page_title: Republic of China (1912–1949)
section_title: Economy
hierarchical_section_title: Republic of China (1912–1949) / Economy
caption_attribution_description: 10 CGU bill
context_page_description: The Republic of China was a sovereign state based in mainland China between 1912 and 1949, prior to the relocation of its government to the island of Taiwan. It was established on 1 January 1912 after the Xinhai Revolution, which overthrew the Qing dynasty, the last imperial dynasty of China.
  The Republic's first president, Sun Yat-sen, served only briefly before handing over the position to Yuan Shikai, the leader of the Beiyang Army. Sun's party, the Kuomintang, then led by Song Jiaoren, won the parliamentary election held in December 1912. However, Song was assassinated on Yuan's orders shortly after; and the Beiyang Army, led by Yuan, maintained full control of the Beiyang government.
  Between late 1915 and early 1916, Yuan proclaimed himself Emperor of China before abdicating not long after due to popular unrest. After Yuan's death in 1916, the authority of the Beiyang government was further weakened by a brief restoration of the Qing dynasty. Cliques in the Beiyang Army claimed individual autonomy and clashed with each other during the ensuing Warlord Era.
context_section_description: In the early years of the Republic of China, the economy remained unstable as the country was marked by constant warfare between different regional warlord factions. The Beiyang government in Beijing experienced constant changes in leadership, and this political instability led to stagnation in economic development until Chinese reunification in 1928 under the Kuomintang. After this reunification, China entered a period of relative stability—despite ongoing isolated military conflicts and in the face of Japanese aggression in Shandong and Manchuria, in 1931—a period known as the "Nanjing Decade".
  Chinese industries grew considerably from 1928 to 1931. While the economy was hit by the Japanese occupation of Manchuria in 1931 and the Great Depression from 1931 to 1935, industrial output recovered to their earlier peak by 1936. This is reflected 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) followed by the United Kingdom (1 billion). By 1948, however, the capital investment had halted and dropped to only 3 billion, with the US and Britain being the leading investors.
  However, the rural economy was hit hard by the Great Depression of the 1930s, in which an overproduction of agricultural goods lead to 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, Chinese imports of rice amounted to 21 million bushels compared with 12 million in 1928. Other imports saw even more 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 and thus the income of rural farmers. In 1932, agricultural prices were at 41 percent of 1921 levels.  By 1934, rural incomes had fallen to 57 percent of 1931 levels in some areas.
  In 1937, Japan invaded China and the resulting warfare laid waste to China. Most of the prosperous east coast was occupied by the Japanese, who committed atrocities such as the Nanjing Massacre. 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 civil conflict as well as the inflow of cheap American goods. By 1946, Chinese industries operated at 20% capacity and had 25% of the output of pre-war China.
  One effect of the war with Japan 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 supervise and control firms, as well as instilling price controls. By 1942, 70% of Chinese industry was 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 large rural population. In 1949, the communists captured Beijing and later Nanjing. The People's Republic of China was proclaimed on 1 October 1949. The Republic of China relocated to Taiwan where Japan had laid an educational groundwork.
caption: A 10 Custom Gold Units bill, 1930
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