Sacrificing His Core Supporters in a Race Against Defeat
WHEN Chinese planners survey the work of reconstruction which must be done in their country a multitude of projects demand attention. Most of them are indeed necessary; but plans which are too diffuse will defeat themselves. The financial resources of China are limited, and the amount of aid from outside will be limited too. If Chinese resources and energies are not to be dissipated, the men who plan their country's future, and the foreign statesmen, technicians and business men who collaborate with them, must take things in the proper order. The first and foremost task is the creation of a modernized system of communications. Without that a strong and democratic China cannot be built. The low standard of living of the farmers, who form about 85 percent of the population, cannot be lifted until better transportation facilities enable them to send their goods to a wider range of markets. And until this standard of living is raised, in turn, the rural millions of China cannot buy the manufactured products of other countries. Integration of the national transportation system is the primary essential for the country's economic health and political stability and for mutually advantageous trade relationships between it and other nations.
China had just begun to develop a modern transportation system when the war with Japan broke out in 1937. Except on the eastern seaboard, the 450,000,000 people of this vast country of nearly four and a half million square miles still depended for transportation chiefly, as in ages past, on river junk, pack animal and human carrier. The limited seaboard communication system, including use of the Yangtze River as far as Ichang, was lost to China soon after the war started. The Chinese, "trading space for time," fell back into the deep and undeveloped hinterland of the southwest and northwest. The very shortage of railway and highway systems in the remote provinces of Yunnan, Kweichow, Szechwan, Shensi and Kansu was helpful in the crisis, for it deterred the enemy from invading the west and gave the Chinese Government time to organize resistance.
In the face of almost insuperable odds, China made heroic efforts to construct connections between the interior of the country and friendly neighbors -- Russia, Indo-China and Burma. She met with one frustration after another. Just as the Hunan-Kwangsi Railway to Indo-China was nearly completed, the Japanese occupied Nanning and brought the project to a halt; and later the Vichy authorities in Indo-China capitulated to the Japanese and shut off all hope of access to the sea by that route. The effort to reach the sea at Rangoon by the Burma Road and the Yunnan-Burma Railway was likewise defeated. The Road was open for about three years, then was severed by the Japanese. In 1942, China's only contact with the outside world was by plane over the snow-capped peaks of the lower Himalayas.
But meanwhile, a network of highways was developed in southwest and northwest China, river communications were extensively improved, and air routes were rearranged to handle interior traffic. These improvements were of importance militarily, and were a great aid to political unity, but in spite of them, interior communications remained most inadequate. Free China possessed only about 1,700 miles of railways, 20,000 miles of usable highways, 8,000 miles of navigable riverways, and air service with very limited mileage. Troops often had to be moved about the country on foot; a march from Sian to Chungking, for instance, took two months, and left the soldiers exhausted. The handicaps imposed on the economic life of the country by this lack of communications can readily be imagined. For example, cotton from Sian, transported to Chungking, sold for four or five times its original price. Such experiences made the Chinese realize the urgency of developing interior communications.
In the following pages the author attempts to suggest the basic requirements of a postwar program for the development of Chinese railways, shipping, airways and highways. He has been guided by certain principles: the development of all types of transportation must be integrated; the prewar policy of simultaneous development of government and private projects will be continued; inland and agrarian communities as well as urban and coastal areas must be served by the new communications system; and lastly, government transportation projects must be run on businesslike principles.
The construction of China's first railway began in 1866. In 1942, three quarters of a century later, there were 12,036 miles of completed railways in the country, all but 1,001 miles of which had been finished before 1937. This was about 27 miles of railway for each million of population, compared to 1,940 miles to every million in the United States. About thirty years ago, Dr. Sun Yat-sen advocated the building of 100,000 miles of railways, apportioned on a regional basis. If that were ever done, China would still have less than half the railway mileage of the United States.
