Taiwan Today

Economists and historians outside the Bam­boo Curtain have become more and more interested in the economic development of the Peiping Communist regime, which is still an enigma to most of them because of the blackout 'of reliable information imposed by the regime on its people with threat of capital punishment for disclosure. Consequently, many of these outside people gladly accept any information that the Reds choose to release with the tragic result that many an otherwise intellectual person have been hood­-winked to the same way of thinking as the Communists without going through the "brain­washing" process. Mr. Wu's book is a timely contribution toward rectifying such a deplorable situation. It is in fact the only book of its kind written by a competent economist that treats the subject objectively and critic­ ally by basing his analysis on data published unguardedly piecemeal by the Communists themselves.

The study rightly starts from the economic heritage that the Communist regime has taken over from the past. These data can be assumed to be correct since they were public infor­mation that had been subject to open criticism and review and can therefore be safely used as yardsticks for evaluation of the later Com­munist claims of achievements. From Chapter III onward the various facets of the Communist economy; namely economic stabiliza­tion and fiscal policy; land redistribution and its implications; agricultural production and self-sufficiency; industrialization, planning and socialization; appraisal of general industrial recovery and development; survey of selected industries; forcer labor and mass labor projects; transportation and domestic trade; monetary and banking control; labor organization and wages; and foreign economic relations-were analyzed with scientific impartiality, the single aim of which is to find out how much real economic improvement the Communist Chinese have achieved, disregarding any consideration of the desirability or otherwise of such a system of economic development from a moral or humane point of view. The author's personal views are compressed into a short concluding Chapter.

The voluminous and reference nature of the book precludes a scrutiny of its contents, chapter by chapter, in such a short review. But any open-minded reader will obtain some unavoidable impressions in common. Firstly, in spite of the purposeful intention of the author to confine the analysis within the economic area, one cannot but feel from reading the factual accounts that the Communists have relied at each step of their progress on deceit and knavery. From the very beginning, when they expedited the disintegration of the Nationalist economy through derangement of monetary stability and disruption of transportation systems to later periods when they implemented their policies to smash the individual and push what they call "indust­rialization and development programs" and finally "socialization" of the whole economy, the same pattern has been followed at each and every step, namely, deception followed by force without any consideration of human sacrifices.

Secondly, in spite of all the facilities and conveniences available to them in ruth­lessly executing their policies, the economic success is still limited and that even in their major objectives of developing heavy industries and redistribution of land for production increase, the result has fallen short of their expectations.

Thirdly, the Communists' claims of successes in fiscal stability and production increases are in most cases mere jugglings of figures. The budget deficit, for instance, is concealed by the issue of bonds, collections from "other sources" (i. e. extortions from people as during the Anti movements), cre­ation of new money and conversion of cur­rency. Anyway, even if deficits did not exist as they claim, a balanced budget would mean nothing under the Communist regime for it has lost its orthodox economic purpose and meaning just as price stability means nothing where the actual consumer goods are not freely available and incomes and expenditures are strictly controlled by the state.

Fourthly, the reader will be impressed by the creation of a new economic factor that has been used very effectively by the Communists to increase production and procure foreign exchange. This factor is the use of forced or slave labor and the export of forced labor to foreign countries. Slave labor and trade in slaves are men's oldest sins imposed by the ancients usually on conquered people or foreign races; but the Communists have streamlined them into national economic institutions.

Lastly, he will be impressed by the cold calculation of the Communist brains in the execution of their plans and schemes and in dealing with their people as well as by their very efficient coordination and their farsight­edness. In the last matters they have, of course, the advantage of learning from the long experiences of USSR. Purely from a technical point of view, some of the Com­munists' methods do spell greater efficiency and thoroughness (such as in taxation and wage system for paid labor).

Hitched to the Russian economic wagon without the advantage, however, of grants-in-aid or free technical assistance, the Com­munist regime has bereaved itself of the ben­efits of foreign investments and foreign trade, which are essentials for the development of under-developed countries. At great sacrifices of human lives and welfare, they have achieved during the six years of des­potic rule no more than recovering their heavy industries to the level before the Rus­sians stripped Manchuria of its industrial equipment. These heavy industries are still infantile by any modern standard; and their agricultural and industrial production is still below the pre-1949 peak and is still far from being self-sufficient. If the Russian experi­ments are any standard, if may be predicted that even after four or five more 5-year plans the Communists will not be able to raise the standard of their people's living to anything resembling that of a modern industrialized country. As the Communist experiment in China has become the focus of attention of many under-developed countries, the book should be specially valuable for comparison by these countries if the tragedy of China is not to be repeated elsewhere.

