INDUSTRIALISM IN CHINA
China is as yet only slightly industrialized, but the industrial
possibilities of the country are very great, and it may be taken as
nearly certain that there will be a rapid development throughout the
next few decades. China's future depends as much upon the manner of this
development as upon any other single factor; and China's difficulties
are very largely connected with the present industrial situation. I will
therefore first briefly describe this situation, and then consider the
possibilities of the near future.
We may take railways and mines as the foundation of a nation's
industrial life. Let us therefore consider first the railways and then
the mines, before going on to other matters.
When railways were new, the Manchu Government, like the universities of
Oxford and Cambridge (which it resembled in many ways), objected to
them, and did all it could to keep them at a distance.[99] In 1875 a
short line was built by foreigners from Shanghai to Woosung, but the
Central Government was so shocked that it caused it to be destroyed. In
1881 the first permanent railway was constructed, but not very much was
accomplished until after the Japanese War of 1894-5. The Powers then
thought that China was breaking up, and entered upon a scramble for
concessions and spheres of influence. The Belgians built the important
line from Peking to Hankow; the Americans obtained a concession for a
Hankow-Canton railway, which, however, has only been constructed as far
as Changsha. Russia built the Manchurian Railway, connecting Peking with
the Siberian Railway and with Europe. Germany built the Shantung
Railway, from Tsingtau to Tsinanfu. The French built a railway in the
south. England sought to obtain a monopoly of the railways in the
Yangtze valley. All these railways were to be owned by foreigners and
managed by foreign officials of the respective countries which had
obtained the concessions. The Boxer rising, however, made Europe aware
that some caution was needed if the Chinese were not to be exasperated
beyond endurance. After this, ownership of new railways was left to the
Chinese Government, but with so much foreign control as to rob it of
most of its value. By this time, Chinese public opinion had come to
realize that there must be railways in China, and that the real problem
was how to keep them under Chinese control. In 1908, the Tientsin-Pukow
line and the Shanghai-Hangchow line were sanctioned, to be built by the
help of foreign loans, but with all the administrative control in the
hands of the Chinese Government. At the same time, the Peking-Hankow
line was bought back by the Government, and the Peking-Kalgan line was
constructed by the Chinese without foreign financial assistance. Of the
big main lines of China, this left not much foreign control outside the
Manchurian Railway (Chinese Eastern Railway) and the Shantung Railway.
The first of these is mainly under foreign control and must now be
regarded as permanently lost, until such time as China becomes strong
enough to defeat Japan in war; and the whole of Manchuria has come more
or less under Japanese control. But the Shantung Railway, by the
agreement reached at Washington, is to be bought back by China--five
years hence, if all goes well. Thus, except in regions practically lost
to China, the Chinese now have control of all their more important
railways, or will have before long. This is a very hopeful feature of
the situation, and a distinct credit to Chinese sagacity.
Putnam Weale (Mr. Lennox Simpson) strongly urges--quite rightly, as I
think--the great importance of nationalizing _all_ Chinese railways. At
Washington recently, he helped to secure the Shantung Railway award, and
to concentrate attention on the railway as the main issue. Writing early
in 1919, he said[100]:--
_The key to the proper control of China and the building-up of
the new Republican State is the railway key_.... The revolution
of 1911, and the acceptance in principle of Western ideas of
popular government, removed the danger of foreign provinces being
carved out of the old Manchu Empire. There was, however, left
behind a more subtle weapon. _This weapon is the railway_. Russia
with her Manchurian Railway scheme taught Japan the new method.
Japan, by the Treaty of Portsmouth in 1905, not only inherited
the richer half of the Manchurian railways, but was able to put
into practice a new technique, based on a mixture of twisted
economics, police control, and military garrisons. Out of this
grew the latter-day highly developed railway-zone which, to all
intents and purposes, creates a new type of foreign _enclave_,
subversive of the Chinese State. _The especial evil to-day is
that Japan has transferred from Manchuria to Shantung this new
technique,_ which ... she will eventually extend into the very
heart of intramural China ... and also into extramural Chihli and
Inner Mongolia (thus outflanking Peking) unless she is summarily
arrested. _At all costs this must be stopped._ The method of
doing so is easy: _It is to have it laid down categorically, and
accepted by all the Powers, that henceforth all railways on
Chinese soil are a vital portion of Chinese sovereignty and must
be controlled directly from Peking by a National Railway Board;
that stationmasters, personnel and police, must be Chinese
citizens, technical foreign help being limited to a set standard;
and that all railway concessions are henceforth to be considered
simply as building concessions which must be handed over, section
by section, as they are built, to the National Railway Board_.
