Chinese Capitalists in Japan’s New Order: The Occupied Lower Yangzi, 1937-1945

Published by EH.NET (June 2005)

Parks M. Coble, Chinese Capitalists in Japan’s New Order: The Occupied Lower Yangzi, 1937-1945. Berkeley: University of California Press, 2003. xvii + 296 pp. $60 (cloth), ISBN: 0-520-23268-2.

Reviewed for EH.NET by Andrea McElderry, Department of History, University of Louisville.

Chinese Capitalists in Japan’s New Order by Parks M. Coble (Professor of History, University of Nebraska) is a significant contribution to the sparse Western language research on the areas of China occupied by Japan during the Sino-Japanese War (1937-45). Specifically, it examines the strategies used by China’s modern industrial and commercial capitalists to survive the destruction and politics of the Japanese occupation. The study is based on extensive sources in Chinese, Japanese, and English. Two recent developments in Chinese historiography have produced voluminous materials which, in spite of their political agendas, have made research on this topic possible. The first, the “new remembering,” commemorates heroic resistance and details Japanese war atrocities. Given the waning appeal of communist values, it reflects the Beijing government’s desire to encourage nationalism as a source of popular support. The second development, in support of China’s economic reform policies, has transformed capitalists from “class enemies” to “patriotic capitalists” and generated a plethora of material on Chinese capitalists in the early twentieth century.

Collaboration with the Japanese occupiers is a theme which runs throughout the book. The issue is complicated. Coble notes that it is not surprising that the numerous biographies of patriotic capitalists tend to gloss over the war years since the subjects in his study came closer to collaboration than to the heroic nationalist narrative of the “new remembering.” Yet neither do these capitalists easily fit the profile of collaborator. In the early stages of the war, most attempted to escape Japanese domination but, as the circumstances of the war progressed, their options narrowed.

Those concerned with economic and business issues will find Coble’s insights on the Chinese family firm of particular interest. Regardless of their formal organization, the individual businesses examined in a series of case studies were family-controlled. Coble argues that this fact was a major influence on the choices that individual capitalists made during the war. Family income was tied to the survival of the firm and survival “often won out over the more abstract concept of nationalism” (p.112). At the same time, the “family form of organization … was key to the survival of most businesses in the wartime environment.” Family heads could move assets among companies quickly and entrust family members to manage operations in different spheres of the war. Many of the same capitalists followed a similar strategy as the Communists marched to victory in 1949, making quick decisions to spread their resources to Hong Kong, Southeast Asia, and beyond.

Coble presents the experience of the capitalists in three parts. The first part provides an overview of the war and the choices faced by the capitalists. Destruction of plants and infrastructure was the most outstanding feature of the early stages of the war. As the Japanese army quickly occupied Shanghai and the lower Yangzi, most capitalists attempted to escape Japanese control. Of these, most chose to move what was left of their operations to Shanghai’s unoccupied foreign concessions only to end up under Japanese occupation after Pearl Harbor and the outbreak of the Pacific War. For good reason, fewer capitalists relocated to Free China (areas controlled by the Chinese Nationalist government in western China). Doing so meant finding shipping for moving equipment up the Japanese-dominated Yangzi River or along the coasts where Japanese controlled the skies. Government support was “tardy and inadequate” (p. 18). Only a fraction of the total shipped arrived safely in Free China. And once there, businessmen had to operate in an atmosphere which favored dominance by those with close ties to Chiang Kai-shek. Some like the “match king” Liu Hong-sheng, who did follow this path (and thus fits the patriotic capitalist narrative) also retained operations in the occupied areas.

The second part of the book concerns Japanese policy in the occupied areas and the responses of Chinese capitalists to these policies. Until late 1938, Japanese economic policy was “simple plunder” but, at the same time, the occupiers sought capitalists’ support for the puppet government established in Nanjing. Most capitalists resisted cooperation partly because there was no incentive to do so. But they also found themselves caught between the terrorist tactics of the Japanese occupiers and agents of the Nationalist government based in Chongqing. As the war drained Japanese resources, policy changed to developing the Chinese economy in order to fight the war. The possibility of regaining at least partial control of confiscated property provided a stronger incentive for capitalists to cooperate and by late 1943, “most of the capitalists who had remained in the Shanghai area had made some accommodation with the Japanese and the Nanjing regime” (p. 84). As it turned out, they had regained some property only to see the economy deteriorate because of shortages of raw materials and hyperinflation.

In the third part of the book, Coble examines individual experiences and the why and how of individual responses through a series of case studies of both prominent and lesser-known capitalists. As Coble details, Chinese capitalists experienced the war as individuals and their responses depended on a number of factors, such as where operations were located, what could be salvaged, and the strategic value of the business and its level of vulnerability to Japanese interference. Here and throughout the book, Coble provides extensive statistical information on the economy and the enterprises.

The war dramatically weakened Chinese modern industry which was modest but promising in 1937. The war also weakened the Chinese capitalists. In China after the war, Coble concludes, the charge of collaboration against capitalists who remained in occupied Japan tarnished the image of capitalism in general and made it easier for the Nationalist government to take control of their property. Thus the capitalists and capitalism were weakened just at the time the Communists were gaining in power.

Andrea McElderry is Professor Emeritus of History at the University of Louisville. Her recent research is on securities markets in twentieth century China.