The defeat is like a mountain, and behind the defeat is the economic decision, let's take a look at what the national government has done economically in recent years?
1. Economic policy
1. Rely on the United States. In 1946-1949, 40 treaties were signed with the United States. The Sino-American Treaty of Amity, Commerce and Navigation, signed on November 4, 1946, is the most important, and its main contents are:
(1) "Nationals of this Contracting State shall be allowed to enter the territory of the other Party and to reside, travel and trade throughout the territory of that Territory" (art. 2).
(2) "Nationals of the Contracting Parties shall, throughout the territory of the Contracting Parties, be permitted to engage in and operate commerce, manufacture, processing, scientific, educational, religious and charitable undertakings which are not prohibited by the official offices constituted by law" and to acquire suitable premises for this purpose, "and to lease suitable land and to choose agents or employees" (Article 2).
(3) Legal persons and associations duly organized by the Contracting Parties shall "recognize their legal status" in the territory of the Contracting Parties and "shall be treated in the same way as legal persons and bodies of the Contracting Parties" (Article 3).
(4) The importation, sale, distribution or use of the goods of the other Party shall not be prohibited or restricted by one of the Contracting Parties" (Article 16).
(5) ''The ship of one of the Contracting Parties shall be permitted to take off and unload a portion of the cargo in any port, place or territorial waters of the Contracting Party which is or will be open to foreign commerce and navigation, and then to any other port, place or territorial waters of the other Contracting Party' (Article 24). The ships of one of the Contracting Parties may, under the pretext of "any distress", "avoid any port, place or territorial waters of the other Contracting Party which are not open to foreign commerce" (Article 22).
In terms of form and letter, China and the United States are equal, but China is a backward country, and China has no extra funds to export to the United States, so Americans can come to China freely. U.S. goods are pouring into China like a tidal wave, and Chinese companies can't compete with American companies.
In December 1946, the U.S.-China Air Transport Agreement opened all airspace to the United States.
In September 1947, the United States was granted the privilege of stationing troops in the Sino-US Exchange of Notes on the Presence of U.S. Armed Forces in Chinese Territory.
The Agreement on Economic Assistance of July 3, 1948, gave the United States access to any resources and intelligence from China.
In February 1948, the President of the United States proposed the China Aid Act, and the surplus materials of the US military after the war were partially transferred or sold to China at a low price, totaling 2,917,400,000 US dollars, of which 2,339,700,000 US dollars were gifts, 346,800,000 US dollars were included in loans, and 230,900,000 US dollars were sold at low prices.
The United States accounted for 19.6 percent of China's imports and exports in 1936, 61.4 percent in 1946, 57 percent in 1947, and 66.5 percent in 1948.
2. Receive Nissan pseudo-production.
1] Received Nissan. In 1945, Japan seized the assets of Britain and the United States and other countries, plus a total of 4,451,600,000 US dollars from Japanese enterprises, and Japan was defeated and accepted by the Nationalist Government, and the assets of the victorious countries such as the United States and Britain were returned to the original owners.
2] Receiving counterfeit property.
After the surrender of the Japanese invaders, the Nationalist Government announced that it would take over all the "public and private enterprise assets and all rights and interests" established by Japan in China and place them under the management or operation of the Chinese Government. At the beginning, the General Headquarters of the Army presided over the receipt of Japanese counterfeit assets. The spies of the military commanders in the occupied areas, the military and political organs in various localities, and even the puppet army anyway, all vied with the senior officers sent by Chongqing to "receive," causing chaos. On October 26, 1945, the Executive Yuan announced the establishment of the National Undertaking Reception Committee of the Reconquest District, which consisted of four enemy and puppet industry administrations in Jiangsu, Zhejiang, Anhui, Luyu, Liangguang and Pingjin districts, to direct the reception of economic, transportation and financial undertakings across the country. The committee stipulates that the Ministry of Economic Affairs is responsible for the raw materials and finished products of the equipment of the Japanese pseudo-factories in the occupied areas, and that "those of the same nature as the state-owned enterprises run by the Natural Resources Committee shall be handed over to the commission to take over the handling of the Japanese pseudo-industries." The Office of the Commissioner of the Ministry of Economic Affairs is responsible for receiving industrial and mining enterprises in Northeast China. The Office of the Commissioner of the Ministry of Economic Affairs and the Industrial and Mining Office of the Taiwan Provincial Government are jointly responsible for the reception of industrial and mining enterprises in Taiwan.