In his conclusions the author has some very pertinent views to offer: "Notwithstand­ing the impressive forward strides Communist China has made so far in increasing produc­tion and in shaping the economic life of the people according to the dictates of government policy, there are some serious and even glaring deficiencies on the economic scene. In the field of heavy industry, machinery manufacturing, cement and construction materials, chemicals, and the non-ferrous metals are little more than infant in­dustries by any modern standard. The supply of coal and electric power is barely able to meet the country's current demand, while domestic production of petroleum products is altogether negligible. Although the iron and steel industry has virtually fully re­covered from the effects of Soviet devasta­tion in Manchuria, it is in no position to meet any extraordinary increase in demand such as might be expected in a modern war. Besides, in spite of attempts to develop new industrial areas, modern industry in Communist China is still concentrated in a few centers, and the development of industry elsewhere necessitates the maintenance of an efficient transportation system. Similarly, control of consumption through rationing cannot be effective unless unimpeded com­modity movement can be maintained. Yet to meet this demand Communist China has only a railway system which, except in Man­churia, has some notable bottlenecks both with respect to the network itself and with respect to available rolling stock. At the same time, highway transportation offers only limited possibilities because of the shortage of both fuel and vehicles, while inland river transportation is subject to the limitations of geography. The Communist monetary system, though exhibiting outward stability, depends for the suppression of inflation upon the government's continued success in mopping up excess income and in controlling the expenditure of the public. The government budget, while showing a nominal sur­plus from year to year, is by no means in balance and has to rely on extraordinary means to supplement normal revenue. The foreign exchange black market, of limited proportions so far, may well erupt into un­controllable fury if open inflation is resumed or if the international political climate becomes less favorable. Thus, like a tight-rope walker, suspended in mid-air and with a long way to go, Communist China has been barely successful in maintaining a precarious balance. It is in no position to engage in any foolhardy adventure that might provoke an external adversary into retaliatory action which could easily throw the economy into chaos….. "However, he thinks the challenge of Communist China to the West cannot be discounted because technical changes may radically alter the present assessment and the pace of industrialisation may be accel­erated beyond recognition in a measurable span of time if given adequate assistance by Russia. In his opinion, if the Communist regime is left unmolested it will not collapse of its own accord. "Unless the weaknesses are exploited by its opponents relentlessly," says he, "there is little hope for an immedi­ate, nationwise, and spontaneous collapse, at any rate not on purely economic grounds. On the otherhand, if the weaknesses are ef­fectively exploited, serious disruptions can conceivably be brought about, and even a ruthless regime may fall".

In summary, it may be said that the book, while only a pioneer work that may not be considered as a final presentation, is a most useful reference work for all who are inter­ested in the economy of Communist China; it should certainly be read by those weak-kneed politicians of the neutralist countries before they eulogise the Communist achieve­ments any more. The value of the book is increased by a most comprehensive bibliography yet seen anywhere; and, incidentally, the quality of writing is high on the literary plane.

Nathan S. Y. Yuan

A MILITARY HISTORY OF MODERN CHINA: 1924-1949
By F. F. Liu
Princeton University Press
286 pages US$6.00

Engineer and scientist, engaged full-time as an electronics and rocket specialist at the Forrestal Research Center when he began this book in Princeton, Dr. F. F. Liu is now a senior research scientist in high-speed aerodynamics in an aviation company in California. He was formerly an officer in both staff and combat assignments for the Chinese Nationalist Army, was wounded during World War II, and decorated "for conspicu­ous gallantry in action." Approaching the writing of this military history scientifically, the author spent six years in research using German, French, Russian, Japanese, English and Chinese sources for his material.

Liu calls the 1924-28 period one of pacesetting for the Chinese Revolution. Dr. Sun Yat-sen concluded: "Unless we appeal to the force of arms there is no way to settle the present national crisis." The government of the Republic was set up in Canton; the Whampoa military academy was established; and with the help of 1,000 Soviet Russian advisers a strong, reliable force was trained for the revolutionary cause. The timing of Russia's help was perfect: after America and Great Britain had turned a deaf ear to Sun Yat-sen's appeals, and just when Dr. Sun had been betrayed and forced out of Canton by a treacherous warlord, Ch'en Ch'iung-ming, Russia offered advisers and aid. Russia had her own interests in view. One of the instructions under which the advisers worked was: "To make Communism popular .... and to create in the Army, in the labor organiza­tions and in the peasantry the desire for a further revolutionary movement."

