Written and Published by Han Institute, February 12, 2013

Comparative Study on Post-WWII Republic of China and German Economies

They both used a mix of state planning and capitalist market economy.

With the gold from mainland, Taiwan stabilized rocking inflation with the issuance of new Taiwan currency.

The Minister of Economics was Yin Zhongrong. He had extensive working experience in mainland China since the Beiyang government era. He established a link with General Electric and helped to build infrastructure in Taiwan, such as the MacArthur Thruway, the first controlled-access highway in Taiwan.

The Minister of Education brought gold from the mainland Central bank via airplane, as some was intended to build military housing in Zhejiang Province. Most gold was shipped to Taiwan's mountain areas by sea.

Military funds were appropriated to help stabilize Taiwan currency. We must give recognition to this historical truth.

The Republic of China Government's role was to issue currency and stabilize the economy.

President Yen worked earlier in the finance department and it was due to him that Taiwan currency was instrumented, and this avoided the inflation.

Taiwan was praised by Time Magazine as an economic miracle, and the head of Asia's four little dragons.

Before moving to Taiwan, Chiang Kaishek had his in-laws and confidants as ministers of finance and economics and inflation was out of control. The people in Taiwan who ran the economy were economist Yin Zhongrong and Dr. Zhu Jiahua. They were high integrity professionals as they were all believers of Three Principles which ultimately is a fair egalitarian system with land rights to all.

Later on they had 10 infrastructure projects which were organized by ROC fifth term President Yen Jia-gan, overseen by President Chiang Jing-guo.

Land Policy: Created a Great Social Injustice

However, Chiang Kaishek committed big mistakes by violating the Three Principles egalitarian rule, and only applied land rights to the Taiwan-specific group, namely the people who had residence there before the 1945 Japanese surrender.

Vice President Cheng Cheng instituted a land policy which only gave land to one group of people, namely, the local Taiwan natives who already had households in Taiwan prior to 1945 when Japan surrendered unconditionally.

The land tax system was first instituted in China Zhejiang Province in 1927 with land survey and 25% tax. Cheng Cheng had a failed land tax system in China Hubei Province with a 35% tax rate. America backed out its support when ROC already cancelled taxation, so this left national reserves depleted. Once Nationalists came to Taiwan, Cheng Cheng instituted a 37.5% tax on land policy, and by law only if you till, you were given the land. This system got corrupted, so Taiwanese got the land and enriched themselves as a land rich capitalist class. This created social injustice and left other classes of people at a disadvantageous unlevel playing field.

Chiang's land policy also shortchanged the teaching class and government public servants, perhaps unintentionally. Because nationalists thought they would return to China six months later, they only let them lease the land, so they were only tenants, instead, they should have worked out a system so that they owned the public temporary housing.

The idea is that when you give Taiwanese sharecroppers the public land, which was fought hard and won back by the 3 classes of people, military, public employees, and teacher, you shortchanged the three classes to make them only tenants, this created great social injustice.

Cheng Cheng, a military ally of Chiang Kaishek, imposed a land policy which created social inequality. Public housing should not have been 'renter' based, but rather ownership and partnership with the government.

All in all, nationalists helped Taiwan locals create great wealth, but only endangered their own group of people from survival, as they have no land, no capital, and no advantage to advance.

Nationalists fought against the fascist Japan in mainland and won back sovereignty of China mainland, including Manchuria, and Taiwan Island. But they were only to be removed from China by the Soviet assisted communist Chinese in the civil war battles. America assisted the Chinese military to retreat to Taiwan in 1949.

Taiwan suppressed 3 classes of people: military, public employees, and teachers and helped farmers and local natives. These three classes of people worked as a caste or coolies with below minimum pay. Although they were the ones that went through WWII on their backbones, the country sustained against the brutal Japan ultra barbarian militaristic invasion.

Communist China has occupied mainland China for 63 years illegally against Nationalist sovereignty rights, which Japan surrendered unconditionally to ROC in 1945.

These are historical facts, it is an unresolved issue, the Nationalists have sovereignty rights to be in China mainland, and rights to stay in Taiwan without feeling alienated.

How to reconfigure China and Taiwan so that it aligns with justice requires constant research and must ride on the new power of digital media and social media to connect dots with people's broken memories and partial understandings.

Germany's Post-war Economy

Economic minister Ludwig Erhard was an advocate of a mixed economy, in which both the state and private sector direct the economy. He abolished the price-fixing and production controls that had been enacted by the military administration.

"Social market economy is the economic policy of modern Germany that steers a middle path between the goals of social democracy and capitalism within the framework of a private market economy, and aims at maintaining a balance between a high rate of economic growth, low inflation, low levels of unemployment, good working conditions, public welfare and public services by using state intervention. Under its influence Germany has emerged from desolation and defeat to become an industrial giant within the European Union."

"By 1900 Germany had the largest economy in Europe, a factor that played a major role in its entry into World War I and World War II. Devastated by World War II, West Germany became an "economic miracle" in the 1950s and 1960s with the help of the Marshall Plan. Currently it is the largest individual economy in the EU with GDP of roughly 3 trillion USD." Wikipedia

"Erhard's decision, as Economic Director for the British and American occupation zones, to lift many price controls in 1948, despite opposition from both the social democratic opposition and Allied authorities, and his consistent advocacy of free markets, did help set the Federal Republic on its phenomenal growth path. Erhard's financial and economic policies soon proved widely popular as the German economy made a "miracle" recovery to rapid growth and widespread prosperity in the 1950s, overcoming wartime destruction and successfully integrating millions of refugees from the east."

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