According to the reports on the handling of enemy property in various districts, a total of 9,345 enemy factories and mines were received throughout the country, 319 were handed over to their owners, 4,541 were transferred (i.e., directly transferred to bureaucratic capital management), and 2,865 were sold at auctions.
3] Counterfeit currency exchange. After receiving the puppet Manchukuo, the puppet Nationalist Government, and the Bank of Japan in Taiwan, the legal tender will be exchanged at a ratio of 1:200, with a limit of 50,000 yuan of legal currency per person, and the redemption will be completed within 4 months. If you can't redeem it, you will grab the quality of shopping, which will stimulate the soaring prices.
4] Receiving and robbing. The valuable equipment and raw materials of the enterprise were stolen and sold in large quantities by the receiving officials and fell into private pockets. The assets of the All-China Match Production and Marketing Association in Beijing, Tianjin, and Qingdao were returned, and most of the matches and match raw materials stored by the joint venture in Tianjin were stolen and sold, and when they were returned in January 1947, only a pile of tatters remained.
3. Company Law.
In April 1946, the Nationalist Government promulgated the New Company Law, Article 7, Paragraph 1 of which stipulates that "if a foreign company establishes a branch in China to operate an enterprise, its domestic parent company may cease to operate". Ma Yinchu pointed out that this is a law that humiliates the country, "If the capital of the head office is 100 million US dollars, and the capital of the branch is not stipulated, the Chinese branch can report the capital at will when it makes a profit, so as to reduce or avoid paying taxes." …… Income tax on shareholder dividends, as the shareholders of foreign companies are all in the United States, are also evaded. …… After the company law stipulates that it is not necessary to operate, its head office may be a short company, and the U.S. tax can be avoided", whether in China or the United States, foreign companies can evade taxes, can Chinese companies do business with it?
4. Encourage input and open foreign exchange.
At the end of 1945, the Nationalist Government had $858 million in foreign exchange, the largest amount in history. Song Ziwen implemented the policy of "encouraging importation", and relied on imports from the United States for clothing, food, housing and transportation.
On March 4, 1946, foreign exchange control was liberalized, and 1 US dollar = 20 yuan of legal tender was changed to 1 US dollar = 2020 yuan of legal currency, and a pegging policy was adopted. In January, it was in 2 out of 1, in February it was in 3 out of 1, in March it was in 5 out of 1, in May it was in 8 out of 1, and foreign exchange dried up rapidly. On August 19, it was changed to 1 US dollar = 3,350 yuan of legal tender, and the pegging system was still adopted. In 1946, the import value was 653.1 million US dollars, and the import exceeded 474.3 million US dollars, which was 6.8 times that of more than 70 million US dollars in 1936, and the foreign exchange reserves were 455 million US dollars.
On November 17, 1946, the "Interim Measures for Amendment of Import and Export Trade" began to restrict the supply of foreign exchange, strictly restrict imports, and adopt an import permit system for all imported goods, and implement the method of "import quota allocation".
On February 1, 1947, the Nationalist Government announced the "Economic Emergency Measures Program", announcing for the first time the import quota of the second category of imported goods (belonging to industrial raw materials and important materials lacking in China). In May 1948, the Central Bank had $28 million in foreign exchange.
American bulbs sell for 200 yuan, and domestic bulbs cost 400 yuan. The six-foot lathe in the United States sells for 200,000 yuan, and the domestic cost is 1.2 million yuan. Chinese tea costs 200,000 yuan in legal currency, and in the United States it costs 70,000 legal currency, because Ceylon tea is so cheap. Other products are similar.
5. Currency depreciation.
1] Prices. On September 28, 1945, the 22 major commodities in Chongqing rose 1,724 times compared with 1936, and Shanghai rose 84,871 times. From September 1945 to August 1948, prices in Shanghai rose 14,240 times.
