Japan's Economic Offensive in China

Lowe Chuan Hua

• Publisher: Taylor & Francis
• Year: 2010
• Print ISBN: 9780415585309
• eBook ISBN: 9781136927287
• Edition: 1
• Topic: History
• Subtopic: Japanese History
• Index: History

This volume exposes Japan's motives and designs on the economic front, pointing out the dangers of her policy of ousting Western interests and influence from East Asia during the conflict with China in Manchuria. The author urges the American and British governments to reconsider their position and strategy towards Japan. This book represents a fascinating insight into the power struggle between Japan & China in the early twentieth century.

Chapter I
JAPAN’S ECONOMIC MOTIVES IN CHINA

IN the annals of the Far East perhaps no phrase has appeared so often as the “Open Door”. Enunciated by the American statesman and diplomat, John Hay, the Open Door doctrine has served as the keystone of Far Eastern international relations and tranquillity during the last forty years. Not only China (though she has been the principal beneficiary) but all other Powers having interests in the Orient have profited by it.¹ Its basic conception has been incorporated into almost all of the modern treaties concerning China, just as it has been adopted as a guiding principle in numerous commercial agreements concluded between the leading Pacific Powers. Designed to avert the dangers of international rivalry and to ensure peace and prosperity in the Orient, the Open Door doctrine has been found no less desirable and advantageous by many far-sighted Japanese.

Thus in 1908 in the Notes exchanged between Mr. Elihu Root, then United States secretary of state, and Baron Kogoro Takahira, former Japanese ambassador in Washington, their respective governments reiterated their adherence to the Open Door. In these Notes, now generally known as the Root-Takahira Agreement, Japan and the United States agreed: (1) to encourage the free and peaceful development of their commerce on the Pacific Ocean; (2) to maintain the existing status quo in the said region and to defend the principle of equal opportunity for commerce and industry in China; (3) to respect the territorial possessions belonging to each other; (4) to preserve the common interests of all Powers in China by supporting by pacific means at their disposal the independence and integrity of China and the principle of equal opportunity for commerce and industry for all nationals; and (5) to consult with each other should any event occur threatening the status quo or the principle of equal opportunity in China.¹

Several times since the signing of the Root-Takahira Agreement, notably in the Washington conference of 1921– 1922, both Japan and the United States (together with other Pacific Powers) have given categorical assurances that the principles of equality of opportunity and the integrity of China will be observed and maintained.

Unfortunately, in the history of Japan’s foreign relations, often against the wishes of some of her own statesmen, there have been repeated instances of deliberate violation of this Open Door doctrine. Though professing her adherence to the principle of equal opportunity, Japan has always been quick to take advantage of international crises in order to advance herself to a position of paramountcy in the Far East. This was demonstrated very clearly during the European War when she made her so-called “Twenty-one Demands” on China. Perhaps the best-known indication of Japan’s urge towards this position of supremacy is found in the so-called Tanaka Memorial submitted to the Japanese Emperor in July, 1927. Although the Japanese have never admitted the authenticity of this significant document, their actions during the past decade have been strangely identical with what Baron Tanaka laid down. In this Memorial the author, then premier of Japan, did not conceal the importance and need of getting control of “the entire wealth of China” as a means of achieving supremacy in the Pacific area.

CONTROL OF CHINA’S RAW MATERIALS

It is a well-known fact that Japan, poor in natural resources but rich in dreams of military conquest, has long manifested an avaricious interest in China’s raw materials, especially cotton, wool, coal, antimony, iron and other minerals. China as a market for Japanese goods has great potentialities indeed, but China as a source of raw materials —the possession of which would enable Japan to translate her ambitious schemes of conquest into realities—is much too valuable to be left unexploited. A noted British economist once remarked that there are at least twenty-five kinds of raw materials indispensable to the existence of a modern nation. Of these, Japan is self-sufficient in only a few.

As to Japan’s deficiency in raw materials and her continual desire for their acquisition, Professor J.E.Orchard has given such an illuminating account in Empire in the East¹ that we deem it worth while to quote at full length:

“Japan is a poor country. Not only is the area of agricultural land limited, but the islands possess few of the essential raw materials for manufacturing that have contributed to the growth of such nations as Great Britain, Germany and the United States. With the shift to the machine, power becomes all-important, and despite the development of water power and the use of petroleum, power still means coal. Japan has some coal. The reserves remaining in the earth are estimated at about 7.5 billion tons. At first glance, this total would seem to be an ample supply, but for so large a population it is quite inadequate. In per capita reserves Japan ranks far below the industrial countries of the West. Even at the present very low rate of consumption, Japan’s reserves will be exhausted in about forty years. Not only is the supply deficient, but the coal is expensive to mine, since it lies deep and in thin seams, and very little of it will make a satisfactory coke for the blast furnace. If industrialization is to progress in Japan to anything like the degree it has in Western countries, either coal must be imported or a new source of power must be discovered.

