1939 international incident between Japan and Britain
The was an international incident created by a blockade by the Imperial Japanese Army's Japanese North China Area Army of the British settlements in the north China treaty port of Tientsin (modern day Tianjin) in June 1939. Originating as a minor administrative dispute, it escalated into a major diplomatic incident.
Background.
Starting in 1931 with the seizure of Manchuria, Japan had a policy of attempting to reduce Chinese independence with an ultimate aim of placing all of China within the Japanese sphere of influence. Britain's relations with China had not been particularly warm or close before the mid-1930s, but the rise of Japan had improved relations between London and Nanking. The British historian Victor Rothwell wrote: "In the middle 1930s, if China had a Western friend it was Britain. In 1935–36 Britain gave China real help with its finances and showed real concern about Japanese encroachments in north China. Realising that the only hope of inducing Japan to moderate these activities lay in an Anglo-American joint front, Britain proposed that a number of times, but was always rebuffed by Washington". In turn, improved Anglo-Chinese ties had strained relations between London and Tokyo.
On July 30, 1937, Tientsin fell to the Empire of Japan as part of a military operation in the Second Sino-Japanese War, but it was not entirely occupied since the Japanese mostly continued to respect the integrity and extraterritoriality of foreign concessions in Tientsin until 1941. In December 1937, the Japanese took Shanghai, China's business capital. It was a major blow to the government of Generalissimo Chiang Kai-shek, as 85% of all Chinese government revenue came from Shanghai. After the loss of Shanghai, the economic ability of China to continue to resist Japan was very much in doubt. Flush with a series of Japanese victories in China, in early January 1938, the Japanese prime minister, Prince Fumimaro Konoe, announced a set of sweeping "non-negotiable" war aims that would have transformed China into a virtual protectorate of Japan if they had been implemented. Since the beginning of the war in July 1937, the Japanese had taken much of northern China, including the former capital of Beijing and in the Yangtze Valley, they had taken Shanghai and China's capital, Nanking.
After taking Nanking on 14 December 1937, the Japanese had perpetrated the infamous Rape of Nanking in which the Imperial Army had gone on a rampage of arson, looting, torture, rape and murder that destroyed Nanking and killed somewhere between 200,000 and 300,000 civilians. After the victories, Konoe regarded the war as good as won. Ominously for the Chinese, Konoe spoke of the status of Manchukuo as the ideal basis for a Sino-Japanese peace. Sometimes, Konoe went even further and mentioned the protectorate that the Japanese had imposed on Korea in 1905, which had been followed by Korea's annexation in 1910, as an ideal basis for peace. Whether Manchukuo or Korea was the model of new relationship with Japan, Konoe was quite open that the Chinese had to accept a subordinate position to Japan if the war were ever to end to Japan's satisfaction.
Konoe's terms for making peace were so extreme and harsh that even the Japanese military objected to them on the grounds that Chiang would never accept peace with them. German Foreign Minister Konstantin von Neurath, who was attempting to mediate a compromise peace between China and Japan and Germany, which had friendly relations with both Japan and China and did not wish to choose between them, complained upon seeing Konoe's peace terms that they were so intentionally outrageous and humiliating demands that they seemed to be designed only to inspire rejection by Chiang. Konoe's main demands were for China to recognise Manchukuo, to sign the Anti-Comintern Pact, to allow Japanese officers to command the Chinese National Revolutionary Army, to allow Japanese troops to remain indefinitely in all areas of China that they had occupied and to pay reparations to Japan. China was to pay the entire costs of the war run up by Japan but also a punitive amount so that the Chinese people might reflect on the folly of seeking to challenge the might of Japan.
Konoe had deliberately chosen extreme war aims to sabotage any effort at a diplomatic compromise and thereby ensure that the war could end with Japan winning a total victory over China by the destruction of Chiang's government. Konoe's speech made Japan achieving anything less than his "non-negotiable" war aims would seem like a defeat. As Chiang immediately rejected in a speech Konoe's war aims as the basis for making peace, Japan would have to win a decisive victory in China to see the Konoe programme implemented, which had been Konoe's intention all along. On 16 January 1938, Konoe gave a speech announcing once more his "unalterable" commitment to achieving his programme and announced that since Chiang had rejected his peace terms, the Japanese government was now committed to the destruction of Chiang's government.
On 18 January 1938, Konoe made another speech in which he frankly admitted to seeking unacceptable peace terms so that Japan might achieve his real goal of seeking to "eradicate" Chiang's government from the face of the earth. Japan would never make peace with a China led by Chiang and so a compromise peace was now impossible, and Japan would have to win a total victory over China. As the Chinese government retreated deep into the interior of China, major logistical problems were posed for the Japanese Army, which simply could not project the sort of power into the interior of China to win the "total victory" that the Konoe programme required.
