VAULT
HOW CAN CHINA BE INDUSTRIALIZED?
An engineer assigned to the reconstruction of China examines the dauting task ahead in this article first published as World War II was drawing to a close in June 1945.
Written by K.Y. Chen, assistant chief for the Far Eastern Division of the United Nations Relief and Rehabilitation Administration (UNRRA) in Washington, D.C.
IN RECENT MONTHS, THE POSSIBILITIES OF INDUSTRIALIZING CHINA have inspired widespread discussion among Chinese and also among Americans. At a meeting of this Society, in 1944, I discussed the requirements of industrialization which would tend to raise the standard of living of the Chinese population. Since then, numerous papers have been published on the subject.
The Engineering Service of the Foreign Economic Administration, under the direction of Alex Taub, chief engineer, has gone so far as to prepare a detailed guide to the industrialization of China, including various projects totaling over 600 factories, plants, and transportation facilities and costing billions of dollars. John Savage, chief designing engineer of the Bureau of Reclamation, Denver, Colo., has designed a 10,000,000-kw hydroelectric plant for the upper Yangtze, which would cost $1,000,000,000. The China-America Council of Commerce and Industry has held many committee meetings to discuss the industrialization of China. I recently attended a conference of the Institute of Pacific Relations at which several sessions were devoted to the postwar economic development and industrialization of China. Inquiry is frequently made as to the borrowing capacity of China from the friendly nations, and the methods to be used to secure sufficient funds to accomplish such a large-scale development.
The city gate in the city of Kunming in 1945. This image is part of a series of photographs taken by American airmen known as the Flying Tigers who were stationed in China during World War II.
Photo credit: William L. Dibble
I approach the problem with which China is confronted as an individual who is desirous of purchasing a farm and yet has not sufficient savings or equity to permit a cash payment for the entire amount. This individual, with an income and with deductions for current expenses, has a definite surplus or savings each month. He contacts a bank or building and loan association and negotiates a loan for the desired amount, agreeing to pay back the loan, as well as the interest charges, by a monthly installment-payment plan. On the date of final payment, the farm is finally owned outright and his income and savings will rise. By the same procedure, the needs of China as a nation can be procured.
Confucius advocated the idea that a government which has the confidence of its people ought to “feed” them first and ‘‘arm” them next; in modern language, to raise their standard of living first and build the national defense next. This teaching of 3,000 years ago conforms with modern economic views. (American economist) Eugene Staley said, “In the early stages of economic development, industrialization is likely to manifest itself in (1) increased processing of local raw materials, including processing for export, (2) manufacture of simple consumption goods, (3) assembly of products using imported parts, (4) utilities and their maintenance. In later stages the heavy capital-goods industries take on increased importance. This is the usual sequence and the one likely to be easiest and also most immediately effective in raising living standards.”
The industrial development of Japan without regard to the improvement of living standards of the people has led Japan to disaster. The Soviet Union, with some light industries to begin with, has pushed capital-goods industries ahead of light industries, but has postponed the raising of living standards. The Chinese living standard is too low to be neglected in her economic development in the postwar era.
Central Shanghai had modern buildings in 1945, but many parts of the countryside were mired in desperate poverty.
Photo credit: William L. Dibble
Building the Economy
Engineers will have an ever-important position in promoting the economic construction of China and raising the standard of living of the Chinese population necessary to lay the sound foundation of true democracy in China.
I have a conviction that the Chinese Government, after experiencing difficulties through these years of war, will spare no effort in strengthening itself to achieve internal political stability. I have also a conviction that the Chinese people, struggling for bare subsistence for centuries, will exert themselves to the utmost in helping to build a national economy just as they did with bare hands in building a B-29 airfield in three months, and a 200-mile stretch of the Stilwell Road in 50 days. I have further a conviction that the United Nations will establish some system of world political security as manifested by the Dumbarton Oaks Conference, so that China may not be invaded again in the near future; that international cooperation for promoting economic development will be forthcoming as manifested by the Bretton Woods Conference so that China’s plan for economic development may be carried out successfully.
Alex Taub predicted, “As China goes forward industrially, she will make tremendous and ever-growing imports of equipment. Later, the nation will become a customer for more and more of the world goods.”
The economic development of China is to increase the capacity of her 450,000,000 population to produce as well as to consume. China is a potential country, not loaded with debts, which with a little help to get started, will sail on peacefully and prosperously.
K.Y. Chen was assistant chief for the Far Eastern Division of the United Nations Relief and Rehabilitation Administration (UNRRA) in Washington, D.C. The UNRRA was created at a 44-nation conference in 1943 to confront the massive task of global reconstruction during and after World War II.
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