Just like the states of Latin America, China and Japan were sovereign states of the periphery which could conduct their own crisis management, but they were nevertheless dependent on the Western industrial powers, though in very different ways. China had a quasi-colonial status because the British controlled its essential ports and managed its customs offices, and they also had a major influence on Chinese monetary policy. At the same time China was a large agrarian country which was integrated in the world market only to a very limited extent. Moreover, it had a silver currency and had not joined the gold standard. This was of great significance in the early 1930s as we shall see in the next section of this chapter. In contrast with China, Japan was in full control of its international trade and its monetary policy and it had returned to the gold standard at the most inappropriate moment in 1930. Due to this fact and because of its great dependence on the American market, Japan was initially far more deeply affected by the depression than China. But whereas the depression reached China late and then lingered on, Japan was able to counteract its impact very quickly. Moreover, the transition from the depression to war happened much earlier in East Asia, because Japan attacked China in 1937 after already having invaded Manchuria in 1931.
China had experienced a major recession after the First World War. The silver price had fallen and Chinese entrepreneurs who had ordered investment goods abroad immediately after the war were caught unawares by the steep decline in the value of the Chinese