China

Wartime changes

Although its wartime participation was limited, China made some gains from its entry into the war, taking over the German and Austrian concessions and canceling the unpaid portions of the Boxer indemnities due its enemies. It was also assured a seat at the peace conference. Japan, however, extended its gains in China. The Beijing government, dominated by Duan after Feng’s retirement, granted concessions to Japan for railway building in Shandong, Manchuria, and Mongolia. These were in exchange for the Nishihara loans, amounting to nearly $90 million, which went mainly to strengthen the Anhui clique with arms and cash. Japan also made secret agreements with its allies to support its claims to the former German rights in Shandong and also induced the Beijing government to consent to these. In November 1917 the United States, to adjust difficulties with Japan, entered into the Lansing-Ishii Agreement, which recognized that because of “territorial propinquity…Japan has special interests in China.” This treaty seemed to underwrite Japan’s wartime gains.

Important economic and social changes occurred during the first years of the republic. With the outbreak of the war, foreign economic competition with native industry abated, and native-owned light industries developed markedly. By 1918 the industrial labour force numbered some 1,750,000. Modern-style Chinese banks increased in number and expanded their capital.