Sino-German Cooperation Until 1941 - Sino-German Cooperation in The 1930s

Sino-German Cooperation in The 1930s

However, Sino-German trade slowed between 1930 and 1932 because of the Great Depression. Furthermore, Chinese industrialization was not able to progress as fast as it could because of conflicting interests between various Chinese reconstruction agencies, German industries, German import-export houses and the German Army (Reichswehr) of the Weimar Republic, all of which wanted to profit from the development. Things did not pick up speed until the 1931 Mukden Incident, in which Manchuria was annexed by Japan. This incident created the need for a concrete industrial policy that aimed to create the military and industrial capability to resist Japan. In essence, it spurred the creation of a centrally planned, national defense economy. This both consolidated Chiang's rule over the nominally unified China and hastened industrialization efforts in China.

The 1933 seizure of power by the Nazi Party further accelerated the formation of a concrete Sino-German policy. Before the Nazi rise to power, German policy in China had been contradictory, as the Foreign Ministry under the Weimar Government urged for a policy of neutrality in East Asia and discouraged the Reichswehr-industrial complex from involving directly 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 mobilization of society and stockpiling of raw materials, particularly militarily important materials such as tungsten and antimony, which China could supply in bulk. Thus, from this period on, the main driving force behind Germany's China policy became that of raw materials.

In May 1933, Hans von Seeckt arrived in Shanghai and was offered the post of senior adviser to oversee economic and military development involving Germany in China. In June of that year, he submitted the Denkschrift für Marschall Chiang Kai-shek memorandum, outlining his program of industrializing and militarizing China. He called for a small, mobile, and well-equipped force as opposed to a massive but under-trained army. In addition, he provided a framework that the army is the "foundation of ruling power," that the military power rests in qualitative superiority, and that this superiority derives from the quality of its officer corps.

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 centralized network like a pyramid. Toward this goal, von Seeckt proposed the formation of a "training brigade" in lieu of the German eliteheer which would propagate training to other units to create a professional, competent army, with its officer corps selected from strict military placements directed by a centralized personnel office.

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 forever. The first step toward efficient industrialization was the centralization of not only the Chinese reconstruction agencies, but also German ones. 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 the Chinese government 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 had a very high budget deficit due to military expenditures through years of civil war and was unable to secure monetary loans from the international community. The agreement that led to massive Chinese export of raw material also made Germany independent of international raw material markets. In addition, the agreement expedited not only Chinese industrialization, but also military reorganization. The agreement also specified that China and Germany were equal partners and that they were both important in this economic exchange. 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. Kung and a Chinese delegation took part in King George VI's coronation in 1937 (Kung was by then vice prime minister, secretary of treasury and president of Central Bank of China). After the coronation they visited Germany, invited by Hjalmar Schacht and Werner von Blomberg.

The Chinese delegation arrived at Berlin on June 9, 1937. Kung met Hans von Mackensen on June 10 (von Neurath was visiting eastern Europe); during the meeting, Kung pointed out 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-Germany relationship so far as he and Neurath were in charge of the Foreign Ministry. Kung also met 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 Reichsmark and they would not do so with 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 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, and was also not afraid of foreign invasion. If Russia dared to invade Germany, one German division could defeat two Russian corps. The only thing he (Hitler) worried about was bolshevism in eastern European states, being a threat to German interests and market. Hitler also said he admired Chiang Kai-Shek because he 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 Sino-Japanese War broke out. He met von Blomberg, Schacht, von Mackensen and Ernst von Weizsäcker, asking them to mediate the war.