The railways are not only inadequate, they are unevenly distributed. Manchuria has approximately 3,700 miles, north China 4,000, southeast China 3,000, southwest China 1,000, and northwest China 300. There are no railways in Ningsia, Chinghai, Kansu, Sinkiang, Sikang and Szechwan or in such extensive outlying areas as Tibet and Mongolia. Even with the completion of the Paoki-Tienshui and the Kweichow-Kwangsi lines (now under construction) and of the Yunnan-Burma, Suifu-Kunming and Chengtu-Chungking lines and the section of the Hunan-Kwangsi Railway between Liuchow and Chennankwan on the Indo-China border (work on all of which has been suspended because of the war), only about 1,800 miles will be added in the southwest and about 100 miles in the northwest.
A program based on postwar national requirements and on the ability of the country to carry the financial burden entailed should begin with a two-year period for the rehabilitation of railways destroyed during military operations (1,279 miles up to 1942) and for the completion of work suspended because of wartime shortages (about 1,900 miles).[i] The total of lines dismantled and destroyed may be greatly increased in the course of the Japanese retreat from China. But on present figures alone, the railway construction program for the first two years after the cessation of hostilities would amount to at least 3,000 miles.
In the opinion of the writer, a ten-year building program should then be undertaken, divided into two five-year plans, to create 14,300 more miles of railways. The first five years would be devoted to building lines linking main political centers and exploiting essential natural resources such as oil and wool from the northwest, tin, iron and copper from the southwest, and tungsten and antimony from the southeast. During the second five years, the main purpose would be to develop the frontier regions and to establish lines to Russia, Burma and India, besides extending railway lines to various seaports along the southeast coast. It will be noted that this ten-year plan puts the expansion of railways in the interior of China first, and the extension of the lines to the frontiers and the coastal region second. If the entire program were completed the nation would have a total of about 28,000 miles of track (approximately 10 percent of the mileage in the United States), well distributed over the various regions. China would have a network of surface communications.
About 160 tons of steel rails and parts will be needed for each new mile of railway, and one locomotive and ten carriages for every six miles. The two-year rehabilitation program would require approximately 480,000 tons of steel rails and parts, 500 locomotives and 5,000 carriages, and the ten-year program about 2,288,000 tons of steel rails and parts, 2,216 locomotives and 22,160 carriages. Moreover, about one-half of the rolling stock on national railways in 1937 will probably have to be replaced, creating an additional need for 800 locomotives, 1,400 passenger cars and 10,000 freight cars. By a rough calculation, then, the two-year program would cost from $150,000,000 to $200,000,000. The ten-year program would require the expenditure of another $350,000,000 to $400,000,000.
The railway projects will have to carry a double financial responsibility, for they must become currently self-supporting and at the same time service the prewar foreign railway loans of about $265,000,000; but with efficient management it should be quite possible for them to do so. Chinese railways showed a minimum increase of 30 percent in revenue and a maximum increase of 100 percent, during any given five-year period in the past. Their remarkable prosperity was due to the virtual monopoly of transportation service which they enjoyed (and would continue to enjoy under the plans outlined above), the abundance of cheap fuel along the railway routes, and the exceedingly -- though deplorably -- low labor costs in China. To ensure financial soundness and efficient management, the expanded railways must be integrated into one system, however. A central administration with regional offices, supervised by a board of directors representing various public and government interests should shape policy and appoint administrators; but there will not be efficiency unless the chosen executives are permitted to work without political interference. Under such a setup, the old railway obligations could be converted into a consolidated loan, backed by a common sinking fund established from the revenues of all the lines. The fund could be supervised by a loan service committee composed of representatives of the government and the creditors, and new loans might be handled in the same way if the creditors so desired.
Private ownership and operation of railways in China was permitted before the war, under certain conditions, and the government will need the aid of private enterprise in building the railway network. In particular, private companies can construct a system of feeder lines serving special economic and regional interests under general government planning; and their competitive service can stimulate the government railways to be on guard against inefficiency and bureaucracy.