2] Shanghai Golden Tide. At that time, only Shanghai sold gold, and dignitaries went to Shanghai to buy gold, and the highest price of 10 taels of gold bars on January 4, 1947 was 4.58 million yuan, and on February 13, it rose to 7.8 million yuan. Song Ziwen, the premier, and Pei Zuyi, the governor of the central bank, stepped down. The introduction of the "economic emergency measures plan", which banned gold trading and froze wages, was forced to abandon it in less than a month, accelerating the collapse of the fiat currency.
3] Fiat currency issuance. The issuance of legal tender amounted to 1,031.9 billion yuan in 1945, increased to 2,112.5 billion yuan in June 1946, and 6636946 billion yuan on August 21, 1948. On February 14, 1947, 13.9 trillion yuan was handed over for printing, and only 90 billion yuan could be printed in China.
4] Issuance of Golden Yuan Coupons. On August 19, 1948, Chiang Kai-shek issued the "Financial and Economic Emergency Punishment Order" and issued gold yuan coupons. 1 yuan of gold yuan coupons will be converted into legal currency of 3 million yuan, and legal tender will be recovered. The "Measures for the Issuance of Golden Yuan Bonds" stipulates that "the issuance of Golden Yuan Bills shall be fully prepared. In the preceding paragraph, 40% of the issuance must be gold, silver and foreign exchange, and the rest must be replenished by marketable securities and state-owned enterprise assets designated by the government." At that time, there were only more than 200,000 taels of gold in stock, and in January 1948, foreign exchange assets were only more than 13,000 US dollars. At that time, some assets such as Tianjin Pulp Company, Taiwan Sugar Company, Taiwan Paper Company, China Textile Construction Company, and the state-owned China Merchants Bureau were designated for preparation. Limited to 2 billion yuan. Compulsory exchange of US dollars, gold, silver, silver dollars, Hong Kong dollars, etc., a total of 190.43 million US dollars. The actual issuance reached 11.07 billion yuan on January 14, 1949, 161.2 billion yuan on March 26, and 435.5 billion yuan on April 9. From August 1948 to May 1949, prices in Shanghai rose 1281707 times.
5] Issuance of silver dollar coupons. After the battle of crossing the Yangtze River, the Nationalist Government fled to Guangzhou and issued silver yuan coupons, 1 yuan was exchanged for 500 million yuan in gold yuan coupons, but the masses refused to use them.
6. Deficit.
Fiscal Revenue and Expenditure of the National Government from 1945 to 1948 (100 million yuan)
The first set of figures can be found in the "Fiscal and Financial Policy Address" delivered by Finance Minister Yu Hongjun at the National Congress on April 13, 1948, and the second set of figures can be found in the "History of Inflation in China" by Zhang Jiaguang, Governor of the Central Bank. Yu and Zhang were both the top financial officials of the Nationalist Government, but the figures provided by the two were far from the same, and it can be seen that the competent authorities at that time could not come up with a unified set of figures in this regard. In order to conceal the severity of the fiscal crisis, the official release of fiscal revenue and expenditure figures deliberately exaggerated revenues and depressed expenditures to narrow the deficit. Zhang's History of Inflation in China was written in exile after liberation, when the crisis was already history, so the data he provided may be closer to reality.
The deficit was mainly due to military spending, which was 59.9 percent in 1946, 54.8 percent in 1947, and 68.5 percent in 1948.
Zhang Jiaxuan
Second, the expansion of bureaucratic capital
1. National capital.
1] Finance. On November 1, 1946, the Central Cooperative Treasury was established, which, like the Four Banks and the Second Bureau, operated savings, investment, and loans. Lending exceeded deposits by 21 per cent in 1946, 67 per cent in 1947 and 72 per cent in 1948, stimulating hyperinflation.
2] Trade. The Central Trust Bureau arranged the import of materials such as rice, flour, wheat, coal, rayon, etc., and monopolized the bulk sources of export such as raw silk, tea, ice eggs, pig bristles, copper oil, soybeans, etc., and rarely exported them directly, but entrusted Huayang Commercial Bank to act as an agent and give commissions.
3] Industry. China Textile Construction Corporation is the largest textile industry enterprise, and it also meddles in the import and export trade, and controls the purchase of national cotton.
2. Co-organized by the government and business.
China Vegetable Oil Factory, China Tea Joint Venture, etc.
China's vegetable oil mills monopolize 66% of tung oil exports.
