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16. CHINA'S URBAN ECONOMY IN THE 1930S Parks M. Coble, Jr., The University of Nebraska-Lincoln The economy of urban China, which had been relatively prosperous during the first years of the Kuomintang government, slid into recession during 1932. A rise in world silver prices, severe floods on the Yangtze, the Japanese invasion of Manchuria, and the subsequent fighting in Shanghai caused the urban economy to weaken. This downturn became economic depression in urban China during the mid-1930s with falling wholesale prices, increased interest rates, declining production, and plummeting connnodity export totals. The deepening depression in 1932 and 1935 undermined the economic base of the Chinese capitalists. The above characterization of China's economy in the 1930s has bien widely shared by both Chinese and foreign writers from the 1930s until the present. A number of recent scholars, however, have attempted to quantify the growth of the modern sector of the economy in China prior to 1949 and have drawn a different economic picture of the Nanking period. Despite the new arguments, I would contend that the·"depression thesis" has validity, and.that the discrepancies between the research of Liu Ta-chung, Yeh Kung•chia, John K. Chang, and the "depression school" can be resolved. Liu Ta-chung baa estimated that the gross value added by modern manufacturing in China increased steadily during the 1930s when calculated in constant 1931 prices. His figures aeasured in billion yuan are as follows:2 1931 1932 1933 1.65 1. 71 1.89 1934 1935 1936 1.98 2.24 2.39 Yeh Kung-chia, in a more recent study, has concluded that the gross value of the output of 11&11ufacturing factories in China P~oper and Manchuria grew from 2.33 billion yuan·in 1931 to 3.53 billion~ in 1936. Perbapa ~he 908t widely cited study of this type, however, is John K. Chang's Industrial Developbant in Pre-Communist China; A Quantitative Analysis. Chang argued that China*• modern industrial aector expanded at a steady rate during the 1930s. Although be acknowledged the effect of rising silver prices, he stated that "these changes ill world economic conditions do not seem to have had much effect on the modern industrial ae~tor of China. The indexes of industrial prod~ction during the 1930s, either inclusive or axcluaive of Manchuria, show no decline. Chang concluded that the average annual rate of growth of modern industry in China (including Manchuria) was 8.4 percent for 1928-1936. Hie aeries f~r the gross value of industrial output, measured in millions of 1933 yuan was aa follows: 1931 886.9 1934 1.042.6 1932 921.5 1935 1,104.1 1933 1,006.3 1936 1.227.4 There is no indication in these statistics of any decline in output because of the depression. One difficulty with the more recent studies of the quantifiers has been the nature of the data on which their arguments depend. Liu Ta-chung's figures, for instance, were baaed on a study of Chinese industries undertaken in the 1930s by D.K. Lieu. Althougl undoubtedly the best data available1 Lieu's statistics only covered the year 1933. Liu Ta-chung used 1933 as a base year and derived his estimates for other years from an index of industrial employment published by the Chinese government in 1940. (Liu ass a constant ratio between employment and output.) The government's employment index in- 17. ,:luded Jnly four industries and is of rather dubious reliability since the constantly :..uci-easing employment figures may simply reflect an improvement in government surveys of ~niustry rather· than real increases in employment. (The government survey, for exampie ~ indicated a twenty-six percent increase in the number of workers employed in Chi ;1eiae-o'Wtled textile plants between 1933 and 1936. Thia ia most unlikely since there is iJuben;.antial data which reveals a decline in output.) Thus Liu' s estimates for 1933 may b~ sound, but his figures ~or other years are subject to question. Another problem with the Liu data is that Lieu did not survey foreign-owned industry in China. Liu Tachung noted that the capital investment of foreign...


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