chapter 2 Local State Building in Province, 1927–1937

County-level taxation and public finance in Guangdong were colorful affairs during the 1920s and 1930s. Central, provincial, and county bu- reaus and agents fought bandits, pirates, and guerrillas—and one an- other—for the fruits of others’ labors. In 1925, in the Kaiping county seat alone, 28 tax-collection bureaus and the county government con- tended for revenues. Some of the more interesting ones, such as the opium-suppression tax office, the prostitution tax office, and the for- tress tax office, are indicative of the county’s unruly social and politi- cal situation (KXSZBX 1987: 16). By the late 1930s, the number of bu- reaus had been pared back. County governments and the local elites cooperated to create a more coherent, if duller, state edifice. The sys- tem remained exploitative, but by 1936 the province and the counties had worked out new fiscal relationships, the land tax had been re- vamped, new tax and public finance bureaucracies had been set up, and new subcounty institutions had been established. Behind much of this local state building were the grandiose ambi- tions of Chen Jitang, the warlord of Guangdong.1 Chen rose to mili- tary prominence during the early 1920s, when the GMD was head- quartered in , which the GMD declared the national capital in 1925. The GMD army’s departure in 1926 on the Northern Expedition to reunify left the province in the hands of Gen- eral Long Jiguang, who selected Chen as his military chief.2 By 1929, Chen dominated the local regime, which more and more openly de- fied Nanjing’s rule. Chen officially came to power in 1931, when he 42 Local State Building in Guangdong Province, 1927–1937 became the chairman of the province, and ruled until 1936. “Al- though [Guangdong] had been the revolutionary base of the [GMD] prior to the Northern Expedition, it had never been effectively in- corporated into the political and financial system of the Nan[j]ing government.” Chen’s regime “conducted its affairs virtually without reference to the central government” (Eastman 1991a: 34). Allied with the powerful Guangxi warlords, Chen and his allies chal- lenged Chiang Kai-shek through the establishment of a separatist South-West Political Council and South-West Headquarters of the GMD Central Executive Committee. By the summer of 1936, how- ever, Chiang had outmaneuvered Chen’s group politically and mili- tarily. When he demanded their political submission, the Cantonese attacked GMD troops in Hunan and northern Guangdong, on the pretext that the GMD did not want to fight Japan. After Chiang bought off the Cantonese military, the attack failed, and by Septem- ber the separatist regime had collapsed. Its leaders were “promoted” into the Nanjing regime and replaced by others more loyal to Chiang (Eastman 1991a: 35). During Chen’s tenure as military ruler, his regime sought to prove its superiority to the GMD Nanjing regime by enacting a three-year plan to revamp provincial fiscal and monetary policy (Fitzgerald 1990). The plan was laid out in a 711–page tome outlining the regime’s plan for “modernizing” the province’s industry, roads, agriculture, and local governments between 1933 and 1935. Among other features, it called for reform of the land tax system; implemen- tation of a business (turnover) tax; elimination of exorbitant local taxes (kejuan zashui) and of the opium and gambling taxes; a thor- ough retooling of the currency and banking systems; a balanced pro- vincial budget; and repayment of bonds (GSZM 1933). Some of these reforms were implemented with the help of the county governments, and the city of Guangzhou became a showcase of modern urban plan- ning, industry, and architecture, perhaps second only to Shanghai (E. Lee 1936; Tsin 1999). This chapter is the story of how large parts of the plan were accomplished, and how the Nanxiong and Kaiping county governments reacted. This chapter has three goals. First, it seeks to demonstrate that the tax and finance arms of these two county-level states experienced state building in 1927–37. In Kaiping county, and to a lesser extent in Nan-