A Spectacular Century: The Republic of China Centennial Democracy Forums

The Republic of China in Historical Perspective

Editor's Note:  In a speech presented at "A Spectacular Century: The Republic of China Centennial Democracy Forums" in Taipei, Taiwan, Richard Bush gives historical perspective on the Republic of China (ROC) in the twentieth century in terms of the concept of state-building, and describes how the ROC was the crucible for creating a modern Chinese state.

The subject of the ROC in historical perspective is quite broad, particularly when one includes the period on the mainland before 1949. It has been a long time since I have done any work concerning the pre-1949 period. And it is a subject on which there is a lot of misunderstanding. There is a tendency to look at this history in terms of a conflict between good and evil. We tell stories of struggles between heroes wearing white hats and villains wearing black hats, if you will, when in fact the actors of twentieth century China all wore hats in some shade of gray. They operated within complex historical contexts and always had to choose among a variety of really bad options.

There is less attention to underlying developmental trends, and it is on that subject that I wish to offer some speculative ideas. Specifically, I wish to look at the ROC in the twentieth century in terms of the concept of state-building, and how the ROC was the crucible for creating a modern Chinese state. In the end, there emerged a modern state here on Taiwan, while another and very different sort of state formed under the rubric of the PRC. I do not pretend to provide a comprehensive examination, either conceptually or historically. What I can offer are some ideas as a basis for discussion.

Conceptual Points of Departure

State Emergence. Francis Fukuyama provides this definition of my concept: “State-building is the creation of new government institutions and the strengthening of existing ones.” But states are not usually built according to the blueprint laid down by a benevolent law-giver. Charles Tilley’s synthesis on state emergence in Europe, which we can borrow to think about twentieth century China, illuminates a darker reality. Here are a few of the key points in his synthesis:

• Men who controlled concentrated means of coercion used them to extend the range of population and resources over which they wielded power – fighting wars as necessary.

• Some conquerors became rulers: they were able to exert stable control over populations in substantial territories and to gain routine access to part of the goods and services produced in the territory.

• War and preparation for war involved rulers in extracting the means of war from others who held essential resources: men, arms, supplies, or money.

• Within the limits set by the challenges of other states, extraction and struggle over the means of war created the central organizational structures of states.

• The organization of major social classes within a state’s territory, and their relations to the state, significantly affected the strategies rulers employed to extract resources, the resistance they met, the struggle that resulted, the sorts of durable organization that extraction and struggle laid down, and so on.

• There were two different models of state development, depending on whether development occurred in “coercive-intensive regions” (usually lightly urbanized) or “capital-intensive regions” (where cities and market economies predominated).

• The organizational forms of states were a function of whether rulers were trying to extract resources from coercion-intensive or capital-intensive regions.

In addition to his coercion-intensive and capital-intensive routes to state formation, Tilley also has a mixed case, “capitalized coercion,” in which holders of capital and coercion were both incorporated into the state and acted on a basis of relative equality. France and England are the key examples here.

Tilley focused on Europe. Fukuyama generalizes Tilley’s basic point, that war and violence are often both the motivation and result of state-building. China’s long history reflects this fundamental insight: each dynasty was in some way the product of violent conflict. China in the first half of the twentieth is a clear and more recent example.

State Function. Once established, states, particularly modern states, may build institutions to perform a variety of tasks (but they don’t necessarily do so). These tasks include:

• External security;

• Internal security and order;

• Government finance;

• Providing public goods like the rule of law, property rights, education of the young, recruitment of public officials, and so on;

• Regulating economic and social life;

• Transforming the economic system;

• Transforming social life;

• Offering ideological legitimation of the nation and the state;
• Ensuring accountability concerning the actions of the state; and

• Facilitating political participation.

Fukuyama has a more parsimonious approach, but it amounts to the same.

Now, each state will perform some of these functions and not others. It may do some well and others badly. Fukuyama’s and Tilley’s idea that states usually emerge from violence and face violent challenge suggests that there is a sequence in the performance of state tasks: achieving internal and external security first and then moving on to things like economic development, rule of law, accountability, and so on.

Finally, Fukuyama usefully distinguishes between the scope of the state and its strength. The former refers to the tasks that the state undertakes. The latter pinpoints its capacity to implement and enforce the tasks that it assumes. A state’s functions can range from minimal, through intermediary, to “activist.” Capacity has a continuum between weak and strong. Combining these two variables creates a variety of possible outcomes: high scope and strong capacity (the Soviet Union); limited scope and high capacity (United States); modest scope and high capacity (Turkey or Brazil); and small scope and low capacity (a weak or failing state). Also, states can change in terms of their scope and capacity. They develop when they increase both capacity and scope, and decay when each declines. They become more liberal when capacity grows relative to scope, while a revolutionary state has high levels of both.

