Resistance against japanese aggression the civil war

This preview shows page 9 - 12 out of 18 pages.

resistance against Japanese aggression, the civil war between the Kuomintang and the communist party began just as people were trying to catch their breath. Two forces in this civil war that was Chiang Kai-shek’s Nationalist government and the large communist forces led by Mao Zedong. The civil war raged across China for four years, until Mao’s communists were triumphant on the mainland and the remnants of Chiang’s Nationalist army withdrew to Taiwan in late 1949. When war with Japan broke out in 1937, the Chinese inflation was began and it became hyper-inflation before the end of the Second World War. When the United States entered the war, the Chinese money supply had increased to 22.8 billion yuan. Originally, the total quantity of money was 3.6 billion yuan. The civil war brought a worse inflation. American aid was very important to China at that time. That is why China's economic situation still does not collapse after the war of resistance against Japanese aggression. Otherwise, China's economy would have collapsed as it had. During the war, in addition to 9
military pay, dry food had to be distributed to the people. So foreign money is an important source of support for this war. But sustaining hyper-inflation in 1947 was the existence of large budget deficits associated with the civil war and financed by issues of money or bank credit. Another was the expansion of bank credit to private business at relatively low rates of interest, which seems to have been used largely for hoarding of commodities. In the same time, wholesale prices in Shanghai rose about fifteen times. Thus, the price increase and the rise in the velocity of circulation tended to reinforce each other. Expedite of the hyper-inflationary process continued until monetary reform in August 1948. This exacerbated the spread of economic problems, and because of the aftermath of the war, China's economy had not really recovered. So, the economy has been unstable. In August 1947, Chinese government was instituted a currency reform to curb hyper- inflation. It can change the old depreciated yuan to the new yuan and the rate id three million old for one new. In August 1948, the new money supply stood at 296.82 billion yuan. But the government printing presses were set to work again because the supply of the new yuan was keeps increasing. Between 1937 until 1949, the prices in the whole China was rose dramatically but to different degrees in the various regions of China. It caused the hyper- inflation was developed again and it was forcing a breakdown of the price controls which had been introduced under the monetary reform. 10
(Source: The report of World Economic Report 1948, p44) The table showed the index of wholesale prices indices for Shanghai between September and December in 1948. At the end of December, the conversion of currency into gold or silver was suspended.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture