CHINA'S ECONOMIC WAR
By A SPECIAL CORRESPONDENT
nESPITE rumours of large-scale military operations and JJ flamboyant claims of victories by both sides, the actual military position in the Sino-Japanese war approximates to a stalemate. The fact is that the war is now entering an econo- mic stage, and here the advantage is all with the Chinese. Their objective henceforth must be the achievement of an economic self-sufficiency that shall in due time be independent of de- velopments in any other part of the world.
Striking progress is being made toward that objective, also toward the establishment of adequate facilities for the manufac- ture of munitions. During the past two years four arsenals have been constructed in Kunming, the Yunnan metropolis, alone, and others in undivulged interior points. These are so far making only small arms, but one is about to undertake production of heavier types of machine-guns and certain kinds of light field artillery.
More than twenty other factories have come into existence in Kunming during the same period. They include everything from power-plants to cotton mills Eighteen thousand spindles are now in operation where two years ago such things were hardly known. Unfortunately materials that require to be imported for the setting up of all these works have come in mainly over the French Hanoi-Yunnan railway, and they went on coming for months despite repeated Japanese attempts to destroy the line from the air.
The net result of these attempts was nothing but a terrible loss of innocent non-combatant civilian life. Only a few months ago there occured, between the Indo-Chinese frontier and Kun- ming, a railway disaster as appalling as anything of the kind in history, and at any other time than the present it would prob- ably have been publicised all over the world. The Japanese airmen scored a direct hit at one end of a short tunnel, thus blocking it with a mass of rock. By an unfortunate chance this happened only a few minutes before the arrival of the daily through express, which was composed of half a dozen cars in three classes, the first carry- ing 3 number of Europeans. The train entered the free end of the tunnel in complete ignorance of the blocking of the other- It crashed into the mass of rock, the wreckage took fire, and not a single person escaped from the horror of this inferno in the heart of a mountain. However, engineers with an un- limited supply of coolie labour got to work without delay, and in a month another tunnel was ready. The tons of essential supplies for the Chinese in the interior, brought by ship to Haiphong, on the Indo-China coast, and piled up there, began once more to make their way inland. Since then the Japanese have been at the railway often, but have gained no more im- portant successes in trying to blast it out of existence. Now, of course, unfortunately this route is closed altogether owing to the capitulation of the Vichy-directed government of Indo- China to Japan.
With aid from many sources a new, industrialised and hitherto unheard-of China is growing up in the south-west, where the terrain makes mechanised warfare practically impos- sible and where there is also relative security from air attack. Some of the industries are quite new, others have been brought from parts of China now under nominal Japanese control or in danger of being. Among the former are the first important heavy metal industries in Chinese history, crude, of course, in their inception, but improving all the time under competent foreign direction. Ore for them is available in quantity appar- ently inexhaustible in several parts of mountainous Yunnan Province.
Most important of all, however, is the remarkable progress being made in the expansion and improvement of interior transport facilities. The Burmah-Yunnan highway is, of course, vital, and if, in addition to the reopening of the road, progress is made with the construction of the projected railway parallel with it, the economic outlet for China will be still further improved. The foreign engineers promise the com- pletion of the railway, the survey for which has already been finished, in eighteen months. This is probably an over-opti- mistic estimate. The Japanese air-force may, of course, inter- fere with the work considerably. They can do less harm to the road, for there is always abundant labour for immediate repairs. Material for China's economic expansion in the " free " districts also continues to come in over the long road from a point on the Trans-Siberian railway south of Lake Baikal to southern Shensi. This road is capable of bearing five-ton trucks, but progrsess is slow and subject to Japanese air-attacks over the last part of the way.
It is a striking fact that, besides unifying China politically and socially in a measure never achieved before and perhaps impossible of achievement under any other conditions, Japan's assault has stimulated large industry to an unprecedented and quite unforeseen degree. For it is well understood now that the way to win the war does not lie along military lines but by strengthening to an impregnable point the country's internal economy, while at the same time preventing the enemy from exploiting the resources of the districts he nominally controls. If those two objectives can be achieved, time, China's best ally, will do the rest, in the steady weakening of Japan's own internal economy.
No progress worth mentioning has been made by the invader in utilising the resources of the occupied regions of China. As a matter of fact, these are held anyway only by the presence of large garrisons in the important towns. Elsewhere the Chinese peasantry, most tenacious in the world in its cleavage to the ancient tradition of soil-tilling, has simply returned to the-good earth and resumed its normal activities.
Its surprising security from interference is due in part to the guerilla operations that more and more harass the Japanese outposts and disturb their lines of communication, and in part to the fact that, as Japan's internal economy continues to weaken under the increasing strain, it becomes more and more difficult to send food-supplies in sufficient amounts to the large armies in China. Their position is getting to be more and more one of necessarily living off the country. A large part of their sustenance must be bought, stolen, or in some way procured from the local farmer. But if he is left enough to subsist on himself -he will go on working the soil, because that is second nature to him.
The steady advance being made by China in developing and strengthening her internal resources is far more important than even a large-scale military victory would be. At the stage of the war now reached neither such a victory nor an equally impressive one by the Japanese could have any particular bear- ing upon the final outcome of the conflict. On the other hand, it becomes a question of one or the other of the contestants exhausting himself economically, assuming, that is to say, that there is no outside interference. And China, so far from weakening economically, is growing stronger all the time. Even though developments on the other side of the world should seriously interfere with her imports of materials still essential for carrying on the war, it is only a question of time—perhaps two years at the outside—when she will become entirely self- sufficient not only for the relatively meagre requirements of her people, but also for the necessary equipment to continue the style of war-making which is, in the circumstances, most effective. It is possible that before the end of that period Japan—quite apart from the effect of other entanglements in which she may be involved—will have succumbed to the long strain, or at least become so weakened as to make necessary a withdrawal from China with as much remaining " face " as may be. Even if that does not happen, in the economic war now under way the odds are all in favour of China.
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