“Some petroleum is produced along the west coast of Honshu, the main island of Japan. The annual output is small, and in 1932 equalled for the entire twelve months only about 70 per cent of the yield of the petroleum fields of the United States for a single day. The domestic production does not meet the demand, and in recent years more than 80 per cent of the petroleum consumption has been imported. There is little expectation that additional fields will be discovered in the Japanese islands, since the geological formations are known to be in general unfavourable to the occurrence of petroleum. In view of the greatly increased use of petroleum in merchant and naval vessels and in airplanes and motor vehicles, the dependence upon foreign sources has become a matter of grave concern.

“Iron is closely associated with power as a fundamental basis of modern industry. In the days of seclusion there were hundreds of small smelters and forges scattered all over Japan, supplying the local need for knives, cooking utensils and weapons. With the opening of the country, this primitive industry was one of the first to disappear, for it could not compete with the imported product of modern blast furnaces and steel mills. The number of ore deposits and their widespread distribution were not evidences of a wealth in iron, since few of them, either because of small reserves or because of the poor quality of the ore, were suitable for large-scale exploitation. There are only two iron-ore deposits that can be worked under conditions of the present day. The total reserves of the country are small and have been estimated at about 80 million tons with perhaps one half of the ore unsuitable for modern furnaces. Even under the pressure of the World War, the maximum annual production was less than 400,000 tons, and usually it is around 200,000 tons. In the United States, the annual consumption of iron ore for the years preceding the abnormally low years of 1932 ranged from 30 to 75 million tons. The reserves of Japan are quite inadequate for the development of an iron and steel industry. If it were necessary to support the iron and steel requirements of the country entirely from domestic deposits, all of the Japanese iron ore, both high and low grade, would be consumed in less than twenty-five years. The progress of the industry in the past has been based mainly upon imported ores. Any future expansion must depend upon imports to an even greater degree.

“The territory added to the Empire during the modern period has not remedied significantly the deficiencies of Japan proper in raw materials. Some iron ore is obtained in Korea. It is of better quality than the ore of Japan, but the reserves are even more limited in quantity. Korea also has some deposits of anthracite coal of importance to the Japanese navy as a smokeless fuel. The total reserves are quite inadequate, however, for the requirements of Korea alone, and in recent years the imports of coal have equalled the Korean output.

“As the industrial limitations of Japan have been more fully appreciated in recent years, the search for resources has become a major incentive in the expansion into Manchuria, although political and strategic considerations undoubtedly were predominant in the earlier years. Manchuria has come to be regarded as both the political and economic life-line of Japan.”

But in attempting to control Chinese resources, Japan is apparently heedless of the fact that these are equally needed by some 400,000,000 people in China. While Japanese propagandists have frequently advanced economic desperation as an excuse for territorial aggrandizement (which. camouflage is given no little credence amongst the isolationist elements in the West), it may be well to remember that China, many parts of which are poorer and even more densely populated than Japan, is in no less urgent need of the great bulk of her own natural wealth. Indeed, the development of modern industries in China within recent years has made her increasingly dependent upon the very resources which Japan is now trying to seize.

In international conferences on Far Eastern problems as well as in the writings of many Japanese publicists, one is often told that Japan must have additional room to take care of her ever-increasing population. While it is admitted that Japan is suffering from an unusually great density of population, she is nevertheless in a much better position than England, Belgium and Holland. Hokkaido and a number of the lesser islands belonging to the Japanese Empire can be further developed so as to accommodate many more million people than they now hold. Again, during the last 44 years, Japan has added several hundred thousand square miles of land to her map, i.e. the Liuchoo Islands, Formosa, Korea, the Mandated Islands in the Pacific, and now “Manchukuo”. Yet these regions, considered as suitable for human habitation as any other section on earth, have absorbed but one to two million Japanese emigrants and have served as outlets for only a small fraction of the total of annual population increases in Japan proper. According to the Japan Year Book for 1939, Japan’s overseas population in 1936 was only 1,401,671, the overwhelming majority being in China and Manchuria.¹

Generally speaking, people move into areas where they can find better opportunities, greater security and freedom. It is chiefly due to these causes, rather than military control or political domination, that some 10,000,000 Chinese have found their way into foreign lands. And they are thriving in every corner of the world without the protection of Chinese gunboats! On the other hand, the Japanese are not good colonizers and, despite the various inducements given by their government, they have hardly emigrated into their colonies and territorial possessions on a scale sufficiently large to help solve the problem of over-population. Evidently the section of the Japanese people who need urgent relief are the peasants, but, strangely enough, among the Japanese who have moved into Korea, Formosa and Manchuria during the last few decades, the largest groups are not the peasants but government employees, business men and the white-collar class—those associated with Japanese colonial administrations and overseas enterprises. Therefore one is compelled to assume that the Japanese are using the argument of population pressure only to cover up their designs of territorial conquest.

