Before we can delve into financial information, I thought it important to contextualize the numbers by providing a brief explanation of the inflation China experienced during the war. During the war, Japan attacked China not only on the battlefield, but also in their wallets. By printing counterfeit bills and creating puppet currencies, Japan worked to weaken the purchasing power of the fabi, the Chinese currency at the time. This, in turn, created a period of hyperinflation that created great turmoil for the Chinese people and the ruling Nationalist Government.

I felt that the best way to show the sheer scale of the hyperinflation China faced during this time was to compare it to the inflation in the US over the early 2020s. I’ll be looking at and comparing two seven-year periods, WWII China from 1938-1945, and the United States from 2018-2025. Imagine you walk into a store in New York in 2018 and decide you want a new pair of $100 shoes. You, as any person would, decide to save up for seven years to get them. CPI data tells us that when you walk back into that store seven years later, you would find the shoes now cost roughly $128.16. The inflation shown here was the most important issue during the 2024 election and likely heavily influenced the outcome. Imagine now, if this store were in China during WWII. When you walked back in seven years later, you would’ve found the shoes cost roughly $124,119.61! This is due to the incredible levels of inflation seen at the time. Where inflation in America reached its peak at ~6.5% in 2022, China’s annual inflation rates rose as high as an estimated 277.70% in 1945!

*Monthly production numbers could not be calculated for the June 1939 date. (Numbers taken from China Handbook 1937-1945 and calculations by Douglas R. Reynolds’ dissertation “THE CHINESE INDUSTRIAL COOPERATIVE MOVEMENT AND THE POLITICAL POLARIZATION OF WARTIME CHINA”. 1975

This is a graph displaying the value of goods produced by Indusco factories in a given month. Just from looking at this graph, it didn’t make sense to me. When reading the graph, it seems obvious that the Indusco movement only grew stronger and more productive throughout the early 40s, which contradicts previous data I collected. This data showed a decline both in the number of co-ops and their workers in late 1941 and into 1942, which suggested to me that their productivity must have taken a hit as well. If we instead attempt to adjust these values for inflation, we can begin to see a clearer picture.

Above is a graph showing the same values of production for Indusco as shown previously, but adjusted for inflation by holding the currency’s value constant to its value in July 1937. By doing this, we can observe a more familiar curve showing an increase in production throughout 1940 and up to June of 1941, where production peaked. This was followed by a decline beginning in late 1941 and continuing throughout the rest of the chart.