Cooperation between China and Germany was instrumental in modernizing the industry and the armed forces of the Republic of China between 1926 and 1941.
From 1911 to 1941, cooperation was often very close, culminating in an alliance between the Republic of China and Germany. The Republic of China, which followed the Qing Dynasty in 1912. At the time, the Republic of China was fraught with factional warlord-ism and foreign incursions. The Northern Expedition of 1928 nominally unified China under Kuomintang (KMT) control, yet Imperial Japan loomed as the greatest foreign threat. The Chinese urgency for modernizing its military and national defense industry, coupled with Germany’s need for a stable supply of raw materials, put China and the German Weimar Republic on the road of close relations from the late 1920s onwards. This continued for a time following the rise in Germany of the Nazis. However, intense cooperation lasted only until the start of the Second Sino-Japanese War in 1937. The German cooperation nevertheless had a profound effect on Chinese modernization and the capability of the Chinese to resist the Japanese in the war.
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The earliest Sino-German trading occurred overland through Siberia, and was subject to transit taxes by the Russian government. In order to make trading more profitable, Prussia decided to take the sea route and the first German merchant ships arrived in China, then under the Qing dynasty, as part of the Royal Prussian Asian Trading Company of Emden, in the 1750s. In 1861, following China’s defeat in the Second Opium War, the Treaty of Tientsin was signed, which opened formal commercial relations between various European states, including Prussia, with China.
During the late 19th century, trade with China was dominated by the British Empire, and Otto von Bismarck was eager to establish German footholds in China to balance the British dominance. In 1885, Bismarck had the Reichstag pass a steamship subsidy bill which offered direct service to China. In the same year, he sent the first German banking and industrial survey group to evaluate investment possibilities, which led to the establishment of the Deutsch-Asiatische Bank in 1890. Through these efforts Germany was second to Britain in trading and shipping in China by 1896.
During this period, Germany did not actively pursue imperialist ambitions in China, and appeared relatively restrained compared to the United Kingdom and France. Thus, the Chinese government saw Germany as a partner in helping China in its modernisation. In the 1880s, the German shipyard AG Vulcan Stettin built two of the most modern and powerful warships of its day—the pre-dreadnought battleships Zhenyuan and Dingyuan—for the Chinese Beiyang Fleet that would see considerable action during the First Sino-Japanese War. After China’s first modernization efforts apparently failed following its defeat in the First Sino-Japanese War, Yuan Shi-kai requested German help in creating the Self-Strengthening Army and the Newly Created Army . German assistance not only concerned military, but also industrial and technical matters. For example, in the late 1880s, the Chinese government made a contract with the German company Krupp to build a series of fortifications around Port Arthur.
Germany’s relatively benign China policy as shaped by Bismarck changed under post-Bismarckian chancellors during the reign of Wilhelm II. After German naval forces were sent in response to attacks on missionaries in Shandong province, Germany negotiated in March 1898 at the Convention of Peking a ninety-nine year leasehold for Kiautschou Bay and began to develop the region. The period of the Boxer Rebellion of 1900 proved the low point in Sino-German relations and witnessed the assassination of the imperial minister to China, Baron Clemens von Ketteler and other foreign nationals. During and in the aftermath of the campaign to defeat the Boxers, troops from “each and all” participating states engaged in plundering and looting and other excesses, but “the prime movers of the more aggressive faction were the Germans,” who, with only a tiny contingent of troops then in North China wanted to exact retribution for the murder of their diplomat. On 27 July 1900, Wilhelm II spoke during departure ceremonies for the German contribution to the international relief force. He made an impromptu, but intemperate reference to the “Hun invaders” of continental Europe, which would later be resurrected by British propagandists to attack Germany during World War I and World War II.
Germany, however, had a major impact on the development of Chinese law. In the years preceding the fall of the Qing dynasty, Chinese reformers began drafting a Civil Code based largely on the German Civil Code, which had already been adopted in neighboring Japan. Although this draft code was not promulgated before the collapse of the Qing dynasty, it was the basis for the Civil Code of the Republic of China introduced in 1930, which is the current civil law on Taiwan and has influenced current law in mainland China. The General Principles of Civil Law of the People’s Republic of China, drafted in 1985, for example, is modeled after the German Civil Code.