Twentieth-Century China: 1911-1937

With this conceptual background, considering twentieth century China from the perspective of state-building can be quite illuminating.

It is worth noting that at its best the Chinese imperial state was quite impressive, at least when it came to ruling a traditional agrarian economy based on extensive growth with a fairly stable population. Once each new dynasty was established – always through warfare – the imperial state provided social order and basic rule of law, collected taxes to fund the state, defended China against outside forces, and offered a well-developed theory of its moral legitimacy. It did this through a civil service chosen on the basis of merit and imbued with an ideology of public service to create a good society. Yet even at its best and for all its impressive capacity, the imperial state had a fairly limited scope.

It was also a state that was prone to political decay. The population would naturally grow while the state apparatus remained constant; the controls on official corruption weakened; national defense was neglected; and internal rebellions overturned social order. This was particularly true during the Qing Dynasty, when the population swelled beyond the previous highs of 300 million people; external threats were new and unprecedented; government resources were not commensurate with the state’s tasks, and so on. Despite efforts at reform, the Imperial system quickly toppled once rebellion began in Wuhan in October 1911.

Thereafter, Dr. Sun Yat-sen and other political leaders sought to construct a new state based on modern, republican principles. Of course, Yuan Shikai rejected that new political order but failed to adapt imperial institutions to a post-imperial society. There then emerged a fight amongst various actors, and each sought to establish hegemony over China’s territory by means of coercion. These contenders may have spoken in terms of nationalism, democracy, and morality, but as Tilley and Fukuyama would predict, they sooner or later (usually sooner) used military resources to try to win political power. To that end, each sought material resources that could be transformed into coercive power. In this regard, before 1928, Beijing was a special prize because it was the seat of the Republic of China, yielding some marginal legitimacy and providing access to the proceeds from customs.

We call this the warlord period, but I would argue that the terms “warlordism” or “militarism” should be applied to the entire three-plus decades from 1916 to 1949 because political competition was primarily among actors who relied on coercive power. In making this statement, I do not mean to belittle the ideological sincerity of any particular actors, including the Nationalist Party. I recognize that at least in the early years of the Nanjing decade, there was a revolutionary dimension to Kuomintang (KMT) rule—an impulse to transform society even as fighting continued, as opposed to accommodating to society. Nor do I intend to denigrate any party’s state-building efforts, particularly the Kuomintang’s. I simply stress that those factors were secondary to the primary reality of war. And it follows from that emphasis that Chiang Kai-shek, Mao Zedong, and the commanders of the Japanese army that occupied the Northeast and East China were as much militarists as Wu Peifu or Sun Quanfang.

Once the Nationalist army secured a base in the Lower Yangzi in 1928 and moved the seat of government from Beijing to Nanjing, there ensued a serious effort at state-building. The KMT regime married Dr. Sun Yat-sen’s five-yuan design for the government structure, his three-stage plan for political development (military, political tutelage, democracy), and a Leninist model of party penetration of the government. In effect, the KMT regime tried to do state-building as it continued the fight against the remaining militarist forces. And this was “building” in a very literal sense: a capital was created in Nanjing where one did not exist before.

For the next three years, Chiang had the initiative and he sought, as Tilley would predict, to expand the area under his control. And there was a certain rhythm to warfare and state-building. At the beginning of each temporal cycle, conflict would break out between Chiang Kai-shek’s forces and this or that warlord. Once his army defeated the adversary of the moment, and before the next conflict began, there would occur a burst of political and economic reform of the KMT system, usually but not exclusively to increase the sources of revenue. The restoration of tariff autonomy and the enactment of commodity taxes were cases in point. Since the Red Army was essentially a warlord formation, the bandit extermination campaigns were part of this pattern. And incrementally, Chiang was quite successful. He managed to stay on the offensive—until September 1931.

Although Tilley’s coercive-intensive route to state-building has the best “fit” to China before 1949, I would not rule out completely the idea of a mixed path (Tilley’s “capitalized coercion”), at least after 1928. Certainly, the relationship between militarists and urban economic elites before 1928 was one where the former extracted “protection costs” from the latter. But there was an attempt during the Nanjing decade to put taxation and the financing of government debt on a more legal and institutionalized basis, with cities increasingly becoming the site of taxation. There were a host of proposals for economic development that would have tied the state more closely to the economy. And even though the primary tasks of the regime were warfare and mobilizing funds to pay the army (defense and debt service were the largest components of the central budget), the KMT regime did seek to expand the scope of government functions to include some social reform.

