William C. Kirby

No ONE knows precisely the amount of the losses suffered by the Chinese
economy as a result of the war of 1937-45, but there is no doubt that they were
staggering. Between fifteen and twenty million Chinese perished. China's ini-
tially small industrial output shrunk even further. In agriculture, the war intensi-
fied an already serious agrarian crisis. China's currency became increasingly
worthless.

Industrial losses are the ones that have been most carefully measured, and it is
clear that China's emerging modern sector was substantially worse off in 1946
than it had been in 1937. In Shanghai, the prewar center of China's modern
economy, the first two years of the war witnessed the destruction of over 50
percent of Chinese industries. In the Wuhsi and Nanking regions, the damage
ranged from 64 to 80 percent. In 1945-46, when the Nationalist government took
control of nearly 70 percent of China's total industrial capital, it found that
wartime damage or losses to these publicly owned assets reached 55 percent of
industrial and mining assets, 72 percent of shipping, and 96 percent of railroads.
In 1946, coal production in China (including Manchuria) was less than one-third
its prewar peak and one-fifth the wartime peak production. Mines had been
looted, flooded, or destroyed toward the end of the war, and they suffered from
deferred maintenance. Mining of antimony and tungsten, China's chief export
metals and major revenue earners for prewar government industrial investment,
had ceased altogether in 1944. Total economic losses to Chinese mines, indus-
tries, transportation, and communications were estimated at U.S. $1.08 billion.
(All figures given are in U.S. dollars.)

Of a prewar foreign investment in China of about $3.5 billion, an estimated
$800 million was lost during the first two years of the war. To this figure must be
added wartime damage estimated at $30 million to industries on Taiwan, and the
colossal theft of plant equipment valued at up to $900 million in Manchuria in
the immediate aftermath of the war, with production losses and replacement
costs estimated at $2 billion. To give specific examples: the Manchurian iron and
steel industry was expected to produce only 30,000 tons of pig iron in 1947, in
comparison to 2.5 million tons in the peak year under Japanese rule; of fifteen

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