If the Shantung Railway Agreement is loyally carried out, this
reform--as to whose importance I quite agree with Putnam Weale--will
have been practically completed five years hence. But we must expect
Japan to adopt every possible means of avoiding the carrying out of her
promises, from instigating Chinese civil war to the murdering of
Japanese employees by Japanese secret agents masquerading as Chinese.
Therefore, until the Chinese actually have complete control of the
Shantung Railway, we cannot feel confident that they will ever get it.
It must not be supposed that the Chinese run railways badly. The Kalgan
Railway, which they built, is just as well built as those constructed by
foreigners; and the lines under Chinese administration are admirably
managed. I quote from Mr. Tyau[101] the following statistics, which
refer to the year 1919: Government railways, in operation, 6027
kilometres; under construction, 383 kilometres; private and provincial
railways, 773 kilometres; concessioned railways, 3,780 kilometres.
Total, 10,963 kilometres, or 6,852 miles. (The concessioned railways are
mainly those in Manchuria and Shantung, of which the first must be
regarded as definitely lost to China, while the second is probably
recovered. The problem of concessioned railways has therefore no longer
the importance that it had, though, by detaching Manchuria, the foreign
railway has shown its power for evil). As regards financial results, Mr.
Tyau gives the following figures for the principal State railways in
1918:--
Name of Line. Kilometres Year Per cent, earned
Operated. Completed. on Investment.
Peking-Mukden 987 1897 22.7
Peking-Hankow 1306 1905 15.8
Shanghai-Nanking 327 1908 6.2
Tientsin-Pukow 1107 1912 6.2
Peking-Suiyuan 490 1915 5.6
Subsequent years, for which I have not the exact figures, have been less
prosperous.
I cannot discover any evidence of incompetence in Chinese railway
administration. On the contrary, much has been done to overcome the
evils due to the fact that the various lines were originally constructed
by different Powers, each following its own customs, so that there was
no uniformity, and goods trucks could not be moved from one line on to
another. There is, however, urgent need of further railways, especially
to open up the west and to connect Canton with Hankow, the profit of
which would probably be enormous.
Mines are perhaps as important as railways, for if a country allows
foreign control of its mineral resources it cannot build up either its
industries or its munitions to the point where they will be independent
of foreign favour. But the situation as regards mining is at present far
from satisfactory. Mr. Julean Arnold, American Commercial Attaché at
Peking, writing early in 1919, made the following statement as regards
China's mineral resources:--
China is favoured with a wonderful wealth in coal and in a good
supply of iron ore, two essentials to modern industrial
development. To indicate how little China has developed its
marvellous wealth in coal, this country imported, during 1917,
14,000,000 tons. It is estimated that China produces now
20,000,000 tons annually, but it is supposed to have richer
resources in coal than has the United States which, in 1918,
produced 650,000,000 tons. In iron ore it has been estimated that
China has 400,000,000 tons suitable for furnace reaction, and an
additional 300,000,000 tons which might be worked by native
methods. During 1917, it is estimated that China's production of
pig iron was 500,000 tons. The developments in the iron and steel
industry in China are making rapid strides, and a few years hence
it is expected that the production of pig iron and of finished
steel will be several millions of tons annually.... In antimony
and tin China is also particularly rich, and considerable
progress has taken place in the mining and smelting of these ores
during the past few years. China should jealously safeguard its
mineral wealth, so as to preserve it for the country's
welfare.[102]
The _China Year Book_ for 1919 gives the total Chinese production of
coal for 1914 as 6,315,735 tons, and of iron ore at 468,938 tons.[103]
Comparing these with Mr. Arnold's figures for 1917, namely 20,000,000
tons of coal and 500,000 tons of pig iron (not iron ore), it is evident
that great progress was made during those three years, and there is
every reason to think that at least the same rate of progress has been
maintained. The main problem for China, however, is not _rapid_
development, but _national_ development. Japan is poor in minerals, and
has set to work to acquire as much as possible of the mineral wealth of
China. This is important to Japan, for two different reasons: first,
that only industrial development can support the growing population,
which cannot be induced to emigrate to Japanese possessions on the
mainland; secondly, that steel is an indispensable requisite for
imperialism.
