KMT China Post war economy, foreign relations, society, and politics

[ShadowSpeaker]

Hello everybody,

I have seen a number of posts talking about a KMT civil war victory scenario. I'm going to offer my input based on information I have found online. In my scenario, I'm assuming a KMT total victory over the Communists, establishing a Republic of China with Nanking as the Capital.

1) I have found a link on the Office of the Historian (US department of state) website with a record of the KMT statement, identifying their intentions for post war China's economy and reconstruction. Here is the link as follows:

https://history.state.gov/historicaldocuments/frus1945v07/d997

Based on this link, the KMT intended to have State Owned Enterprises and free enterprise. They wanted to attract foreign capital so a License Raj type import substitution economy may be out of the question. The KMT mention tariffs so protection of local industries will be there. Furthermore, state monopolies will be kept for things like Telecom, Defense Industry, and post Office. Any industry where private capital is insufficient will have State owned enterprises or even joint ventures. If the KMT follow this plan, there will be state owned enterprises in China's auto sector, machinery, mining, oil, gas, etc. There would also likely be joint ventures in these areas esp with US companies. The key here is that the KMT wanted State owned enterprises to be run like Private companies and be treated as such. They may be LESS statist than OTL PRC as I've found that despite the similarities between the KMT and CCP, the KMT always represented a less extreme version of China. There will of course be private companies as well.

One thing the KMT economic plan fails to mention are land reform and exports. In OTL, Chiang Kai Shek wanted to do land reform because he viewed it as secondary compared with his conflict against the Communists. If Chiang retains control of China, he will do things gradually and it will take time. Landlords will be given shares to hold in Companies (maybe mixed ownership SOEs) and others will open factories and become small-medium business owners. Chen Cheng did land reform in Hubei, which served as a model for what the KMT in our timeline did in Taiwan. KMT may also adopt export oriented growth and if the US is willing to open their markets, it could create a trade war scenario the US had with Japan in the 1980s. Maybe KMT China will have to sign a plaza accord or something along those lines.

2) KMT foreign relations, esp with the US will be interesting. I have found another link on the Office of the Historian Website, outlining the American intention of negotiating a treaty of friendship, navigation, and commerce with the KMT: https://history.state.gov/historicaldocuments/frus1945v07/d967

I believe such a document will set the tone for a ROC-US post war relationship. Things like the South China Sea, tech transfers, IP, and such can be laid out and the contents could be adjusted from time to time via negotiation. One potential issue could involve IP as the US might let ROC citizens work in various American industries.

3) In terms of Chinese society, KMT may switch to simplified characters. In OTL, they used traditional on Taiwan to make a statement and differentiate themselves from the PRC. If the Republic goes well post war in China, than Chinese literature and cinema could thrive. Lao She and Lin Yutang, among others could lead a renaissance of Chinese literature. Chinese cinema, like the shaw brothers and TVB will stay in Shanghai and Canton. Let us not forget all the talented human resources that would have otherwise stayed in China had the CCP not won in 1949. Chinese traditional culture and values will serve as a check against too much emphasis on money.

4) Chinese politics is interesting. KMT was corrupt at all levels before the war but it was gradually, slowly getting under control. The war with Japan increased corruption within the KMT and Chiang knew he had to do something. He did not feel safe tackling corruption while fighting the Japanese and Communists because any action could have destroyed the KMT warlord faction foundation, making them even more vulnerable. Post war KMT China will trend towards unification so nobody will accept any warlord BS. Chiang can consolidate power and force the warlords to play ball. Many lost their power base due to the war. The only ones who had enough power were the Ma Clique and those dudes were loyal to Chiang. Post war KMT China will see Chiang consolidate power and target corruption with his son, Chen Cheng, etc. It won't be easy but Chiang will not be idle.

I also do not believe that Chiang will be a dictator in a KMT China like he was in Taiwan. In Taiwan, he had a siege mentality, with a behemoth Communist China threatening nearby. If KMT controls China post war, he will not have that feeling...unless he sees the Soviets as a problem. The KMT-Soviet relationship will be hot-cold with a cooling feeling and Chiang, being realistic, will know that China cannot afford to poke the Bear due to a lack of strength. Chiang also ran elections in 1947-48 on China and accepted some kind of democratization to appease his critics. KMT China won't be a full on one man dictatorship because they will accept SOME degree of dissent. They will be kinda democratic and further pressure to liberalize in the 60s and 70s may create a full democracy.

In regards to Taiwan, it won't be all perfect. While a KMT victory would ensure that the Republic of China control Taiwan as a province, lets not forget that Chen Yi instigated the 228 incident. Furthermore, the Taiwanese locals were suspicious of the KMT. Taiwanese identity and unique history may create independence parties in Taiwan under Republic of China Rule....DPP anybody haha

 

[jerseyguy]

Chiang would need to walk quite a tight rope between the Americans and the Soviets. I doubt that free and fair elections would happen that early, mainland China didn't have the developed party system or large middle class necessary for stable democracy.

While it's impossible to predict exactly what a KMT China would look like, it's useful to combine a series of close OTL analogues to see how the economy and politics might develop. Politically China may look like Mexico's 20th century experience under one party rule, or Indonesia's period of dictatorship under Suharto.

Export oriented growth looks very attractive with 20/20 hindsight of the Asian Tigers' economic performance, but it would be relatively unlikely given the mid-century fad for Import Substitution Industrialization and relatively statist economic ideas. The potential size of China's internal market would also make ISI very seductive.

India's postwar economic history is the most extreme example of this, the Congress Party attempted to combine soviet style economic planning with Westminster model democracy. It's probably as far as a liberal democracy can go as far as control over the economy in peacetime. The non-convertibility of the rupee cut off India from world trade, and the Indian economy saw relatively little economic growth or foreign investment during this period.

The demographic effects of a non-communist China would be massive, there could be a much larger Chinese diaspora than OTL. International migration is generally a middle-income phenomenon in global terms, the poorest people on Earth can't afford to leave their situation and upper-middle income people have no reason to leave in large numbers. It will take a decade or two after WW2 ends, but the kind of migration the world is seeing now could begin earlier ITTL.

Nationalist control over the mainland also raises the "Chinese question". There are large overseas Chinese communities in most countries of Southeast Asia, and whether the Chinese would be forced to integrate into the local culture, move "home" to China, or some other option was an open question. In the colonial era this was a moot point, but the Chinese diaspora became an issue in Chinese-North Vietnamese OTL after independence. Overseas Chinese were more likely to be traders or economic middleman than the peoples around them who were mostly farmers. Local non-Chinese in places like Indonesia and the Philippines had some degree of resentment towards a "foreign" elite who had a prominent role in the economy.

 

[Hamurabi]

ISI is actually very useful in the early stages of industrlization. Taiwan and South Korea both underwent ISI in 50s and 60s.
I believe taiwan went all out export oriented after 1965.

Isi builds the base infrastructure to build your exports on

 

[ShadowSpeaker]

ISI is actually very useful in the early stages of industrlization. Taiwan and South Korea both underwent ISI in 50s and 60s.
I believe taiwan went all out export oriented after 1965.

Isi builds the base infrastructure to build your exports on

Japan industrialized from 1868 to 1945 without using export oriented industrialization.

 

[Hamurabi]

Japan industrialized from 1868 to 1945 without using export oriented industrialization.

Yes people often forget that the export oriented industrialization of East Asia was due to circumstances unique to the cold war and willingness of the US to open it's markets and dollar hegemony.

If you have a large enough population like Iran you can pull of ISI without exports.

 

[ShadowSpeaker]

Yes people often forget that the export oriented industrialization of East Asia was due to circumstances unique to the cold war and willingness of the US to open it's markets and dollar hegemony.

If you have a large enough population like Iran you can pull of ISI without exports.

I'm not sure if Japan was using ISI from 1868 - 1945. I do know that the world was more protectionist before World War 2. You could export during those times but to have an export oriented economy was not feasible.