Japan’s Economic Experience in China before the Establishment of the People’s Republic of China: a Retrospective Balance-sheet

The modern history of Sino-Japanese economic relations extends from the late nineteenth century to the present. It is a story of extraordinary interest — not least because its present phase is far from complete. Before 1949 Japan’s economic adventure in China involved not only commodity trade, but direct investment, population migration, military occupation, experiments in economic planning and, ultimately, nominal political independence within the Japanese imperial system and a ‘rationalised’ position within the Greater East Asia Co-prosperity Sphere. The defeat of Japan in 1945 and the establishment of the People’s Republic of China in 1949 ended both the political dream and direct involvement in the Chinese economy. The influence of the Japanese past, however, remained a critical determinant of China’s development in the 1950s; and after 1960, severance of China’s links with Japan’s long-standing rival in China, the Soviet Union, resulted in renewed development of trade. The re-establishment of diplomatic relations in 1972 was followed by further growth of trade and of increasingly complex financial, resource and political relationships. Today, Japan is arguably China’s most important economic link with the outside world and a key to her economic future; although to the Japanese, who have resolved the problems of their inter-war economy outside the East Asian region, China’s importance is perhaps more political, strategic, even psychological, than economic in the narrow sense.