Bound by the Neutrality Act to avoid giving direct military aid to the Chinese, the United States Congress engineered a bill exchanging monetary loans for tung oil sold by a government-controlled Chinese corporation, the Fu Hsing (or Foo Hsing) Company, from Chongqing. By executing the Acquisition and Distribution of Tung Oil Policy through the Fu Hsing Company, the Nationalist Party government (Guomindang or Kuomintang) controlled the tung oil trade as a military resource for supporting the army and infrastructural development during World War II. Fifteen years later, the Chinese Communist Party modeled the state acquisition and distribution policy of grain and other commodities after the Korean War on that policy’s success.
Previous scholarship has only examined the Tung Oil Agreement within the context of America’s changing Far East foreign policy before the war with Japan. Instead, by using Chinese county-level archives, this paper examines the effects of this aid program on the local Chinese economy and argues the arrangement resulted in policies and practices that shaped inland China’s economic development into the Communist era.
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