No Great Wall

This book, an in-depth study of Nationalist tariff policy, fundamentally challenges the widely accepted idea that the key to the Communist seizure of power in China lay in the incompetence of Chiang Kai-sheks Nationalist government. It argues instead that during the second Sino-Japanese War, Chinas international trade, the Nationalist governments tariff revenues, and hence its fiscal policy and state-making project all collapsed. Because tariffs on Chinas international trade produced the single greatest share of central government revenue during the Nanjing decade, the political existence of the Nationalist government depended on tariff revenue. Therefore, Chinese economic nationalism, both at the official and popular levels, had to be managed carefully so as not to jeopardize the Nationalist governments income. Until the outbreak of war in 1937, the Nationalists management of international trade and Chinas government finances was largely successful in terms of producing increasing and sustainable revenues. Within the first year of war, however, the Nationalists lost territories producing 80 percent of tariff revenue. Hence, government revenue declined just as war-related expenditure increased, and the Nationalist government had to resort to more rapacious forms of revenue extractiona decision that had disastrous consequences for both its finances and its political viability.