3. Big bureaucratic capital.
Song Ziwen series Fuzhong Company, China Import and Export Corporation, etc., Kong Xiangxi series Yangzi Construction Company, Jialing Company, etc., Chen Lifu family's Huamei Trading Company, Taiping Xingye Company, etc., Song Meiling series of Sino-American Industrial Company, etc.
Fuzhong Company has obtained the exclusive right to operate the goods of 12 large companies such as Wellis Automobile Company and Westinghouse Electric Company of the United States, and imported a large number of jeeps, generators, hydropower equipment, etc. Yangzi Company obtained the general agent distribution rights of 10 American companies such as Baohua Pharmaceutical Factory and Gonghe Steel Mill in China.
4. Important enterprises. Before the war, bureaucratic capital was mainly in heavy industry, and after the war it rapidly expanded to light industry.
1] Resources Committee. After the victory of the Anti-Japanese War, the Assets Supervision and Management Committee turned its attention to the enemy and counterfeit industries waiting to be taken over, and decided to adjust and shrink the existing enterprises in the rear. By the end of 1945, there were 93 production enterprises owned or sponsored by the Committee in the rear. After demobilization, 13 were handed over to the local government or leased to the private sector, 33 were terminated or basically suspended, and 47 continued to operate. By the end of 1946, it had received 292 units of the enemy's counterfeit industry, with assets worth 326588 million yuan before the war. In Northeast China, the SAC received 216 units, including the well-known Anshan Iron and Steel Company, Benxi Coal Mine, Fushun Mining Bureau, and Northeast Electric Power Company. All electric power, coal mines (excluding scattered small mines), iron and steel, electrician, petroleum, paper, metal mines, 87% of machinery and 75% of cement in Northeast China are under the control of the Commission. In Taiwan, the SAC received 48 companies. Taiwan's sugar companies and Taiwan's and northeast's paper companies belong to the scope of light industry, and they were also accepted by the SAIC on an exceptional basis.
2] China Textile Construction Corporation. Founded in December 1945, it is composed of 112 units of Japanese cotton spinning, wool spinning, linen making, silk spinning, printing and dyeing, knitting and related machinery, chemical industry and woodworking from Shanghai, Qingdao, Tianjin and Northeast China, with more than 1.77 million spindles, more than 330,000 thread spindles and more than 40,000 cloth machines. The head office is located in Shanghai, and branches are set up in Qingdao, Tianjin and Northeast China, with 5,504 employees and 75,000 workers. It was the largest textile enterprise in the world at the time.
3] State-owned China Merchants Bureau. At the end of the Anti-Japanese War, China Merchants had only 18 steamships left, with a capacity of 23,841 tons. After the war, the number of ships of China Merchants increased to 479 ships with 412497 tons.
4] China National Grain Industry Corporation. In 1941, it was funded by the Ministry of Food, the Central Trust Bureau, and the Peasant Bank of China, and after the war, it received 22 enemy and counterfeit enterprises in Hainan Island, 8 in Guangzhou, and one in Wuhan and Beijing, and bid for 20 grain factories.
5] China Vegetable Oil Company. In 1936, it was jointly funded by the Ministry of Industry of the National Government and the Construction Department of Sichuan, Hunan, Hubei, Anhui and Zhejiang Provinces, and received a large number of enemy products after the war, with 15 oil mills, storage and refineries, and 37 domestic trade institutions, and became a large-scale comprehensive enterprise in oil production and oil trade at home and abroad.
6] Huainan Road Mining Company. The Song Dynasty participated in the investment and agency operation of the China Construction Bank Company, and fell to the Japanese during the war. After the war, Song Ziwen preemptively took over the Huainan Coal Mine.
7] Yangzi Electric Company. China Construction Bank Company participated in the investment and agency operation, and after the capital power plant and Qishuyan power plant were returned in 1946, some power generation equipment was added, and the power generation exceeded that before the war.
8] China Salt Industry Corporation. In March 1947, it was established on the basis of receiving the salt pans plundered by the Japanese invaders, and the head office was set up in Tianjin, and later moved
Shanghai, and then moved to Taiwan. The government holds 80% of the shares, monopolizing the production and sales of salt.