In the decade preceding World War I, Sino-German relations became less engaged. One reason for this was the political isolation of Germany, as evident by the 1902 Anglo-Japanese Alliance and the Triple Entente of 1907. Because of this, Germany proposed a German-Chinese-American entente in 1907, but the proposal never came to fruition. In 1912, Germany granted a six million German Goldmark loan to the new Chinese Republican Government. When World War I broke out in Europe, Germany offered to return Kiautschou Bay to China in an attempt to keep their colony from falling into Allied hands. However, the Japanese preempted that move and entered the war on the side of the Triple Entente, invading Kiautschou during the Siege of Tsingtao. As the war progressed, Germany had no active role or initiative in conducting any purposeful actions in East Asia as it was preoccupied with the war in Europe.
On 14 August 1917, China declared war on Germany and recovered the German concessions in Hankow and Tientsin. As a reward for joining the Allies, China was promised the return of other German spheres of influence following the defeat of Germany. However, at the Paris Peace Conference, Japan’s claims trumped prior promises to China and the Treaty of Versailles assigned the modern and up-to-date city of Tsingtao and the Kiautschou Bay region to Japan. Subsequent recognition of this Allied betrayal sparked the nationalistic May Fourth Movement, which is regarded as a significant event in modern Chinese history. As a result, the Beiyang government refused to sign the Treaty of Versailles.
World War I dealt a severe blow to Sino-German relations. Long established trade connections had been destroyed, financial structures and markets wrecked; of the almost three hundred German firms conducting business in China in 1913, only two remained in 1919.
Sino-German Cooperation in the 1920s
The Treaty of Versailles severely limited Germany’s industrial output. Its army was restricted to 100,000 men and its military production was greatly reduced. However, the treaty did not diminish Germany’s place as a leader in military innovation, and many industrial firms still retained the machinery and technology to produce military hardware. Therefore, to circumvent the treaty’s restrictions, these industrial firms formed partnerships with foreign nations, such as the Soviet Union and Argentina, to legally produce weapons and sell them. As the Chinese government did not sign the Treaty of Versailles, a separate German-Chinese Peace Treaty was concluded in 1921.
After the death of Yuan Shi-kai, the Beiyang government collapsed and the country fell into civil war, with various warlords vying for supremacy. German arms producers began looking to reestablish commercial links with China to tap into its vast market for weapons and military assistance.
The Kuomintang government also sought German assistance, and the German-educated Chu Chia-hua arranged almost all Sino-German contact from 1926 to 1944. There were several reasons other than Germany’s technological expertise that made it the top candidate in Chinese foreign relations. First, Germany had no more imperialistic interest in China after World War I. Second, unlike the Soviet Union, which helped with Kuomintang reorganization and opened party membership to communists, Germany had no political interest in China that could lead to confrontations with the central government. Moreover, Chiang Kai-shek saw German unification as something that China could learn and emulate. Thus, Germany was seen as a primary force in the international development of China.
In 1926, Chu Chia-hua invited Max Bauer to survey investment possibilities in China and the next year Bauer arrived in Guangzhou and was offered a post as Chiang Kai-shek’s advisor. Soon, he managed to recruit 46 other German officers to advise and train nationalist forces, while he devised the strategy that allowed the Nationalists to win its 1929 campaigns against the warlords. In 1928, Bauer returned to Germany recruit a permanent advisory mission for China industrialization efforts. However, Bauer was not entirely successful as many firms hesitated because of China’s political instability, and because Bauer was persona non grata for his participation in the 1920 Kapp Putsch. In addition, Germany was still constrained by the Treaty of Versailles, which made direct military investment impossible. Max Bauer contracted smallpox after his return to China, died and was buried in Shanghai. Bauer’s provided the foundation for later Sino-German cooperation. He argued for the reduction of the Chinese army to produce a small but elite force, and supported opening up the Chinese market to spur German production and exports.