In 1937 there were about 1,200,000 tons of merchant shipping along the China coast and on the Yangtze River, approximately 500,000 of which were Chinese. When the Japanese invasion began, some Chinese ships were scuttled to block strategic channels, and others which had taken out foreign registry were seized by the enemy. About 110,000 tons of Chinese shipping are safe on the upper Yangtze, where about thirty of the vessels are in use and a number are lying at anchor, most of them smaller than 200 tons. It is hard to say now how much of the commandeered shipping will be available after the war, but to cope with immediate postwar requirements, which will be especially heavy until the railroads are in running order, China will need at least 1,000,000 tons over and above what may be saved from the Japanese.
The problem of postwar shipping, like that of railroad development, can best be dealt with in two stages -- rehabilitation and then expansion. The minimum needs of the first two years are 100,000 tons for use on the Yangtze, and 300,000 for service in coastal and neighboring waters; and about 600,000 tons more of replacement shipping will have to be built soon thereafter. In addition, the wharves and installations which will presumably be destroyed by the retreating enemy at Shanghai, Tsingtao, Dairen, Hankow and elsewhere will have to be repaired. A rough estimate of the cost of a two-year rehabilitation program is $300,000,000. A national objective of 10,000,000 tons of shipping was set by Dr. Sun Yat-sen in the early days of the Republic, and it has recently been proposed that a goal of 2,000,000 tons should be set for the first ten-year period following the war.
Now that the United States, Great Britain and other nations have relinquished their extraterritorial rights, ships carrying traffic on inland waterways and between coastal points will fly the Chinese flag and be owned by companies registered under Chinese law. But foreign investments in Chinese shipping firms will be possible on a percentage basis to be determined by the government, with the understanding that over a fixed period of time the foreign capital will be retired. With government consent, foreign shipping en route to or from a foreign port could carry cargo between coastal points, provided that a contract to cover each consignment were agreed upon with a Chinese shipping concern. Such an expedient would greatly ease the burden on Chinese shipping, which will be insufficient to meet the country's needs during the immediate postwar period.
For years ten large Chinese private shipping companies and about one hundred smaller ones have done business side by side with the government-owned China Merchants' Steam Navigation Company. This government company is in need of reorganization, to achieve more businesslike methods of management, but the principle of coöperation between private and government concerns is a sound one. The government should allocate routes for private lines and specify minimum shipping capacities; and in postwar years the government company should give greater attention to ocean transport, since private enterprise may not be able to provide the capital outlay or take the risk involved. If Japanese shipping lines are not permitted to resume their prewar operations and their routes are apportioned among other nations, China will be particularly interested in sharing the traffic between her homeland and Japan, and between Japanese ports and those of the South Seas and beyond.
There are perhaps half a million tons of smaller river craft in China, including 20,000 tons of new wooden vessels recently built with government aid; and under the stress of war, about 2,500 miles of formerly unusable waterways have been opened. But further development of river and lake shipping is a primary essential to help the Chinese farmer market his produce. The smaller rivers and shallow lakes now need to be dredged and dikes built where necessary for maintaining channels. For use on these rivers and lakes, light wooden craft driven by Diesel or gasoline engines would save labor, time and freight costs, though their usefulness would obviously depend upon the availability of cheap fuel; and light draft tugs and barges would be of great value. Considerations of efficiency demand that machine-age power be substituted for sails on inland waters and for human muscle along towpaths.
Although China planned to develop civil aviation as early as 1916, not much progress was made until, in 1930, the China National Aviation Company was organized to maintain a domestic air service. CNAC is a joint company with 55 percent of its capital of about $3,000,000 contributed by the Chinese Ministry of Communications, and 45 percent by Pan-American Airways. In 1931 the Eurasia Aviation Corporation was capitalized at about $1,000,000, an amount later increased to about $3,000,000, the Chinese Ministry of Communications contributing two-thirds and the German Lufthansa one-third. This corporation intended to open a route between Shanghai and Germany across Soviet Russia, but for political reasons the plan was abandoned and the company limited its services largely to the northwestern area. After China went to war with Germany in December 1941, Eurasia became a purely Chinese company.