September 1931 began a new trend. The Guandong Army’s seizure of China’s Northeast, the short conflict in early 1932 in the Shanghai area, the creation of a puppet state in Dongbei, and the later Japanese penetration of North China threw Chiang and the KMT on the defensive. It was a new competitor in China’s militarist contest (domestic militarists and the communists continued to make mischief). Japan’s penetration of China deprived the Nationalists of both material resources and the legitimating mantle of nationalism, to which the KMT had hitherto had a stronger claim than any of its domestic rivals. It also exacerbated the nightmare of any military commander of having to fight on more than one front. Chiang did explore new approaches to governing while fighting. The New Life Movement was an innovation with respect to scope. His flirtation with fascism sought to expand capacity. But generally, state-building suffered through the rest of the Nanjing Decade.

How should we evaluate the state of state-building at that point? Looking just at Western scholars, the late Lloyd Eastman concluded in 1974 that the KMT regime had failed “to create a stable and effective system of rule.” The reasons were weak institutions that had no good way to “impose direction and accountability” on their personnel, and the negative elements of Chinese political culture, which was inappropriate for a nation that had embarked on modernization. Jay Taylor provided a more positive assessment in 2009: “Despite continuing civil wars, the depression, depredations by Japan, and preparation for a general war, the power and authority of the Chinese central government was [sic] greater than at any time since the Taiping Uprising. Government finances and the unification of the currency were particularly noteworthy.” The differences here are relative. Taylor is correct that the KMT had made progress in state-building; Eastman is also correct that it had a long way to go before it fostered “a stable and effective system of rule.” The reason for the limited progress, I would suggest, is that Chiang was trying to build a state as he engaged in warfare.

Twentieth-Century China: 1937-1949

During the mid-1930s, I believe, Chiang Kai-shek was preparing gradually to resist Japan. The Sian Incident only accelerated a process that was already quietly underway. To this day, it is unclear whether the full-scale war that evolved from the Marco Polo Bridge Incident could have been avoided. Japan’s main strategic concern at that time was the Soviet Union, so it was possible. But the bias by 1937 was certainly towards conflict, and Chiang’s decision to try to drive the Japanese out of the Lower Yangzi region certainly reflected an over-estimation of his own strength. That he lost the KMT’s political-financial base and its capital was the most significant setback in Chiang’s effort to establish military hegemony and build a state. Thereafter, the challenge to mobilize human and budget resources became even more daunting, and the ROC had to rely on “the kindness of strangers” (the Soviet Union and the United States). Nationalist forces were severely handicapped, even as they often fought with great heroism. Underpaid civil servants resorted to corruption to survive. Political decay infected the Nationalist state, and both scope and capacity declined.

Unknowingly, the United States contributed to this decay. In 1934, the Roosevelt Administration, as a favor to struggling silver producers in western states, enacted the silver purchase act to support prices above a specified floor. Because the Chinese currency was based on silver, this quickly caused both inflation and an economic crisis in China. The KMT government quickly moved to a managed currency, which created the opportunity to cover fiscal deficits through the printing press and avoid the discipline of the bond market. The temptation to do so became overwhelming once the war began, and the cancer of inflation began to spread. Thus, Washington contributed to the ROC’s political decay.

There was a noteworthy contrast in the approach to warfare and state building between Chiang Kai-shek and the KMT on the one hand and Mao and the Chinese Communist Party (CCP). From 1928 to 1937, the focus of Chiang’s war-fighting was the transportation grid formed by major rivers and railways (Tianjin-Nanjing, Beiping-Guangzhou, and Lunghai). And he sought to build his state from the center out, relying on taxes and loans collected in urban centers. Making a virtue out of necessity, Mao Zedong adopted the opposite strategy once the Communists had been driven out of the cities in the late 1920s. That is, the CCP and the Red Army chose to fill up as much as they could of the spaces in between major transportation arteries. In those territories, the CCP built its own state – or proto-state – with which it mobilized resources: mainly manpower but also property, sometimes through land reform. The Japanese invasion facilitated Mao’s strategy as much as it undermined Chiang’s. After the end of the war, Chiang tried again to dominate the river-railway grid, but by then the CCP was in a much stronger position. Having accumulated power off the grid, it was able to seize it from the KMT, which was weakened by the decay it suffered during the war and by Chiang’s disastrous decision to seize the Northeast. Once victorious, the CCP accelerated the process of state building on the Mainland.

