Shiroyama, Tomoko, “China under the Depression: the regional economy of the lower Yangzi delta, 1931-1937” (1999)

Title : “China under the Depression: the regional economy of the lower Yangzi delta, 1931-1937”

Author(s) : Shiroyama, Tomoko

Year : 1999

Type : Dissertation

Subject : History

Keywords : economy;region;space

University : Harvard University

Language:Name : English

Support : Print

Abstract : During the world depression of the 1930s, as China's position in the international financial system changed, so also did the government's role in the domestic economy. This thesis analyzes the transformation of the regional economy of the lower Yangzi delta to explore the close interrelationship between the international and domestic dimensions of the Chinese economy. This study focuses on three areas. The first is the mechanism of China's silver-standard monetary system. The Shanghai financial market was closely integrated with the international silver market. in the first two years of the depression, 1929 to 1931, China avoided worst effects because of the international depreciation of silver. This inflationary trend reversed, however, when foreign countries devalued their currencies after 1931. The American Silver Purchase Act in 1934 further raised the international price of silver. Since the price of silver in China lagged behind the sudden rise in the international price, large amounts of silver flowed out of China. The second focus is the impact of fluctuations in the price of silver on the Chinese economy. The credit expansion was based on silver and its outflow was deflationary. The regional economy of the lower Yangzi delta revealed itself most vulnerable to deflationary pressure. Once commodity prices and value of assets declined, credit-loan relationships which among industrial enterprises, rural households, and urban and rural financial institutions, developed during the years of inflation, ceased to work. The third focus is effects of the crisis on the relationship between the state and society. Searching ways to recover from the depression, the government increased its influence in the economy, especially in the banking system and in the agricultural promotion. Most important, by moving to the foreign-exchange standard in November 1935, the government succeeded in eliminating the negative effects of the rising price of silver. Nonetheless, the government's control was far from total. Although the Nanjing GMD government lasted from 1927 to 1937, its role in the economy changed significantly during the depression years. The intensified tension between the government and the people over currency convertibility in particular, has important implications for the nature of the state-society relationship.