How Crisis Shapes Change: New Perspectives on China's Political Economy during the Sino‐Japanese War, 1937–1945¹

Abstract

This article surveys the recent literature on China's political economy during the Sino-Japanese War . This literature reveals that the war-triggered sustained systemic crisis brought about the most intensive Nationalist statebuilding efforts, the danwei designation of political, economic, and administrative organizations, the expansion of state-owned industries and the decline of the private sector, the creation of a state enterprise system, and the formation of an ideology of developmental state. This literature suggests that the elements of post-1949 institutional and structural arrangements and ideological systems developed well before 1949. Therefore, the critical issue is no longer that of establishing institutional, structural, and ideological continuity between the Nationalist and Communist eras; instead, it rests in understanding why and how the Chinese Communists kept intact, built on, and expanded existing institutions, structures, and ideologies in certain key areas of political, economic, and administrative life.Scholars of modern China have long appreciated the critical importance of the Sino-Japanese War in key historical developments. As many studies have shown, the war fostered the development of Chinese nationalism, hastened the collapse of the Nationalist regime, and accelerated the Communists' rise to power. Nevertheless, only recently have scholars begun to understand fully the war's profound impact on China as they explain how the war-triggered crisis shaped Nationalist state-building efforts, contributed to the formation of China's danwei (unit) system, 2 wrought fundamental changes to Chinese industry, brought about new economic institutions, and gave rise to new ideologies. Although some scholars argue for the notion of radical change after 1949, this growing literature points to the existence of significant continuities between the Nationalist and Communist eras. The objective of this article, then, is to summarize key issues and arguments of this literature and suggest new directions for research. 3

Crisis and the Development of China’s Southwestern Periphery

“…These mental models helped create institutional memory and a bureaucratic infrastructure that outlasted the war and continued into the post-1949 CCP period. Bian's work reinforces an emerging scholarly consensus on the continuities that connect GMD and CCP planning and economic policy (Bian, 2005b;Esherick, 2001;Frazier, 2002;Howard, 2004;Kirby, 1990). This continuity narrative typically connects the civil war period of the late 1940s with the so-called "golden years" immediately following the CCP's revolution of 1949 and ends with the political and economic turmoil of the late 1950s.…”

“…The political and economic crisis spawned by the Japanese invasion and occupation of Manchuria in 1931 had a profound impact on China's economic policy. William Kirby and Morris Bian in their respective works reveal the critical impact that the crisis had on the GMD government, shaping its bureaucratic structure, adjusting its policy priorities, and helping shift its spatial orientation away from eastern and toward central China (Bian, 2005b;Kirby, 1983). These crisis-inspired changes, however, were in many ways simply a precursor of more radical changes in the waning years of the decade, when a far more serious geo-political crisis served as the midwife for a new economic center located deeper in China's interior.…”

“…Morris Bian argues that the Japanese invasion forced the GMD to adopt new "mental models" that allowed it to institute pathbreaking bureaucratic and organizational changes (Bian, 2005b: 7-13;Bian, 2007Bian, : 1101. These mental models helped create institutional memory and a bureaucratic infrastructure that outlasted the war and continued into the post-1949 CCP period.…”