The conflict with Japan has thrown Chinese economic development back to conditions not too far from the pre-Nanking stage. China not only faces the handicaps of social dislocations but also the ruin of her factories and her industrial centers. The Japanese have destroyed much of the Chinese manufacturing equipment and are placing what remains under Japanese control. Significantly, the deadliest enemy of Japanese business—in the unlikely event of a complete Japanese success—will be Japanese-owned factories in China. Chinese labor will deeply affect Japan's domestic production, unless the Japanese succeed in rationalizing their economic system to an extent not yet contemplated. Hence, Japan's losing the war may well be brought about by bankruptcy from sheer military indebtedness; her winning the war, however, may lead to more remote but no less certain ruin—through the competition of Chinese output with Japanese home industries disadvantaged by the cheaper labor markets of China. But Japan's loss is not inevitably China's gain, and the Chinese may find themselves, at some point in the future, controlling an industrial system which has been wrecked, looted, and bankrupted.
Whatever the ultimate outcome, loans will again play a part in Chinese development. The placing of large foreign loans has been a key part of Chinese development, and the task of reconstruction in China—no matter who undertakes to do it—will require large amounts of capital. Consequently, the loan policies of the wealthier nations may return to the importance which they enjoyed in 1913, and the dictates of the Western states may again direct the lines of Chinese economic progress. The effects of the Japanese conquest, if it is partial and then lapses into a stalemate, may well be determined by the extension of loans to the Chinese or to the Japanese in China. The effect of the war has already complicated the picture of China's economic future to the extent of making even cautious prophecy hazardous.[28]
In the military sphere, the Chinese have come of age, although their fighting strength will be determined by the importance of infantry. If later wars continue to depend upon man power, China will become more and more significant in world politics. Internally, the armies provided (1) a transitional administration from the Empire to the Republic; (2) a physical expression of the ideological confusion and the regional disunity of China from 1916 to 1931 (the period of tuchüns); (3) the armed edge of the ideological revolution of 1926-1927; (4) decisive instruments in the conflict between the Communists and Nationalists from 1927 to 1937; and (5) one of the most powerful unifying agencies at the command of the National Government at Nanking. The Chinese military system spread the knowledge of Western warfare and, with it, of modern techniques throughout the country; it shaped the ideological and governmental experience of modern China.
Notes
[2.] Rodney Gilbert in The China Year Book, 1921-2, p. 519, Tientsin, 1921.
[3.] Ibid., 1926, p. 1065.
[4.] Ibid., p. 1062.