The Chinese are proud of the Kiangnan dock and engineering works at
Shanghai, which is a Government concern, and has proved its capacity for
shipbuilding on modern lines. It built four ships of 10,000 tons each
for the American Government. Mr. S.G. Cheng[104] says:--
For the construction of these ships, materials were mostly
supplied by China, except steel, which had to be shipped from
America and Europe (the steel produced in China being so limited
in quantity, that after a certain amount is exported to Japan by
virtue of a previous contract, little is left for home
consumption).
Considering how rich China is in iron ore, this state of affairs needs
explanation. The explanation is valuable to anyone who wishes to
understand modern politics.
The _China Year Book_ for 1919[105] (a work as little concerned with
politics as _Whitaker's Almanack_) gives a list of the five principal
iron mines in China, with some information about each. The first and
most important are the Tayeh mines, worked by the Hanyehping Iron and
Coal Co., Ltd., which, as the reader may remember, was the subject of
the third group in the Twenty-one Demands. The total amount of ore in
sight is estimated by the _China Year Book_ at 50,000,000 tons, derived
chiefly from two mines, in one of which the ore yields 65 per cent. of
iron, in the other 58 to 63 per cent. The output for 1916 is given as
603,732 tons (it has been greatly increased since then). The _Year Book_
proceeds: "Japanese capital is invested in the Company, and by the
agreement between China and Japan of May 1915 [after the ultimatum which
enforced the revised Twenty-one Demands], the Chinese Government
undertook not to convert the Company into a State-owned concern nor to
compel it to borrow money from other than Japanese sources." It should
be added that there is a Japanese accountant and a Japanese technical
adviser, and that pig-iron and ore, up to a specified value, must be
sold to the Imperial Japanese works at much below the market price,
leaving a paltry residue for sale in the open market.[106]
The second item in the _China Year Book's_ list is the Tungkuan Shan
mines. All that is said about these is as follows: "Tungling district on
the Yangtze, 55 miles above Wuhu, Anhui province. A concession to work
these mines, granted to the London and China Syndicate (British) in
1904, was surrendered in 1910 for the sum of £52,000, and the mines were
transferred to a Chinese Company to be formed for their exploitation."
These mines, therefore, are in Chinese hands. I do not know what their
capacity is supposed to be, and in view of the price at which they were
sold, it cannot be very great. The capital of the Hanyehping Co. is
$20,000,000, which is considerably more than £52,000. This was the only
one of the five iron mines mentioned in the _Year Book_ which was not
in Japanese hands at the time when the _Year Book_ was published.
Next comes the Taochung Iron Mine, Anhui province. "The concession which
was granted to the Sino-Japanese Industrial Development Co. will be
worked by the Orient Steel Manufacturing Co. The mine is said to contain
60,000,000 tons of ore, containing 65 per cent. of pure iron. The plan
of operations provides for the production of pig iron at the rate of
170,000 tons a year, a steel mill with a capacity of 100,000 tons of
steel ingots a year, and a casting and forging mill to produce 75,000
tons a year."
The fourth mine is at Chinlingchen, in Shantung, "worked in conjunction
with the Hengshan Colliery by the railway." I presume it is to be sold
back to China along with the railway.
The fifth and last mine mentioned is the Penhsihu Mine, "one of the most
promising mines in the nine mining areas in South Manchuria, where the
Japanese are permitted by an exchange of Notes between the Chinese and
Japanese Governments (May 25, 1915) to prospect for and operate mines.