Sino-German cooperation in the 1930s
Sino-German trade slowed between 1930 and 1932 due to the Great Depression; Chinese progress towards industrialization was further hampered by conflicting interests between various Chinese reconstruction agencies, German industries, German import-export houses, and the German Army. Events did not pick up speed until the 1931 Mukden Incident. This incident created the need for a concrete military and industrial policy aimed at resisting Japanese encroachment. In essence, it spurred the creation of a centrally planned, national defense economy. This both consolidated Chiang’s rule over China and hastened industrialization efforts.
The 1933 seizure of power by the Nazi Party further accelerated Sino-German cooperation. Before the Nazi rise to power, German policy in China had been contradictory, as the Foreign Ministry under the Weimar government urged neutrality and discouraged the Reichswehr from becoming directly involved with the Chinese government. The same feeling was shared by the German import-export houses, for fear that direct government ties would exclude them from profiting as the middleman. On the other hand, the new Nazi government’s policy of Wehrwirtschaft (Defence economy) called for the complete mobilisation of society and stockpiling of military raw materials, which China could supply in bulk.
In May 1933, Hans von Seeckt arrived in Shanghai and was offered to oversee economic and military development involving Germany in China. He submitted the Denkschrift für Marschall Chiang Kai-shek memorandum, outlining his programme of industrialising and militarising China. He called for a small, mobile, and well-equipped force as opposed to a massive but under-trained army. In addition, he advocated that the army is the “foundation of ruling power”, that the military power rests in qualitative superiority derived from qualified officers.
Von Seeckt suggested that the first steps toward achieving this framework was that the Chinese military needed to be uniformly trained and consolidated under Chiang’s command, and that the entire military system must be subordinated into a centralised hierarchy. Toward this goal, von Seeckt proposed the formation of a “training brigade” in lieu of the German elite heer which would train other units, with its officer corps selected from strict military placements.
In addition, with German help, China would have to build up its own defense industry because it could not rely on buying arms from abroad much longer. The first step toward efficient industrialization was the centralization of both the Chinese and German reconstruction agencies. In January 1934, the Handelsgesellschaft für industrielle Produkte, or Hapro, was created to unify all German industrial interests in China. Hapro was nominally a private company to avoid oppositions from other foreign countries. In August 1934, “Treaty for the Exchange of Chinese Raw Materials and Agricultural Products of German Industrial and Other Products” was signed in which China would send strategically important raw material in exchange for German industrial products and development. This barter agreement was beneficial to Sino-German cooperation since China was unable to secure external monetary loans due to high budget deficit from military expenditure. This agreement allowed Germany to become independent of the international raw material market. The agreement specified that China and Germany were equal partners. Having accomplished this important milestone in Sino-German cooperation, von Seeckt transferred his post to General Alexander von Falkenhausen and returned to Germany in March 1935, where he died in 1936.
Finance minister of China and Kuomintang official H.H. Kung and two other Chinese Kuomintang officials visited Germany in 1937 and were received by Adolf Hitler. The Chinese delegation met Hans von Mackensen on June 10; during the meeting, Kung said that Japan was not a reliable ally for Germany, as he believed that Germany had not forgotten the Japanese invasion of Tsingtao and the Pacific Islands during World War I. China was the real anti-Communist state and Japan was only “flaunting”. Von Mackensen promised that there would be no problems in Sino-German relationships so far as he and Neurath were in charge of the Foreign Ministry. Kung also met Hjalmar Schacht on the same day. Schacht explained to him that the Anti-Comintern Pact was not a German-Japanese alliance against China. Germany was glad to loan China 100 million Reichsmarks and would not do so with the Japanese.
Kung visited Hermann Göring on June 11; Göring told him he thought Japan was a “Far East Italy” referring to the fact that during World War I Italy had broken its alliance and declared war against Germany, and Germany would never trust Japan. Kung asked Göring “Which country will Germany choose as her friend, China or Japan?”, and Göring said China could be a mighty power in the future and Germany would take China as friend.
Kung met Hitler on June 13. Hitler told Kung that Germany had no political or territorial demands in the Far East, Germany was a strong industrial country and China was a huge agricultural country; Germany’s only thought on China is business. Hitler also hoped China and Japan could cooperate and Hitler could mediate any disputes between these two countries, as he mediated the disputes between Italy and Yugoslavia. Hitler also told Kung that Germany would not invade other countries, but was also not afraid of foreign invasion. If Russia dared to invade Germany, one German division could defeat two Russian corps. The only thing Hitler worried about was Bolshevism in Eastern European states. Hitler also said he admired Chiang Kai-Shek because he had built a powerful centralized government.