In 1939 another joint corporation was formed with Chinese and Soviet capital, totalling about $1,000,000 -- half supplied by the Chinese Ministry of Communications and half by the Soviet Government -- to operate a thousand-mile route between Hami in Sinkiang and Alma Ata in Russia, via Tihwa (Urumchi). China-based air routes totalled about 7,500 miles before the war, and about 5,000 miles of new routes have been added since 1937. Although CNAC ran a deficit for the first four years of its operation, there has been a surplus of revenue over expenditure ever since 1933. Eurasia, though less prosperous than CNAC, showed profits for 1937 and 1938.
Following the war, China will first have to strive to reconstitute her domestic air services, in order to supplement the greatly overburdened surface transportation, but she also contemplates the construction of a network of airlines to India, Burma, Malaya, Thailand, Indo-China, the Philippines, Japan and Korea. Besides these routes, she hopes eventually to establish a system of airlines through the East Indies to Australia, across India to Europe, Africa and South America, and across the Pacific to the United States, Canada and the West Indies. In the period 1931-1938 there was an eightfold increase in mail cargo on the CNAC and Eurasia routes, and a tenfold increase in passenger traffic. In the writer's opinion, the total route mileage (including domestic and international lines) can be raised to 40,000 within a period of five years after the war, with a tenfold expansion of traffic volume (including passengers, mail and freight). Between 200 and 250 planes of various types will be required. Although the DC-2 and DC-3 types may continue to be used on trunk and feeder lines, it is probable that planes of the C-46 and C-54 types, or others more economical or more efficient, will be used on the international routes. An expenditure of about $150,000,000 will be needed to equip the country with adequate aircraft, airports and technical installations in the immediate postwar years.
The policy of maintaining government ownership of main routes, and private ownership of feeder or subsidiary routes, will be continued in the field of civil aviation, as in other fields of transportation. But foreign capital now invested in Chinese domestic airlines will gradually be retired and the lines in which it is invested transformed into purely national enterprises. There is, of course, nothing new in a policy of exclusive national operation of domestic airlines; this principle of reserving the right of cabotage for domestic operators is generally accepted and was incorporated in the agreements drawn up by the International Civil Aviation Conference at Chicago in 1944. The postwar application of the principle in China will not preclude the fullest coöperation with foreign interests on technical matters.
Since China is eager to establish airlines to neighboring countries, and eventually to nations overseas, she is prepared to welcome foreign planes within her borders. But she has consistently emphasized that both in the case of commercial and private flights the establishment of reciprocal rights of commercial entry with foreign Powers is a prerequisite to her granting rights of transit and "technical stop" (landing for any purpose other than taking on or discharging passengers, cargo or mail). At the International Civil Aviation Conference in Chicago, she therefore maintained that the so-called political rights, i.e. rights of transit and technical stop, are inseparable from the so-called economic rights, i.e. rights to carry traffic to and from the homeland and foreign countries, and between intermediate points on an international route. That is to say, China is ready to accord both political and economic rights on a reciprocal basis, but not the former without the latter.
The first modern road in China was a 30-mile military highway built in Hunan in 1912. By 1937 there were about 60,000 miles of roads, although most of them were poor. They had not been laid out as part of a national network of highways, only about half were usable for motor traffic, and only about a quarter had all-weather surfacing.
When the war broke out, the government undertook to connect China with neighboring countries by a road from Lanchow to the border of Sinkiang (joining a road to Soviet Russia), a road from Hengyang via Kweilin and Nanning to Indo-China, and a road from Kunming to Burma. At the same time, it constructed about 5,000 miles of new highways behind the front and inland, and improved or rebuilt about 15,000 miles of the older roads, following a national plan, particularly in the northwest and southwest. With Kweiyang as a radiating center, there is now a network of highways extending through Hunan, Kwangsi, Yunnan, Kweichow and Szechwan. In the northwest, with Lanchow as a center, there is another network which covers Shensi, Kansu, Chinghai, Ningsia and Sinkiang. Joining these two networks is the Shensi-Szechwan highway with Chengtu as a center, and with a spur running out to Sikang. An elaborate network was also planned for southeast China, covering Kwangtung, Kwangsi, Fukien, Chekiang and Kiangsi, but the military situation halted the project.