The new government won the sympathy of the educated classes with its orderliness in structure, its revolutionary zeal, and its relative democracy. The discipline of the troops and their dedicated spirit (so different from the earlier soldiery of China) won the masses.

As president of the Whampoi Academy, Chiang Kai-shek instilled his own ideals in the officers. He did not have Sun Yat-sen's eloquence and fire, according to the author, but he had personal magnetism which in­spired confidence. His fortitude and sense of justice won deep loyalty. The Whampoa officers and men became a fraternity, their loyalty a tradition in China.

While Chiang worked toward one goal­ the overthrow of the warlords and the unifying of China-the Russian advisers were emphasizing on putting political workers and commissars under their contro1. This divergence of purpose came out in early 1924 and Chiang resigned, not to return until his political associate, Liao Chung-k'ai, succeeded in getting Soviet demands reduced.

With the arrival of the first shipment of Russian arms (8,000 rifles with 500 rounds of ammunition for each), the Whampoa Academy began to expand. Sun Yat-sen, then ailing, made a last tour of inspection and said., "Now that we have Whampoa, I may die peacefully!" He died on the eve of Chiang's first victory (over Ch'en Ch'iung-ming).

On March 20, 1926 Chiang Kai-shek struck a blow at the left-wingers, arresting a number of the Communist commissars including Whampoa advisers and the Workers' Guard of the Chinese Communist Party. Rogacheff fled to Peking. Stepanolf reported to Stalin:

"The Labor Union at Canton called a strike, and Chiang Kai-shek without consulting (us) disarmed the strikers and obstructed labor movements."

By this time the Revolutionary Army had 85,000 men. Against the advice of the Rus­sians, Chiang Kai-shek launched the Northern Expedition in 1926. There, were five or six warlords to suppress. Galen (Bleucher) emphasized the elements of surprise, speed of march and enveloping tactics. Chi­ang respected and liked him; offered to retain his services after the break with the others.

An order from Stalin meant for the Soviet adviser to Chiang's own First Army corps, fell into Chiang's hands: "The work of the KMT and communist cells in the army must be intensified ... where the organization of the communist cell is impossible, intensive work must be carried on with the help of concealed communists." A month later Sta­lin's instructions were to stress an "agrarian revolution" turning peasants' committees in rural areas into organs of power.

The climax was the Communist-inspired attack (Mar. 24, 1927) in Nanking on foreign­ers and the setting up of the left-wing government in Hankow. To prevent intervention of Communist members, Chiang sent the Russian advisers home, and set up the National Government in Nanking.

Victory in the Northern Expedition came in 1928. The Japanese stalled Chiang's advance in Tsinan. It took four more months to go around them to reach Peking, but he refused to tangle with the Japanese until the unification of the country was complete.

The period under German advisers followed. The plan was to reduce the size of armies to save drain on resources, and to train a closely knit defense force.

Among the outstanding German advisers was Herman Kriebel (who said to the Allied Commission after World War I, "See you again in 20 years!"). Friend of Ludendorff and Hitler, he served as adviser a short time, but returned as Hitler's Consul-General in Shanghai in 1934. Georg Wetzell followed him as chief operational adviser (famed for the war-plan that defeated Italy). His superior, General von Seeckt, the builder of the German Reichswehr, came to China later. With him came General von Falkenhausen, and the three established the Central Military Academy (Lu-ta) in Nanking with a whole group of special schools for infantry, cavalry, artillery, chemical warfare, engineering, etc.

Where the Russians had emphasized conformity, the Germans stressed originality. Chiang Kai-shek's emphasis in Lu-ta (Central Military Academy) was on character, ability, and an understanding of responsibility. German assistance, and the threat of Japanese expansion, spurred Chinese industrialization to great achievements. Highways and railways, with war as well as peace in mind, were speedily built. Factories sprang up. Arsenals were expanded and modernized. The new industrial tempo was geared to the feverish military preparations. Von Seeckt's overall plans for reconstructing the army and certain broad general strategies were of great value, but his most far-reaching work was that concerned with the establishment of Chinese war industries and the encourage­ment of Sino-German trade. His proposals were earnestly followed in China. Unfortunately his advice to Hitler was not. On November 2, 1936 Ribbentrop signed the anti-Comintern pact with Japan.

