Agriculture,

which strove to popularize agricultural knowledge, improve production methods,

and encourage cooperation among farmers;

(2) The establishment of the Central Agricultural Research Bureau, which conducted

experiments for the improvement of agriculture;

(3) The establishment of the National Bureau for the Improvement of Paddy and

Wheat Strains;

(4) The formation of the Commission of Rural Rehabilitation, which assisted the

task of rural reconstruction; and

(5) The establishment of the River Conservancy Commission under the National

Economic Council, which unified the administration of river conservancy.

3.3 Social development

3.3.1 Putting in place a modern system of education

The Nanjing government attached special importance to curricula of a practical

nature: university education laid stress on the teaching of science and engineering;

secondary education laid stress on vocational training; and elementary education laid

stress on manual training. The government also promoted civic education and

encouraged studying abroad, either on scholarship or at private expense.

3.3.2 Launching the New Life Movement

In early 1934, as success in the Fifth Encirclement and Suppression Campaign

against the communists was close at hand, Chiang Kai-shek launched the New Life

Movement at Nanchang, capital of Jiangxi province. He subsequently propagated the

standards of New Life across China with the help of the mass media.

The New Life Movement was mainly directed against two types of idea and


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belief: first, class warfare preached by the CPC; and second, anti-traditionalism and

individualism advocated by the May Fourth New Culture Movement. With a view to

propagating a set of belief and behaviour to safeguard his rule, Chiang demanded the

regularization and militarization of the daily life of the Chinese people. In short, he

required them to cultivate the habits of maintaining a healthy way of life, acting

courageously and promptly, working hard without complaints, keeping promises, and

treating people courteously. He further opined that true militarization is rooted in

propriety, righteousness, honesty, and the sense of shame. There was thus the

imperative to fully restore traditional virtues in order to build a new kind of national

consciousness and mass psychology so as to realize the rejuvenation of Chinese

society. The gist of the New Life Movement was highlighted in two government

publications: Outline of the New Life Movement and Necessary Knowledge for

New Life. The movement was led by military leaders in Nanchang in 1934-1935.

Madame Chiang Kai-shek and the missionaries in Nanjing took over the leadership in

1936. The movement produced very little effect as it became trivial, tedious, and

formalistic. Some contemporaries ridiculed it as a restoration movement.

3.3.3 The failure of land reform

In order to improve landlord-tenant relations, the Nanjing government

introduced a policy called 25% rent discount. According to this policy, 25% of the

harvested crop would go direct to the tenant, and the remaining 75% would be split

into two equal portions, one going to the tenant and the other to the landlord. Since

the landlord would receive 37.5% of the harvested crop as rent, the policy was

sometimes referred to as 37.5% rent discount. Apart from achieving some success

in Zhejiang province, this policy produced very little effect elsewhere.

It has been argued by some that Chiang Kai-shek suffered defeat in the end


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because he did not adopt Mao Zedongs policy of mobilizing the masses and carrying

out land revolution, which cost him the support of the peasants. Admittedly, one

cannot expect Chiang to launch radical land revolution like Mao. Although Chiang

was unable to bring about national reunification, he was after all the legitimate ruler

of the Chinese nation. It was therefore natural that he found mass movements

objectionable, for they would disrupt social order and stability. Perhaps Chiang had

the wisdom of knowing that mass movements could be an effective instrument for the

purpose of seizing power, but not for state building. The utter chaos that incessant

mass movements produced during the Maoist period (1949-1976) proved him right.

3.4 Modernization as practiced by the Nanjing government

The modernization undertaken by the Nanjing government was mainly inspired

by Sun Yat-sens theory of the Three Peoples Principles. It also took reference from

the modernization experiences of the Soviet Union, Germany, and Japan. In the final

analysis, modernization during the Nanjing Decade was:

(1) Top-down, built upon highly centralized state power and an integrated

industrial-military complex;

(2) Capitalistic, with the bourgeoisie serving as the mainstay of the economy and

with an emphasis on the role of the free market, but a heavy dose of monopoly

state capitalism; and

(3) Urban-oriented, originating in the treaty-ports and lacking any comprehensive

programmes for agricultural modernization.

4. Issues that are worth exploring

4.1 Concerning the effectiveness of reconstruction under Nationalist rule

Opinions differ as regards the achievements and failures of reconstruction


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under Nationalist rule. One scholar praised the performance of the Nanjing

government in 1928-1937 and characterized this period as the golden decade (see

Paul K.T. Sih (ed.), The Strenuous Decade: Chinas Nation-Building Efforts,

1927-1937 (New York, 1970)). Another pointed out that the Nanjing Decade

witnessed the abortion of the Chinese Revolution (see Lloyd Eastman, The Abortive

Revolution: China Under Nationalist Rule, 1927-1937 (Cambridge, Mass.: Harvard

University Press, 1974)).

4.2 Concerning the nature of the Nanjing government

The following terms may be used on the nature of the Nanjing government:

modern,

traditional,

Confucian,

personalistic (rule of man),

elitist,

autocratic,

totalitarian,

authoritarian,

one-party dictatorship,

one-man dictatorship,

fascist,

militaristic,

capitalist,

autonomous,

pluralistic, and

authoritarian corporatist.


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4.3 Concerning the nature of Chinas economy and society in 1928-1937

The following terms may be used on the nature of Chinas economy and society

in the Nanjing Decade:

traditional,

modern,

semi-feudal and semi-colonial,

agrarian,

commercial,

industrial,

labour-intensive, and

capital-intensive.

N.B.: All the terms listed in Sections 4.2 and 4.3 are useful for the purpose of

illustrating either the nature of the Nanjing government or the nature of Chinas

economy and society in 1928-1937. As to which term(s) is (are) more appropriate in

reflecting contemporary reality, it must be a matter of personal opinion. It suffices if

one could cite relevant historical information to support ones standpoint. An

important point to note is that some of these termssuch as modern and

traditional; labour-intensive and capital intensivecontradict each other. How

then can both be used to characterize the nature of the same reality? The answer to

this question lies in the fact that each and every single historical setting is intricate

and complex, and full of contradictions. For China, the 1920s and 1930s were an

epoch of transition from the old to the new. It is thus not surprising to find the

coexistence of both traditional and modern elements in the same period. For instance,

Chinas political system at the time was modern, but the nature of Chinese political


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rule was still traditional, for it was autocratic and personalistic: a case of the

rule of man. The same is true of Chinas socio-economic structure: the treaty-ports

were modern and engaged in a capital-intensive mode of production, whereas the

vast rural hinterland was traditional and engaged in a labour-intensive mode of

production. All this drives home the point that China exhibited both aspects of

transformation (discontinuity) and persistence (continuity) in the course of

modernization.

chapter 3 eng amend

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