Tensions, Trade, and Transformation: Essays on Chinese Economic History During the Warlord Era

Citation

Feng, Kexin (2025) Tensions, Trade, and Transformation: Essays on Chinese Economic History During the Warlord Era. Dissertation (Ph.D.), California Institute of Technology. doi:10.7907/y2c1-yq10. https://resolver.caltech.edu/CaltechTHESIS:05242025-222714803

Abstract

This thesis comprises three chapters on politics, trade, and industrialization during the Warlord Era (1912–1928) in China. The Warlord Era marked the beginning of China’s modern history—a pivotal transitional period that remains largely understudied. This thesis offers an in-depth examination of this era by addressing a central puzzle: why did large-scale industrialization take place during this period of persistent political instability? The unique historical context and the rich historical data of this period yield a deeper understanding of the economic transformation not just in China but in other late-developing countries as well.

The first chapter examines the effects of military factions on domestic trade costs. Using newly collected inland transit data from the Chinese Maritime Customs, it shows that bilateral trade costs between a province and a port increased significantly when they were controlled by different military factions. Leveraging the 1917 Russian Revolution as an exogenous supply shock, the chapter further demonstrates that demand for foreign goods was elastic across all regions in China, with poorer regions exhibiting even more elastic demand than wealthier ones. Taken together, these findings show that political instability significantly influenced regional access to foreign goods by shifting domestic trade costs. Given that foreign trade was crucial for China’s early industrialization, these results have important implications for understanding regional industrial development.

Building on the first chapter, the second chapter examines the impact of foreign trade access on regional industrial development. It develops a simple model, wherein access to foreign trade influenced private firms' entry decisions through its effect on market prices. In particular, access to foreign capital goods relative to foreign consumer goods determined the number of new industrial firms in a region. Better access to foreign consumer goods discouraged industrial firm entry, whereas better access to capital goods encouraged domestic producers to enter the market. This model is then tested by combining the trade costs measured in Chapter 1 with a large dataset of firm entry on the provincial level. These findings highlight the importance of private initiatives in driving industrialization. Private participants, even in a late-developing country like China, actively responded to market incentives. It was their entry that made industrialization possible even during a period of persistent political instability. A liberalized market alone was able to induce some industrialization. At the same time, high domestic trade barriers were not inherently disadvantageous, as they could offer protection to domestic producers from foreign competition in certain regions.

The third chapter further examines coal markets using a dataset of county-level coal prices and output from 1912 to 1919, newly compiled from archival records of the Nongshang Tongji Biao (Survey of Agriculture and Commerce). Adding to the first two chapters, which focus on the movement of foreign goods within China, this chapter turns to a domestically produced good. Consistent with the previous chapters, it finds that political instability introduced trade barriers, that the entry of small private coal mines played a key role in driving market integration, and that limited market integration may have encouraged local mining activities. More important, this chapter revisits Pomeranz’s influential argument that China’s late industrialization was largely “a geographic accident.” While the distribution of coal deposits may reflect geological randomness, the high energy costs faced by China’s commercial centers during the Qing were not purely a misfortune of geography but also a consequence of unfavorable institutions.

Thesis Files