The author asks:
Why had von Seeckt been able to do so much in his two brief missions to China? His military prestige earned him the respect of Chiang and the cooperation of his associates… His personality, -his inspiring bearing, his correct­ness, his attention to details-pleased Chiang. His military sagacity and his doctrine of the elite army won over many of the Chinese leaders, while his concept of the centralization of military control coincided exactly with what Chiang was advocating .… He did not attempt the Stilwellian method of overwhelming Chinese opposition by sarcasm, logic and evidence. Instead, he inspired confidence by his reputation, and his assurance, and by cordiality and respect won over the Chinese .... Chiang he once des­cribed to Sven Hedin as a judicious, wise and prudent statesman, a skillful but careful strategist, and a splendid and noble character.

Von Falkenhausen is highly spoken of as well. "Had the war been delayed for two more years, China might have had 60 German-trained army divisions to throw against the Japanese invaders .... they might have met a far different foe."

Then came the Japanese attack at the Marco Polo Bridge in North China on July 7, 1937, —a war which the Japanese thought would be a blitzkrieg. They little knew the determination of the nation to fight to the last, or the power of the Chinese people to endure and resist. Chiang placed great confidence in the spirit he himself had develop­ed in his soldiers, and the patriotism and loyalty of the people. General Pai Chung­-hsi praised him highly for his emphasis on morale and intangibles of the spirit.

The Gimo's crack divisions were lost in the world-famous defense of Shanghai against the combined air, sea, and land attack of the Japanese. "The early sacrifice proved to the world that China was determined to resist Japanese aggression" regardless of the cost; then China, settled down to a calculated and less spectacular strategy of dissipating "Japanese strength and forcing Japan to over­ extend herself." With all of Nippon's technological superiority, the armies of Japan not only bogged down drastically in China's vast land, but also failed to exploit many of the military and economic mistakes and weaknesses of the Chinese.

The author fails to mention the needless cruelties of the enemy, especially the atrocities of Nanking; and seems unaware that the Red Army's cooperation with the Nationalists for a time was due to Stalin's order throughout the world for a United Front against the Fascist enemies.

Dr. Liu says: "Few Western observers or even the Japanese enemy could understand how the motley crew of ragged, poorly equipped, largely illiterate and underfed Chinese soldiers held at bay for such a long period the heavily armed might of Imperial Japan." The reason did not lie in a smooth-working and clear-cut command system. The notion about China's inexhaustible man-power he considers a fallacy. "There is a vast difference between the size of a nation's population and her potential military manpower." Chiang's casualties were enormous, perhaps one in four. The limits on industrial capa­city were serious handicap throughout. Conscription was unfair and inhumane until the Gimo established a ministry of conscription. The soldier's diet was inadequate, Medical care was woefully lacking. Illiteracy of the troops was high. There is a vast difference between ideas of Occident and Ori­ent on the "do-or-die" attitude. China lost some of her most valuable and best-trained troops in the face of hopeless odds. China had not had time before the Japanese war to build an adequate general staff.

A feeling of loyalty had grown up be­tween the German advisers and the Chinese. Von Falkenhausen, and his associates left China retaining the confidence, high respect, and regard of the Chinese. He was convinced the Japanese would never wholly control the Chinese even in the occupied areas. He said China could wage war for 50 years if neces­sary and would be ultimately invincible. He considered the troops "magnificent."

The author handles the Stilwell period well, giving him full credit for being a sol­dier's soldier, well-liked by the troops, proud of his men trained at Ramgarh, where without technological backgrounds they caught on amazingly fast. More than 90% of the Chinese radio operators were able to receive 15 words a minute in English after 7 weeks training. In the US 60% make it in 13 weeks. Stilwell always insisted that the Chinese soldier if well-fed, well-trained and well­-equipped is the equivalent of any fighting man anywhere. Dr. Liu shows that he was devoid of tact, sarcastic and lacking in courtesy, wholly incompatible with the Gimo and highlevel Chinese. President Chiang was not vindictive and gave him his due by naming the new road from Ledo the Stilwell Road.

General Albert C. Wedemeyer was successful where Stilwell failed. He earned the admiration of the Chinese; his ability as a strategist was of the highest order. Young, with less seniority than many other American officers, he was from the German war college, the Kriegsakadamie, which impressed the Chinese. Stressing good relations between officers and enlisted men, strict discipline and fighting efficiency, he tightened the size of the army and improved its fighting power, but did all this with tact and diplomacy.