Some Japanese allege that their need and struggle for raw materials is motivated by a desire to develop their large-scale industries, which, they claim, give the only solution to their problem of ever-increasing population. While it is true that these major industries provide livelihood for a large part of the Japanese people, they are doing so merely on a subsistence level. Practically all important business enterprises and heavy industries in Japan, including the munition and armament industries, are owned and controlled by a few powerful family concerns such as the Mitsuis, the Mitsubishis, the Sumitonos, the Yasudas and lately the Shinko groups. These financial barons and industrial magnates, in collaboration with certain army cliques, hold in their hands the destiny of Japan’s economic life. Control of raw materials, whether it be the iron ores in Manchuria, the oil fields in Borneo or the fishery rights in Sakhalin, has largely benefited the big capitalists, financiers and industrialists. It has not helped, to any measurable extent, in elevating the standard of living of the working people. As a matter of fact, it has been the consistent policy of the ruling class in Japan to devote the fruits of industrialization and economic development to the expansion of their military power. Not only the masses in Japan, who are already over-taxed, but also the peasants, the small traders and the ignorant workers in Manchuria, Mongolia, Korea, Formosa and China must be drafted to help shoulder the burden of Japan’s increasing military and naval expenditures. Enjoying as she does geographical propinquity to China, Japan is actually in a better position than any Western Power for exploiting Chinese resources, and in normal trade relations she need entertain no fear of any shortage of raw materials to keep the wheels of her industries going. This fear comes only when she has other than peaceful intentions. Is it any wonder, then, that her repeated attempts to seize China’s sources of wealth have been interpreted as deliberate preparations for territorial aggrandizement? Indeed, as Baron Tanaka stated in his Memorial, the real purpose behind Japan’s efforts to secure control of China’s natural resources lies in herambition to attain political and economic supremacy in Asia. “Manchuria and Mongolia”, says the Tanaka Memorial, “are our key positions. After conquering Manchuria and Mongolia, we can seize the wealth of the whole of China. After conquering China, we shall be able to subjugate India, the South Seas, Asia Minor, Central Asia and finally Europe.” These plans may sound fantastic, but they are being steadily carried out.

PREDOMINANCE IN THE CHINA MARKET

Japan’s second motive is to gain a position of paramountcy in the China market. While time and again Japanese officials and spokesmen have promised to observe the Open Door policy, their actions have always been organized with a view to crushing foreign interests in China and gradually closing the trade door in the Orient. To Japanese industrialists China is more often regarded as a market for their goods than as an independent political entity. The methods which they have been using in building up this position of paramountcy in Manchuria and North China since the Mukden Incident of 1931 are open secrets and need no elaboration here. The same methods of discrimination against Western enterprises are being applied in the newly occupied districts in East, Central and South China. And, if the frequent protests from the Western Powers have made any impression on the Japanese at all, they have only made the latter more vigorous and relentless in these discriminatory activities.

How seriously Japan’s high-handed measures in China are affecting foreign trade and investments, and what grave repercussions these measures are likely to have upon the whole trend of political and economic events in the Orient, are questions of immediate concern to all of the Powers having treaty relations with China. These questions must be faced and be faced promptly, unless the Western countries are prepared to alter completely their traditional policies in the Far East.

CHINA AS A FIELD FOR JAPANESE INVESTMENTS

Japan further wants to turn China into an exclusive field for Japanese investments. In this sphere, she has chosen the development of a network of monopolies as her chief method. Just as a few wealthy family groups, with the acquiescence and co-operation of the army leaders, have gained control of all public utilities, communication and transportation faci...

Table of contents

• INTRODUCTION
• FOREWORD
• CONTENTS
• LIST OF ILLUSTRATIONS
• Chapter I JAPAN’S ECONOMIC MOTIVES IN CHINA
• Chapter II DEVELOPMENTS ON THE ECONOMIC FRONT, 1937–1939
• Chapter III JAPAN’S OFFENSIVE AGAINST THIRD POWER INTERESTS
• Chapter IV CHINA’S ECONOMIC DEFENCE
• Chapter V JAPAN’S LOSSES DURING THE “CHINA INCIDENT”
• Chapter VI ECONOMIC IMPLICATIONS AND CONSEQUENCES
• APPENDICES
• APPENDIX I FULL TEXT OF U.S. SECRETARY OF STATE CORDELL HULL’S PROTEST TO THE JAPANESE FOREIGN OFFICE CONCERNING THE OPEN DOOR IN CHINA
• APPENDIX II JAPAN’S REPLY TO UNITED STATES
• APPENDIX III TEXT OF THE NOTE PRESENTED TO JAPAN’S FOREIGN MINISTER BY SIR ROBERT CRAIGIE, BRITISH AMBASSADOR IN TOKYO
• APPENDIX IV FULL TEXT OF THE UNITED STATES’ REBUTTAL TO JAPAN ON THE OPEN DOOR POLICY
• A SELECTED BIBLIOGRAPHY