Newly Setup Enterprises and Government Investment in China during 1928-1937
Social Sciences in
No.3, 2015
Newly Setup Enterprises and Government Investment in China during 1928-1937
(Abstract)
Du Xuncheng
Between 1928 and 1937, enterprise development in China saw some progress. As it passed through several economic crises, China’s capitalist economy already showed several characteristics of the early industrial transformation: the adjustment of traditional industries, development of new industries, and initial formation of industries relating to the urban economy. Government investment statistics show that there was a change in the pattern of investment in new enterprises even before the total resistance against Japanese aggression; that is, investment had gone from being market-led to being government-led. As well, the government increased investment in infrastructure. In the short term, the economic pattern of government-led investment and administrative control helped the Chinese economy, then in dire straits, to escape the effects of the world economic crisis and drove economic recovery. In the long term, however, the pattern of government dominance resulted in “financial repression,” which not only harmed the development of private business but also grew into rent-seeking bureaucratic capitalism untrammeled by restrictions on its power.