After Chiang Kai-shek got to Taiwan, he reviewed the reasons the KMT lost to the Communists. He did not ignore his own personal failings (including poor personnel choices). But many of the factors he cited had to do with the decay of the Nationalist state: the collapse of party, military, and government structures; factionalism within the Party and a lack of loyalty to the Leader; ineffective internal security and commissar organizations; the mistakes of other leaders; and a premature decision to make the transition from the period of military rule to the tutelage period. Lloyd Eastman offers a similar perspective, pinpointing a number of indicators of regime weakness: limited political sway, a corrupt and ineffective administration, factional in-fighting, and the “pervasive incompetence and demoralization of its army.” The KMT’s collapse, he concludes, stemmed from “the inherent structural infirmities of a military authoritarian regime lacking and base in society and in the enervating effects of the war with Japan.”

The ROC on Taiwan

Once the Nationalist regime retreated to Taiwan for good, it gained several advantages. The Taiwan Strait served as a protective moat. The territory and population it had to rule were modest in comparison with the Mainland, so establishing coercive hegemony domestically was not the problem (unsolved) it was on the Mainland. The beginning of the Korean War facilitated anew the kindness of strangers.

Yet the state of the KMT state was mixed. Decay was on display in how Nationalist forces took over the island, with 2-28 as only the most obvious example. As Chiang’s diagnosis of the Mainland defeat suggested, restoring even some measure of basic state capacity was necessary. He authorized Chiang Ching-kuo to remedy many of the organizational problems in state institutions, including corruption and communist penetration. The regrettable side effects were the human rights abuses of the White Terror. Generally, martial law and the temporary provisions removed any threat of a fifth-column force, but they also negated any hope for the rule of law or public accountability, to say nothing of political participation by the Taiwanese majority.

The new KMT did make some early efforts at social transformation. The most obvious examples were land reform, local elections, and the mandate to the education system to use guoyu as the language of instruction and re-instill a Chinese identity. Of course, all of these were intended to strengthen KMT control. Yet the priority of the Nationalist state and its reconstruction remained ensuring security, both internal and external, and continuing the fight with the CCP (guangfu dalu). Economic policy, with its emphasis on import substitution, was designed to serve the military struggle. Much of the government budget still went to the armed forces.

The late 1950s saw the beginning of significant political development. The ROC shifted its economic strategy from import substitution to export-led growth. There emerged within the regime an economic technocracy to staff and direct the developmental state. The Taiwanese landed elite that were the victims of land reform remade themselves as industrialists. Students who were forced to learn to speak guoyu and be Chinese again became the human resources of the economic growth project. Property rights and a rule of law unrelated to politics were strengthened. Strengthening the Examination Yuan fostered the emergence of a more talented and professional civil service. Chiang Ching-kuo, who began the decade determined to rebuild the KMT as a tool for Mainland recovery, ultimately realized that it could also be a mechanism for coopting successful and loyal Taiwanese into the ROC system, thereby broadening the base of still-authoritarian rule.

The success of this transformation was hardly foreordained. Indeed, if the United States had not used the leverage of its substantial economic assistance to demand more reformist policies, what came to be known as the Taiwan economic miracle might never have happened. American intervention was important in ensuring that compensation from land reform gave the Taiwanese elite the resources necessary to move into industry. The United States was critical in forcing the shift to export-led growth and the proliferating linkages between Taiwan companies and multinational corporations. American leverage also empowered the civilian officials who staffed Taiwan’s technocracy, such as K. Y. Yin and K. T. Li.

It is an interesting coincidence, by the way, that U.S. pressure for export-led growth came at the same time that John Foster Dulles took the initiative, in the wake of the 1958 off-shore islands crisis, to get Chiang Kai-shek to reduce the emphasis on military means in the struggle with Beijing and put more stress on political means. The implication: the best way for the KMT to compete with the CCP was by improving life on Taiwan.

To be sure, tensions surfaced among the different elements of the regime, in part because they had different tasks. The national-security establishment of the state and the economic technocracy did not always see eye to eye: export-led growth required greater flexibility in the circulation of people and money. That institutions for political participation and checking the arbitrary exercise of state power were either weak or non-existent clashed with the KMT ideology of development towards democracy. The regime did face challenges to its hard authoritarian rule—Lei Chen and the Diaoyutai movement of 1971 being prominent examples—and its agencies responsible for legitimation had to go through contortions to justify the contradiction between myth and reality.

