Japan, China, and the Growth of the Asian International Economy, 1850-1949

Published by EH.NET (December 2005)

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Kaoru Sugihara, editor, Japan, China, and the Growth of the Asian International Economy, 1850-1949. New York: Oxford University Press, 2005. xv + 295 pp. $140 (cloth), ISBN: 0-19-829271-6.

Reviewed for EH.NET by Ming-Hsuan Lee, Department of Economics, Boston University.

Modern Asian economic history traditionally has been written in terms of the West’s impact on Asia and Asia’s response to it. By contrast the history of international contacts among Asian countries has not been considered as fundamental to the understanding of the region’s economic modernization. While the institutional frameworks introduced or enforced by Western powers in Asia did provide the basis for economic modernization, the process of realizing this goal depended extensively on interactions across Asian countries. Japan, China, and the Growth of the Asian International Economy makes a useful contribution by examining the history of intraregional trade, capital mobility, and migration within East Asia as factors that determined the course of the region’s economic development.

This book consists of an introduction by the editor and ten essays that are divided into four parts. In the introduction, the editor, Sugihara, recognizes that the impact of the West was a major influence on East Asia’s integration into the world economy, but he argues further that it is essential to recognize the central importance of intra-Asian regional dynamics in accounting for the economic history of this region. Part I looks at the history of interactions between the Chinese and Japanese cotton textile industries and the effects of these interactions. In chapter 2, Furuta traces the ways in which British cotton textiles were distributed across East Asian countries by Chinese merchants through their East Asia trading network centered in Shanghai, and concludes that Kobe, a major Japanese port, had become part of the Shanghai network. In chapter 3, Kagotani examines further the relationship between the Chinese merchants’ networks and the growth and decline of the Japanese cotton industry from 1890 to 1941. These two chapters establish the importance of networks as a key institution for modern Asian economic development. In chapter 4, Abe traces out how, in response to Chinese competition, the Japanese cotton industry between 1914 and 1930 sought to upgrade its production by pursuing cost-cutting technologies and diversifying its products.

Part II examines institutional change in China resulting from deeper involvement in international trade. In chapter 5, Kuroda argues that the adoption of the Gold Standard in India and Japan from the end of the nineteenth century to the early twentieth century made it more difficult for China to engage in international trade while preserving its old monetary regime and thus became an important force pushing China’s monetary reform. In chapter 6, Goto-Shibata reinterprets the boycott movements against Japanese and British products in China as a tool for developing China’s national industries. In chapter 7, Kubo relates the development of China’s tariff policy to the international environment China faced and argues that tariff policy was a factor that helped China to industrialize.

Part III discusses patterns of China’s internal integration and relationships with the international economy. In chapter 8, Lin gives an overview of the extent to which the Chinese economy was dualistic and how this dualism was affected by China’s fluctuating international relations as seen in foreign trade. In chapter 9, Kose uses statistics of foreign trade and internal trade from 1914 to 1930 to study the progress of economic developments in eight different regions of China.

Part IV looks at China’s economic relations with Taiwan and Southeast Asia, especially the diffusion of institutions and network resources. In chapter 10, Lin examines the trade between Taiwan and China between 1895 and 1937 and argues that the trade provided Taiwanese merchants with important opportunities to accumulate foreign trade experience. In chapter 11, Sugihara studies the patterns of Chinese migration to Southeast Asia from 1866 to 1939 and highlights the importance of networks in facilitating migration.

Each of the ten essays is well written and provides a concrete example on how interactions between Asian countries affected various aspects of economic development of this region. Generally, the authors are able to cross the border of “nationality” and recognize both strengths and weaknesses of the paths toward economic development taken by various countries. On the other hand, none of the authors employ economic theory or econometric tests in a formal sense and consequently the relevant incentives or determinants underlying development are largely unexamined, and the explanatory power of particular factors (including the West’s impacts and the intra-Asia interactions) is not measured.

Criticisms aside, Japan, China and the Growth of the Asian International Economy is an important corrective to traditional accounts in its clear picture of how and why interactions between East Asian economies shaped the region’s economic development.

Ming-Hsuan Lee is a graduate student in economics at Boston University. She is currently writing a dissertation on the impact of economic development on gender differences in schooling in China in the late twentieth century.