Kung met von Blomberg on the afternoon of June 13 and discussed the execution of 1936 HAPRO Agreement. Under this agreement, the German Ministry of War loaned China 100 million Reichsmarks to purchase German weapons and machines. In order to repay the loan, China provided Germany with tungsten and antimony.
Kung left Berlin on June 14 to visit the US, and returned to Berlin on August 10, one month after the Second Sino-Japanese War broke out. He met von Blomberg, Hjalmar Schacht, von Mackensen and Ernst von Weizsäcker, asking them to mediate the war.
Industrialization of China
In 1936, China had only about 10,000 miles (16,000 km) of railways, far lower than the 100,000 miles (160,000 km) that Sun Yat-sen had envisioned. In addition, half of these were in Japanese controlled Manchuria. The slow progress of modernising China’s transport was due to conflicting foreign interests. Chinese external credits needed approval from British, French, American, and Japanese banks as stated in the 1920 New Four-Power Consortium. In addition, other foreign countries were hesitant to provide funding because of the Depression.
However, a series of Sino-German agreements in 1934–1936 greatly accelerated railway construction in China. Major railways were built between Nanchang, Zhejiang, and Guizhou. These fast developments were made possible because Germany needed efficient transportation to export raw materials, and because the railway lines served the Chinese government’s need to build an industrial centre south of the Yangtze. In addition, these railways served important military functions. For example, the Hangzhou-Guiyang rail was built to facilitate military transport in the Yangtze delta valley, even after Shanghai and Nanking were lost. Another similar railway was the Guangzhou-Hankou network, which provided transport between the eastern coast and the Wuhan area. This railway would later prove its worth in the early stages of the Second Sino-Japanese War.
The most important industrial project from Sino-German cooperation was the 1936 Three-Year Plan, which was administered by the Chinese government’s National Resources Commission and the Hapro corporation. The purpose of this plan was to create an industrial powerhouse capable of resisting Japan in the short run, and to create a centre for future Chinese industrial development for the long run. It had several basic components such as the monopolisation of all operations pertaining to tungsten and antimony, the construction of the central steel and machine works in Hubei, Hunan, and Sichuan, and the development of power plants and chemical factories. Cost overrun for these projects was partly assuaged by the fact that the price of tungsten had more than doubled between 1932 and 1936. Germany also extended RM 100 million line of credit to the KMT. The Three-Year Plan introduced a class of highly educated technocrats to run these state-owned projects. At the height of this programme, Sino-German exchange accounted for 17% of China’s foreign trade and China was the third largest trading partner with Germany. The Three-Year Plan had many promises, but much of its intended benefits would be undermined by the start of the Second Sino-Japanese War.
Chinese Military Modernization
Alexander von Falkenhausen was responsible for most of the military training. Original plans by von Seeckt called for a drastic reduction of the military to 60 elite divisions modeled on the Wehrmacht, but questions as to which factions would be axed remained a problem. As a whole, officer corps trained by the Whampoa Academy up until 1927 were only of marginally better quality than the warlord armies, but they remained loyal to Chiang Kai-shek. Nonetheless, some 80,000 Chinese troops, in eight divisions, were trained and formed the elite of Chiang’s army. However, China was not ready to face Japan on equal terms, and Chiang’s decision to pit all of his new divisions in the Battle of Shanghai, despite objections from his staff officers and von Falkenhausen, would cost him one-third of his best troops. Chiang switched his strategy to preserve strength for the eventual civil war.
Von Falkenhausen recommended that Chiang fight a war of attrition as Falkenhausen calculated that Japan could not win a long term war. He suggested that Chiang should hold the Yellow River line, and not attack until later in the war. Also, Chiang should give up a number of provinces in northern China, including Shandong. He also recommended to construct a number of fortifications at strategically important locations to slow a Japanese advance. Falkenhausen also advised the Chinese to establish a number of guerrilla operations behind Japanese lines.
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