Trucking and travel on the highways under both private and government auspices grew steadily after the National Motor Carrier Act was passed in 1918. Private bus lines operated in southeast China before the outbreak of the war, provincial lines had been started elsewhere, and by 1937 there were about 10,000 commercial busses and 13,000 commercial trucks on the roads. Following the evacuation of Hankow in 1938, the Ministry of Communications operated a highway transportation service in the northwest. A similar service in the southwest was later taken over by the China Transportation Corporation, a company specially organized to handle traffic in that area.
Before the closing of the Burma Road there were approximately 10,000 government and private trucks in use in Free China, but many of them were later forced out of service by lack of spare parts and fuel; today there are perhaps only 5,000. When the fighting ends, the absence of adequate rail and river communications will throw a heavy burden on the present highways, and the restoration and maintenance of the existing roads must have priority over new construction. Then, as soon as possible, existing roads should be surfaced, graded, provided with adequate bridges and converted into feeders to the integrated system of railway, riverway and airway communications. During the period of rehabilitation, special attention should be paid to bettering the roads connecting airports with urban centers, to stimulate the growth of civil aviation. Trunk highways, designed as the backbone of a coördinated road system, will come later, as circumstances permit: the objective is Dr. Sun Yat-sen's million-mile network, apportioned among national, provincial and village roads. In the past there has been too much emphasis on through highways, with a damaging neglect of the welfare of small counties and villages. The construction of about 20,000 miles of rural roads a year, suitable for the use of rubber-wheeled vehicles and tractors, would be a minimum government program to meet the needs of China's agricultural population.
Actual experience during wartime has shown that private highway transportation companies operating in local areas have offered more efficient service than government enterprises. In the immediate future, the government should limit its activities in this field to traffic allocation and control and to road maintenance -- for which a good deal of labor-saving machinery will be needed -- leaving the actual operation of highway services to private business. The government should concentrate its resources on the development of railways, waterways and airways.
To conclude: the first cost of the over-all program to modernize China's communications, the two-year rehabilitation plan, is roughly $650,000,000 -- allocating $200,000,000 for railways, $300,000,000 for shipping and $150,000,000 for aviation. The estimate excludes the cost of equipment for building and maintaining highways. In view of China's dire need for transport, the sum cannot be considered excessive. More and better communications are not only the basic requirement for the improvement of living standards of China's rural millions; they can also form a focal point of the desired industrial development of the country through the gradual introduction of the manufacture of railway and other equipment. This would not only lower the costs of modernizing transport but would tend to lift the low standard of living of the Chinese worker.
This is not the place to analyze the question of how these programs are to be financed. Perhaps the capital can be supplied by international agencies, perhaps by private investment, perhaps in part by both. In the past, Great Britain, more than any other of the Allied Powers, has perceived the importance of communications in the development of China's potentialities. Her share of the approximately $265,000,000 of foreign investment in Chinese railroads is about $66,100,000, or one-fourth. Her share in foreign shipping tonnage in Chinese waters before the war was about 300,000 tons, or roughly one-half. Railway investments of the United States were only $11,589,930, and American shipping interests almost nil. However, the United States was the first foreign nation to invest in civil aviation in China.
Given businesslike administration, the projects sketched above are reasonable and possible. Railway and aviation enterprises have demonstrated their profitability in China; and in the face of depression and sharp competition in prewar years, shipping interests expanded. Efficient and businesslike management -- which, as we have noted, implies freedom from political interference once central policies have been established, and sufficient power and security of tenure for executive administrators -- cannot but make the field of transportation development an attractive one to foreign investors. But surely, commercial profits aside, it is to the interest of other nations to aid China in the completion of this task, on which her orderly and democratic development depends. Need it be argued that an orderly and democratic China is the basis of peace in the Pacific?
[i]Cf. the author's "China's Struggle for Railroad Development," New York: John Day, 1943.
The United States Helped Spark the Battles. Now It Must Help End Them