Still, the scope of the ROC state was growing, and its capacity to pursue those new tasks was growing as well. A stronger Examination Yuan fostered a more professional civil service. Economic growth fostered political stability. Gradually, the ambition of the national-security establishment shrank from Mainland recovery to the defense of Taiwan (even though no-one was allowed to say so). And through Chiang Ching-kuo’s strategy of coopting Taiwanese into the political system rather than excluding them, hard authoritarianism evolved over time into soft authoritarianism. Elections were now used not only to penetrate local society but also to monitor regime performance and facilitate cooptation. The extension of elections to higher levels of the system encouraged habits of political competition, the emergence of a proto-opposition party, and the demand for further democracy. None of these changes occurred fast enough for those who sought them and all of them occurred too fast for those who preferred the status quo. There were, to be sure, missed opportunities. But an evolution was under way.

A new and qualitative phase of political development began in the 1980s. Taiwan’s manufacturing corporations faced cost-pressures at home and had to relocate production and assembly if they wished to remain actors in global supply chains. The PRC—the ROC’s rival for almost four decades—was the most attractive site for such relocation, in part because the economic policy environment was changing. But that required Taiwan’s leaders and the regime’s agencies for both security and economic development to accommodate to a radical shift in Mainland policy. And they did.

A second radical change occurred with respect to politics. Encouraged by reformers within the regime and pressured from without by the dangwai, Chiang Ching-kuo began the shift from soft authoritarianism to democracy and expanded participation – through elections, formation of parties, social movements, freedom of expression, and so on. Martial law and the temporary provisions, plus the agencies that enforced them, were ended or weakened. In effect, the state was reducing its scope (becoming more liberal) while strengthening is institutional capacity to channel more popular demands. The decision to democratize was partly the result of a counterintuitive judgment that the KMT could more efficiently maintain its power by reducing repression.

Again, none of this was quick and easy. Decisions were contested at every step of the way, and reformers had to create political coalitions to propel change. Thus Lee Teng-hui completed the process of democratization by forming a centrist coalition composed of moderates within the KMT and Democratic Progressive Party (DPP) that outweighed “radicals” in each party. And the impact of the United States was not trivial. Washington’s insistence that Taipei appreciate the value of the New Taiwan Dollar accelerated the migration of production and assembly offshore. Pressure from Congress on human rights led Chiang and others on Taiwan to see that political values could become a new basis for American support, and the harsh U.S. response to the assassination of Henry Liu in California gave Chiang the excuse he needed to restrain the security services and begin democratization.

Meanwhile, the course that the CCP took in building the PRC state had similarities and differences with its KMT counterpart. First of all, as with the Nationalist regime, national security was the main priority during its first three decades. The focus was not on gaining full control of Mainland China, as it had been for the KMT, but on defending it from invasion by the United States or the Soviet Union. Second, the PRC did not begin the shift from relative autarky to export led growth and the creation of an economic technocracy until 1979, twenty years after Taiwan made the same transition. Third, the scope of the PRC state was much greater than that of the KMT—Mao sought a social and ideological revolution that vastly exceeded anything that Chiang Kai-shek ever attempted—and the capacity of the CCP system was arguably better. But Mao also induced the decay of his own regime once he concluded it was embarked upon revisionism. The Cultural Revolution undermined national security and economic growth. Fourth, unlike the ROC on Taiwan, Deng Xiaoping and his successors have fostered the growth of the military at a pace consistent with economic growth. And although they have reduced the degree to which the state interferes in people’s lives, the CCP has not seen fit to foster public accountability and popular participation.

Concluding Questions

Fukuyama makes this normative judgment: “The task of modern politics has been to tame the power of the state, to direct its activities toward ends regarded as legitimate by the people it serves, and to regulate the exercise of power under the rule of law.” Based on that standard, we may conclude that Taiwan has achieved that task. In general, the scope of the ROC state is appropriate for modern governance. But we may also ask about its capacity. Is the economic technocracy that facilitated Taiwan’s twentieth-century industrialization properly engineered to guide an innovation-based quest for competitiveness in the twenty-first century? Does Taiwan have a proper evaluation of the coercive threat posed by a PLA that is seriously expanding its war-fighting capabilities (or is it perhaps assuming too much about the kindness of strangers)? Does Taiwan’s defense establishment, which properly shifted its mission from offense to defense decades ago, need to find ways to strengthen deterrence? And do the institutions that usually facilitate public participation actually ensure sound, broadly supported public-policy decisions? Taiwan faces tough choices: how to achieve simultaneously the goals of prosperity, social welfare, and security; and, toughest of all, how to cope with a China that seeks to complete its mission of unification. Does the political system, which is very good at stimulating intense electoral competition, distributing benefits, and pointing fingers, have the capability to address these issues in ways that that are effective and truly reflect the wishes and interests of Taiwan’s people?