In the first few years, the government-run industrial and mining industry developed greatly, with an output value of 97.24 million US dollars in 1946 and 196.97 million US dollars in 1947.
3. The private sector is shrinking
1. A wave of factory closures. Victory struck suddenly, prices plummeted by 21 percent, and by May 1946, 349 of the 368 factories in Chongqing were closed.
2. The factory returns to the east. Taking the Rong family's Shenxin No. 4 Factory as an example, the factory buildings and dormitories in Hankou were occupied by the army and government agencies, and all of them were taken back for repair and resumption of work, and it was July 1948. The original 50,000 spindles, on the eve of the liberation of Wuhan, only 8,000 spindles were started.
3. The government goes back on its word. In the early days of the War of Resistance Against Japanese Aggression, in order to attract private industries in the coastal areas to relocate inward, the Nationalist Government threatened that the post-war industrial policy would be state-run heavy industry and private light industry, and that the factories and equipment obtained by Japan's compensation after the victory of the War of Resistance against Japanese Aggression would be handled in accordance with this principle, and a part of it would be distributed to the relevant private factories free of charge to offset the losses suffered in the war. After the victory of the Anti-Japanese War, the Nationalist Government ignored its promises and took all the Japanese cotton textile industry under the "state-owned" and monopolized the operation of the China Textile Construction Company.
After the victory of the Anti-Japanese War, the government immediately canceled the contract with Chongqing Iron and Steel Machinery Industry and imported cheap and better quality products to the United States, and by the spring of 1946, Chongqing Iron and Steel Machinery Industry stopped production of more than 100 people.
4. The new coastal factories were once positive. In the early days of victory, the import policy was conducive to enterprises importing advanced equipment from the West, but the British and French factories and mines did not recover, and the soaring prices led to hoarding, resulting in false consumption and stimulating entrepreneurs to expand production. In 1945, the total output value of private industrial and mining enterprises was 49.89 million US dollars, in 1946 it was 261.57 million US dollars, and in 1947 it was 267.58 million US dollars. Due to the dumping of U.S. cotton, the price of cotton is low, and Shenxin's profit margin is more than 80%.
5. Begin to decline. In October 1945, the "Textile Business Management Committee of the Ministry of Economic Affairs" was established, and in 1947, the purchase price was much lower than the cost price, and later it was changed to negotiation, but it was similar to the limited price purchase. Taking matches as an example, the price limit is 72 yuan for a box of gold yuan coupons, and the cost is 114 yuan. In order to get low-priced goods, orders have increased significantly, and the factory produces according to the order, and when it is delivered, the price limit is canceled, and the price skyrockets, making it difficult to offset the cost of raw materials. It was at this time that a large number of factories closed down. The biggest problem is that the price limit is abandoned after the price limit, and the price is like a wild horse on the loose. By April 1949, there were more than 1,000 enterprises in Shanghai, and less than 100 were in operation.
6. Minsheng Company. Due to the purchase and construction of a number of large, high-performance ships in the United States and Canada, the tonnage of Minsheng Company increased sharply after the war, and the focus of its business was shifted to Shanghai, opening up the Beiyang route, the South Ocean route, and the Southeast Asia route. The long-term requisition of Minsheng Company's ships by the Nationalist Government for military transportation has greatly reduced the company's ability to operate normally. By 1947, there was no cargo to transport and no passengers to carry, so we had to repeatedly shrink our operations, and a large number of ships were stranded in the port. In 1949, Minsheng's gross tonnage increased by 178 percent compared to 1945, but the number of passengers in 1949 was only 16 percent of that in 1945. In 1947, although the freight volume reached the highest peak in the history of people's livelihood, a large part of it was military transportation with low freight rates. Due to the national government's deduction and arrears of freight tolerances, the adjustment of passenger and freight prices was far from keeping up with the rate of price increases, and the company's financial situation deteriorated day by day.
Hankou Shenxin No. 4 Factory
Fourth, the rural economy is withering
1. Land concentration.
According to a survey of four villages in Nanming Township, Lishui County, the land occupied by landlords in 1939, 1946, and 1948 is as follows:
2. Increased taxes. There are as many as 276 kinds of showdowns in Shaoxing, Zhejiang.
3. Exports of agricultural products have plummeted.
Landlord's mansion