The seam of this mine extends from near Liaoyang to the neighbourhood of
Penhsihu, and in size is pronounced equal to the Tayeh mine." It will be
observed that this mine, also, was acquired by the Japanese as a result
of the ultimatum enforcing the Twenty-one Demands. The _Year Book_ adds:
"The Japanese Navy is purchasing some of the Penhsihu output. Osaka
ironworks placed an order for 15,000 tons in 1915 and the arsenal at
Osaka in the same year accepted a tender for Penhsihu iron."
It will be seen from these facts that, as regards iron, the Chinese have
allowed the Japanese to acquire a position of vantage from which they
can only be ousted with great difficulty. Nevertheless, it is absolutely
imperative that the Chinese should develop an iron and steel industry of
their own on a large scale. If they do not, they cannot preserve their
national independence, their own civilization, or any of the things that
make them potentially of value to the world. It should be observed that
the chief reason for which the Japanese desire Chinese iron is in order
to be able to exploit and tyrannize over China. Confucius, I understand,
says nothing about iron mines;[107] therefore the old-fashioned Chinese
did not realize the importance of preserving them. Now that they are
awake to the situation, it is almost too late. I shall come back later
to the question of what can be done. For the present, let us continue
our survey of facts.
It may be presumed that the population of China will always be mainly
agricultural. Tea, silk, raw cotton, grain, the soya bean, etc., are
crops in which China excels. In production of raw cotton, China is the
third country in the world, India being the first and the United States
the second. There is, of course, room for great progress in agriculture,
but industry is vital if China is to preserve her national independence,
and it is industry that is our present topic.
To quote Mr. Tyau: "At the end of 1916 the number of factory hands was
officially estimated at 560,000 and that of mine workers 406,000. Since
then no official returns for the whole country have been published ...
but perhaps a million each would be an approximate figure for the
present number of factory operatives and mine workers."[108] Of course,
the hours are very long and the wages very low; Mr. Tyau mentions as
specially modern and praiseworthy certain textile factories where the
wages range from 15 to 45 cents a day.[109] (The cent varies in value,
but is always somewhere between a farthing and a halfpenny.) No doubt as
industry develops Socialism and labour unrest will also develop. If Mr.
Tyau is to be taken as a sample of the modern Chinese governing classes,
the policy of the Government towards Labour will be very illiberal. Mr.
Tyau's outlook is that of an American capitalist, and shows the extent
to which he has come under American influence, as well as that of
conservative England (he is an LL.D. of London). Most of the Young
Chinese I came across, however, were Socialists, and it may be hoped
that the traditional Chinese dislike of uncompromising fierceness will
make the Government less savage against Labour than the Governments of
America and Japan.
There is room for the development of a great textile industry in China.
There are a certain number of modern mills, and nothing but enterprise
is needed to make the industry as great as that of Lancashire.
Shipbuilding has made a good beginning in Shanghai, and would probably
develop rapidly if China had a flourishing iron and steel industry in
native hands.
The total exports of native produce in 1919 were just under £200,000,000
(630,000,000 taels), and the total imports slightly larger. It is
better, however, to consider such statistics in taels, because currency
fluctuations make the results deceptive when reckoned in sterling. The
tael is not a coin, but a certain weight of silver, and therefore its
value fluctuates with the value of silver. The _China Year Book_ gives
imports and exports of Chinese produce for 1902 as 325 million taels and
214 million taels respectively; for 1911, as 482 and 377; for 1917, as
577 and 462; for 1920, as 762 and 541. (The corresponding figures in
pounds sterling for 1911 are 64 millions and 50 millions; for 1917, 124
millions and 99,900,000.) It will thus be seen that, although the
foreign trade of China is still small in proportion to population, it is
increasing very fast. To a European it is always surprising to find how
little the economic life of China is affected by such incidents as
revolutions and civil wars.
Certain principles seem to emerge from a study of the Chinese railways
and mines as needing to be adopted by the Chinese Government if national
independence is to be preserved. As regards railways, nationalization is
obviously desirable, even if it somewhat retards the building of new
lines. Railways not in the hands of the Government will be controlled,
in the end if not in the beginning, by foreigners, who will thus acquire
a power over China which will be fatal to freedom. I think we may hope
that the Chinese authorities now realize this, and will henceforth act
upon it.