The Japanese Army, which understood the logistical problems of attempting to conquer such a vast country as China far better than Konoe ever did, had objected to the Konoe programme for precisely that reason. It committed Japan to winning a total victory over China that Japan did not have the power to achieve, but at the same time making, anything less than the achievement of the Konoe programme seemed like a defeat for Japan. In July 1938, Japan launched an offensive intended to capture Wuhan and win the war at last. The summer offensive of 1938 succeeded in taking Wuhan, but the Japanese failed to destroy the core of the Chinese National Revolutionary Army, which retreated further up the Yangtze. After the Wuhan offensive, the Imperial Army informed Tokyo that the troops in the central Yangtze Valley were at the end of a long, tenuous and very overstretched supply line, and no further advances up the Yangtze were yet possible. Unable to win the final victory on the battlefield, the Japanese turned to bombing as an alternative by launching an all-out bombing campaign intended to raze the temporary capital, Chongqing, to the ground.
The Japanese bombing destroyed Chongqing and killed hundreds of thousands of civilians but failed to break the Chinese will to resist. Another alternative Japanese approach to victory in China was the establishment in November 1938 of a puppet government under Wang Jingwei, the leader of the Kuomintang's left wing who had lost to Chiang in the succession struggle after the death of Sun Yat-sen, out of the hope that it would lead to an exodus of Kuomintang leaders to Wang's government and so cause the collapse of Chiang's government. However, the refusal of the Japanese to give Wang any real power discredited his government as a puppet regime in the eyes of the vast majority of the Chinese people.
At the same, time, Dai Li, the much-feared chief of the Chinese secret police, had begun a policy of sending undercover operatives into the areas of China occupied by the Japanese to assassinate collaborators and Japanese officials. Sometimes working closely with triad gangsters (Dai was a close friend and business partner of the crime lord Du Yuesheng, or "Big Eared Du", the leader of the Green Gang triad), Dai's men were responsible for hundreds of assassinations during the Sino-Japanese War. Between August 1937 and October 1941, Bureau of Investigation and Statistics agents were responsible for about 150 assassinations of Chinese collaborators and 40 Japanese officers in Shanghai alone. Chinese collaborators who lived among the Chinese population were much easier to kill than Japanese officers, who tended to stick to their barracks. Undercover agents tended to be young men, who graduated from provincial schools, rather than universities (the ultraconservative Dai was contemptuous of intellectuals, who he felt to have been exposed to too much Western influence for their own good) and were usually skilled in martial arts. Also, Juntong agents were expected to be unconditionally loyal and willing to die for the cause at all times.
With the war stalemated and Japan unable to win a decisive victory in China, Tokyo increasingly placed its hopes for victory on the economic disintegration of Chiang's government. It was a reasonable hope since the western regions in the upper Yangtze Valley around Chongqing were one of the poorest and most backward regions in China and incapable of providing the necessary economic base for sustaining the huge costs that were needed to fight a modern war. Furthermore, Japanese atrocities, most infamously the Rape of Nanking in December 1937, had sent 12 million Chinese civilians fleeing up the Yangtze Valley in the largest movement of refugees yet seen in world history, to escape the Japanese. The refugees required shelter, food and often medical treatment. By 1938, the Chinese government was caught in a "scissors crisis" between the enormous expenditure required to fight the war and a rapidly-plummeting tax base. Between 1937 and 1939, Chinese government spending rose by a third, and tax revenue fell by two thirds.
Faced with a lack of funds to continue the war, Chiang started to engage in increasing desperate measures to raise revenue such as organising sales of opium via Macau and Hong Kong in an operation overseen by Dai and Du. That the Kuomintang government was prepared to run the risk of the shipment being intercepted by either the "Policia de Segurança Pública de Macau" or the Royal Hong Kong Constabulary (respectively) and the consequent public relations disaster reflected the need for money. Chinese Finance Minister H. H. Kung simply printed more and more money, leading to one of the worst spirals of hyperinflation yet seen in the world. That seriously undermined the Chinese war effort, as Chinese soldiers and civil servants were paid in worthless Chinese yuan. It was then that Britain made a series of loans to China intended to stabilise the "yuan".
The British government subscribed to what one might call a 1930s version of the "domino theory". If Japan took control of China, it was believed that inevitably, Japan would attack Britain's Asian colonies and the Dominions of Australia and New Zealand. As such, Neville Chamberlain's British government, despite being unwilling to go to war with Japan, was not prepared to accept a Japanese victory over China. From the viewpoint of London, it was much preferable for Japan to remain embroiled in China than to attack the British Empire. The British Ambassador in China, Sir Archibald Clark-Kerr reported to London that unless Britain gave China loans to continue the war, the economic collapse of Nationalist China, which the Japanese wanted, might very well occur.
In late 1938, Britain started to make a series of loans to China to allow Chiang to continue the war. By 1939, the Chinese government had received loans worth £500,000 from Britain, which provided Chiang with badly-needed money to continue the war. Furthermore, in March 1939, the British government, began to an effort to stabilise the yuan by offering government guarantees to British banks that made loans to Kuomintang China and took in Chinese silver as collateral. The guarantees allowed British banks to lend China some £5 million, a step that the Japanese government publicly denounced as a "frontal attack" on the "New Order" in Asia that Japan wanted to build.
The British loans to China greatly offended the Japanese, who believed that if the British ceased their financial support of China, Japan would finally win the war. Konoe thought that the British effort to stabilise China's currency and thereby to prevent the complete economic collapse of China was the only thing standing between the Chinese and the total victory that was required for his programme. Since the loans to China