Development and Management of Manchurian Economy under the Japan Empire

In 1932, the Kwantung Army occupied Manchuria, the northeast part of China, and founded a puppet state, Manchukuo. The Kwantung Army and the Manchukuo government intended to develop heavy and chemical industries as well as munitions industries there, but they did not have a solid program for it in the first place. Indeed, the process of Manchurian development in the 1930s and 1940s was full of trial and error. At first, many "special corporations" were founded under the supervision of the Manchukuo government, but they were not coordinated systematically. Furthermore, the targets of "Five Years Plan of Industrial Development" decided in 1937 were not coordinated. Given that, a new system of coordination was introduced. That is, a large holding company, the Manchurian Heavy Industries Development Co.(MHID) was founded with Yoshisuke Ayukawa as the president, and it was intended that special corporations would be coordinated under the MHID. It is a remarkable trial of a new coordination system, where a major part of a national economy was coordinated within the one huge private conglomerate. However, finally in 1939, under the condition that import from Japan was restricted and there was no prospect of capital import from foreign countries, the Kwantung Army and the Manchukuo government decided to introduce an alternative system of coordination, namely, the state-led system of planning and control. This was similar to the system that had already started to work in Japan. In this sense, the system of full-scale planning and control was imported from Japan to Manchuria, not from Manchuria to Japan.