This reviewer once heard General We­demeyer say that great credit must be given the Chinese for holding down a million Japanese in China to the very end of the war, Japanese who otherwise would have made the Pacific War much more difficult for the Allies. Dr. Liu puts the figure at 1,313,240. Moreover, while the Japanese with 10 divisions and 3 brigades were defeating the Americans, the Dutch and the British in Asia, the Chinese were faced with 22 divisions and 20 brigades of Japanese and held out to the end.

General Chennault never had Stilwell's full support, but his 14th Air Force was "supported and revered by every Chinese from the Gimo down to the humblest coolie who worked on the airfields."

The Marshall Mission period is the weak­est in the book. Besides speaking of "truces" from time to time, even before the Marshall Mission is mentioned, Liu never states that they were called by that Mission, or that they were violated and taken advantage of by the Communists. He quotes left-wing books for the Communist postwar successes (which exaggerate their abilities) and blames Chiang for demobilization of one and a half million soldiers without seeming to know that Gen­eral Marshall required this demobilization of both sides, and the Generalissimo only complied. He does say that MAGIC (the American military training group) was tied to a directive that kept the American officers from even giving advice in the Chinese civil war, but he seems to think the Communist; were successful from the beginning. Before the Marshal Mission Chiang's forces were winning (as reported by the New York rimes). Superiority in ammunition went over to the Communists when Marshall's 10-month embargo on both sides affected only the Nationalists, because the Russians let the Chinese Communists have the vast store of Japanese arms and ammunition in Manchuria.

Dr. Liu quotes Truman's instructions to Marshall which made American postwar aid contingent on unity with the Communists, and says that when General Wedemeyer asked Washington for authority to dispatch 7 American divisions to Manchuria to accept the Japanese surrender, he was turned down. (Such a move would have saved Manchuria from the Russians, and therefore from the Communists.) He states that the Joint Chiefs were influenced by the US State department in advocating a coalition with Communists, but makes no reference to pro-Communist sympathizers in the State, Commerce and Treasury departments.

But if the Marshall Mission is inadequately handled, the Epilogue is the least interesting part of the book. Called a summary, it actually seems to be at odds with much that was ably set forth earlier. Much too late, it begins to propound ancient Chinese conceptions of warfare. The Russian, German and American military training is so contrary to Chinese tradition that one might conclude the Chinese almost lost the war because they went modern. It appears to establish the thesis that China has gone militaristic, —by intent, rather than of necessity. By-passing completely the decade from 1928 to 1937 of stable government with progress in education, communications, industry, pub­lic work, rural aid, and mass education, it contradicts the earlier exposition that China had too little time for all these things before the Japanese struck. Chiang Kai-shek emerges from the Epilogue as merely a mili­tary leader with no mention of his dedication to democratic principles and the welfare of his people (which so impressed General Wedemeyer), or of his high moral ethics and Christian principles. The reader may forget that longing for peace to build a stable gov­ernment and industrial economy, he was the victim of Russian Machiavellianism, and of America's blunder in trying to force coalition with Communists on China, even while fight­ing Communism in Europe:

A weakness in the organization of the book is the more surprising because of the many professors and other scholars who assisted the writer. This is largely a matter of confusing crates and sequences. A few examples must suffice. After six chapters covering the Japanese War, a seventh starts in at the beginning of the Japanese attack and covers the entire war again. It is not the summary, which follows. Integration into the preceding chapters would seem to have been the place for this material. Again, the first military assistance, an air mission, Dr. Liu says came to China in May, 1941. Then came an American Military Mission in July of that year. President Roosevelt is quoted as saying on March 15 "China asks our help America has said that she shall have our help." On May (still 1941) the defense of China was held vital to the US. Immediately after all this we read: "Until Pearl Harbor was attacked, the US remained, in the Chinese war, merely a sympathetic bystander".

Li Tsung-jen is called China's acting president with no mention that President Chiang had resigned or stepped down. China's "first schools were military", we are told, referring to this modern period beginning in 1924, whereas China had government schools and universities besides a number of missionary Colleges (both Catholic and Protestant) long before that.

The Japanese War was spelled out in detail, including the weaknesses of China in its army and government, but causes were explained. Chiang's government had less than ten years to establish industry, to build a general staff with German help, (American military men say it takes at least thirteen). But the civil war with the Communists is sketchy as to the causes that led to the defeat of the National­ists and the victory of what had once been a harassing minority. Not that any reader would think the author favored the Com­munist side. The rest of the book is thorough and scholarly.

GERALDINE FITCH