page_title: Nationalist government
section_title: Economy
hierarchical_section_title: Nationalist government / Economy
caption_attribution_description: English: Shanghai - The Bund.
context_page_description: The Nationalist government, officially the National Government of the Republic of China, also known as Second Republic of China but most commonly known as the Republic of China, refers to the government of the Republic of China between 1 July 1925 and 20 May 1948, led by the Kuomintang. The name derives from the Kuomintang's translated name "Nationalist Party". The government was in place until it was replaced by the current Government of the Republic of China in the newly promulgated Constitution of the Republic of China.
  After the outbreak of the Xinhai Revolution on 10 October 1911, revolutionary leader Sun Yat-sen was elected Provisional President and founded the Provisional Government of the Republic of China. To preserve national unity, Sun ceded the presidency to military strongman Yuan Shikai, who established the Beiyang government. After a failed attempt to install himself as Emperor of China, Yuan died in 1916, leaving a power vacuum which resulted in China being divided into several warlord fiefdoms and rival governments.
context_section_description: After the Kuomintang reunified the country in 1928, China entered a period of relative prosperity despite civil war and Japanese aggression.  In 1937, the Japanese invaded and laid China to waste in eight years of war. The era also saw additional boycott of Japanese products.
  Chinese industries continued to develop in the 1930s with the advent of the Nanjing decade in the 1930s, when Chiang Kai-shek unified most of the country and brought political stability. China's industries developed and grew from 1927 to 1931. Though badly hit by the Great Depression from 1931 to 1935 and Japan's occupation of Manchuria in 1931, industrial output recovered by 1936. By 1936, industrial output had recovered and surpassed its previous peak in 1931 prior to the Great Depression's effects on China. This is best shown by the trends in Chinese GDP. In 1932, China's GDP peaked at $28.8 billion, before falling to $21.3 billion by 1934 and recovering to $23.7 billion by 1935. By 1930, foreign investment in China totaled $3.5 billion, with Japan leading ($1.4 billion) and the United Kingdom at 1 billion. By 1948, however, the capital stock had halted with investment dropping to only $3 billion, with the US and Britain leading.
  However, the rural economy was hit hard by the Great Depression of the 1930s, in which an overproduction of agricultural goods lead to massive falling prices for China as well as an increase in foreign imports (as agricultural goods produced in western countries were "dumped" in China). In 1931, imports of rice in China amounted to 21 million bushels compared with 12 million in 1928. Other goods saw even more staggering increases. In 1932, 15 million bushels of grain were imported compared with 900,000 in 1928. This increased competition lead to a massive decline in Chinese agricultural prices (which were cheaper) and thus the income of rural farmers. In 1932, agricultural prices were 41 percent of 1921 levels. Rural incomes had fallen to 57 percent of 1931 levels by 1934 in some areas.
  In 1937, Japan invaded China and the resulting warfare laid waste to China. Most of the prosperous east China coast was occupied by the Japanese, who carried out various atrocities such as the Rape of Nanjing in 1937 and random massacres of whole villages. In one anti-guerilla sweep in 1942, the Japanese killed up to 200,000 civilians in a month. The war was estimated to have killed between 20 and 25 million Chinese, and destroyed all that Chiang had built up in the preceding decade. Development of industries was severely hampered after the war by devastating conflict as well as the inflow of cheap American goods. By 1946, Chinese industries operated at 20 percent capacity and had 25 percent of the output of pre-war China.
  One effect of the war was a massive increase in government control of industries. In 1936, government-owned industries were only 15% of GDP. However, the ROC government took control of many industries in order to fight the war. In 1938, the ROC established a commission for industries and mines to control and supervise firms, as well as instilling price controls.  By 1942, 70 percent of the capital of Chinese industry were owned by the government.
  Following the war with Japan, Chiang acquired Taiwan from Japan and renewed his struggle with the Communists.  However, the corruption of the KMT, as well as hyperinflation as a result of trying to fight the civil war, resulted in mass unrest throughout the Republic and sympathy for the communists.  In addition, the Communists' promise to redistribute land gained them support among the massive rural population. In 1949, the People's Liberation captured Beijing and later Nanjing as well. The People's Republic of China was proclaimed in Beijing on 1 October 1949. The Republic of China central government relocated to Taipei in 7 December 1949, to Taiwan where Japan had laid an educational groundwork.
caption: The Bund of Shanghai in the 1930s
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