The Auction
Time rewinds a little.
July 1927
When the Qing Imperial Army landed in Liaodong Bay, an auction was held for Japan's assets and economic rights in China.
While Japan retained usage rights over leased territories such as Shanghai and Hankou, nearly all Japanese-owned assets and economic interests within them were sold off. The winning bidders—nations or companies—were guaranteed operational rights within those leased areas.
The bidding process was open to countries and corporations worldwide. China was seen as a vast market with great potential, so the right to conduct economic activities there drew global attention.
The auction method was based on regional bidding. First came the bid for the Shanghai concession.
It was won by International Trade Limited (ITL) , one of the companies acquired by Richard Investment . ITL placed a bid that exceeded the total amount Japan had invested in Shanghai over the years.
Next was the bidding for the Tianjin concession—and again, ITL won.
This alarmed the Twelve Sages .
Their role was essentially to advance American interests. Since ITL and Richard Investment were American-backed, their actions appeared aligned with U.S. goals—at least on the surface. However, the emergence of organizations outside their control was unacceptable. Also, since America already had concessions in Shanghai and Tianjin, the Twelve Sages had been somewhat complacent.
"Whatever it takes, we must win the Chongqing concession!"
The elders of the Twelve Sages gave strict orders to their subordinates. But once again, ITL won the bid.
Now, Shanghai, Tianjin, and Chongqing were secured by Richard. Only Suzhou, Hangzhou, and Hankou remained. (Note: There was also a small concession in Shashi, but it was too minor to matter. )
Then came the Suzhou concession—and ITL won again.
"We can't afford to be picky anymore! We must secure Hangzhou and Hankou!"
At last, the economic rights to Hangzhou and Hankou were successfully acquired by companies under the influence of the Twelve Sages.
However, the prices they paid were absurdly high—so much so that it would take decades to recoup their investment.
The biggest winner of this auction was Japan's Ministry of Finance. The government had adopted a policy of buying out Japanese assets at market value plus a premium before putting them up for auction. This ensured that Japanese companies and individuals wouldn't suffer losses. However, if bids came in low, the government itself would bear the loss.
In the end, however, the sale prices exceeded total investments. The Japanese government ended up with a surplus equivalent to 8% of the national budget .
Then, in December 1927, ITL went public on the New York Stock Exchange. Given its massive economic rights in China and the overheated stock market, the company opened at an astonishing price.
Since the U.S. stock market had no circuit breakers or price limits, ITL shares opened at three times the offering price on the first day alone—due to a flood of buy orders. After a slight dip, the price surged even higher. By the end of trading, the share price had settled at roughly 3.5 times the initial offering price .
The decision to split the shares and make them more accessible to individual investors likely contributed to this surge.
At this point, Richard Investment sold off all its ITL shares, realizing a massive profit.
In the end, most of Japan's former economic rights in China were acquired by companies tied to the Twelve Sages—but at outrageously inflated prices.
However, this auction acted as a catalyst, causing a flood of American capital to pour into China. Major cities along the Yangtze River saw the rapid construction of power plants and factories funded by American investment. Railway expansion also accelerated.
Ford Motor Company, in particular, was ecstatic about gaining access to the Chinese market. Although production of the Model T Ford was nearing its end, it unexpectedly became a huge hit in China.
The Model T had been in production since 1908 and had powered the American automobile industry for nearly two decades. However, due to aging performance and obsolescence, its days were numbered.
Suddenly, a blue ocean market opened in China. With fully depreciated manufacturing equipment, Ford ramped up production to supply China cheaply. Initially, complete cars were exported, but soon assembly lines from the U.S. were relocated to China. Parts were shipped from America and assembled locally—a process known as knock-down production . Gradually, component manufacturing also moved to China.
As a result, China's industrial base rapidly improved—even surpassing Japan's in some areas.
Towering skyscrapers began rising in Shanghai and Hankou, making them look like New York transplanted across the Pacific.
With American capital employing Chinese workers and paying wages, consumer demand expanded, initiating a virtuous economic cycle. Thus, modernization in China accelerated.
America, now a crucial business partner in China, could not tolerate the spread of communism. It actively intervened in the Chinese Civil War, pushing back Communist forces. In effect, America took over the anti-communist mission that Japan had originally intended to carry out.
———
"Wow, American power really is amazing. Selling our rights to China turned out to be the right call. It created jobs for Chinese workers, and with a richer population, we can suppress the rise of communism."
"I don't really get economics…"
Ririel answered with obvious disinterest.
"Then go read 'Nani Kinyu Dō' and study up!"
———
Japan's military officers, who had initially opposed selling these rights, were relieved when the auctions fetched high prices. However, seeing how fast China developed under American capital, many later regretted the decision. They realized Japan could never have achieved such growth on its own.
Thank you for reading Chapter 60.
China's development has surpassed expectations!
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