In regard to mines, development by the Chinese themselves is urgent,
since undeveloped resources tempt the greed of the Great Powers, and
development by foreigners makes it possible to keep China enslaved. It
should therefore be enacted that, in future, no sale of mines or of any
interest in mines to foreigners, and no loan from foreigners on the
security of mines, will be recognized as legally valid. In view of
extra-territoriality, it will be difficult to induce foreigners to
accept such legislation, and Consular Courts will not readily admit its
validity. But, as the example of extra-territoriality in Japan shows,
such matters depend upon the national strength; if the Powers fear
China, they will recognize the validity of Chinese legislation, but if
not, not. In view of the need of rapid development of mining by Chinese,
it would probably be unwise to nationalize all mines here and now. It
would be better to provide every possible encouragement to genuinely
Chinese private enterprise, and to offer the assistance of geological
and mining experts, etc. The Government should, however, retain the
right (_a_) to buy out any mining concern at a fair valuation; (_b_) to
work minerals itself in cases where the private owners fail to do so, in
spite of expert opinion in favour of their being worked. These powers
should be widely exercised, and as soon as mining has reached the point
compatible with national security, the mines should be all nationalized,
except where, as at Tayeh, diplomatic agreements stand in the way. It is
clear that the Tayeh mines must be recovered by China as soon as
opportunity offers, but when or how that will be it is as yet impossible
to say. Of course I have been assuming an orderly government established
in China, but without that nothing vigorous can be done to repel foreign
aggression. This is a point to which, along with other general questions
connected with the industrializing of China, I shall return in my last
chapter.
It is said by Europeans who have business experience in China that the
Chinese are not good at managing large joint-stock companies, such as
modern industry requires. As everyone knows, they are proverbially
honest in business, in spite of the corruption of their politics. But
their successful businesses--so one gathers--do not usually extend
beyond a single family; and even they are apt to come to grief sooner or
later through nepotism. This is what Europeans say; I cannot speak from
my own knowledge. But I am convinced that modern education is very
quickly changing this state of affairs, which was connected with
Confucianism and the family ethic. Many Chinese have been trained in
business methods in America; there are Colleges of Commerce at Woosung
and other places; and the patriotism of Young China has led men of the
highest education to devote themselves to industrial development. The
Chinese are no doubt, by temperament and tradition, more suited to
commerce than to industry, but contact with the West is rapidly
introducing new aptitudes and a new mentality. There is, therefore,
every reason to expect, if political conditions are not too adverse,
that the industrial development of China will proceed rapidly throughout
the next few decades. It is of vital importance that that development
should be controlled by the Chinese rather than by foreign nations. But
that is part of the larger problem of the recovery of Chinese
independence, with which I shall deal in my last chapter.
FOOTNOTES:
[Footnote 99: For the history of Chinese railways, see Tyau, op. cit.
pp. 183 ff.]
[Footnote 100: _China in_ 1918. Published by the _Peking Leader_, pp.
45-6.]
[Footnote 101: Op. cit. chap. xi.]
[Footnote 102: _China in_ 1918, p. 26. There is perhaps some mistake in
the figures given for iron ore, as the Tayeh mines alone are estimated
by some to contain 700,000,000 tons of iron ore. Coleman, op cit. p.
51.]
[Footnote 103: Page 63. The 1922 _Year Book_ gives 19,500,000 tons of
coal production.]
[Footnote 104: _Modern China,_ p, 265.]
[Footnote 105: Pages 74-5.]
[Footnote 106: Coleman, op. cit. chap. xiv.]
[Footnote 107: It seems it would be inaccurate to maintain that there is
nothing on the subject in the Gospels. An eminent American divine
pointed out in print, as regards the advice against laying up treasure
where moth and rust doth corrupt, that "moth and rust do not get at Mr.
Rockefeller's oil wells, and thieves do not often break through and
steal a railway. What Jesus condemned was hoarding wealth." See Upton
Sinclair, _The Profits of Religion_, 1918, p. 175.]
[Footnote 108: Page 237.]
[Footnote 109: Page 218.]