| The cornerstone of national renewal is national security.It is currently extremely difficult for China to construct a national security system due to the complex domestic and global development environments.Development is a security guarantee,and financial development is intimately tied to the state’s capacity to prevent and manage financial issues.Investigating the relationship between financial development and national capacity is therefore very important from a practical standpoint.In order to review and examine the development history of China’s red finance,this paper uses Beihai Bank in the liberated region of Shandong as an example.It then delves deeply into the interactive relationship between red financial development and the improvement of national capacity in the hopes that this can serve as a useful guide for preventing and mitigating financial risks and promoting the improvement of national capacity.By using the Beihai Bank and the rise of the Communist Party of China(CPC)rule in Shandong as examples,the historical foundation for investigating the interactive link between red finance and national capability is as follows:First,the red bank serves as the focal point of the red financial system.The Beihai Bank took on the role of a "central bank" in the Shandong province’s liberated districts.Second,the construction of the Beihai Bank was characterised by its relative independence.The flow of information and factors was restricted and divided in the context of military operations and regime changes during a war.Thirdly,during the war years,the improvement of the state capacity was primarily represented in the triumph in military and economic warfare.Each base region developed independent banks and issued independent currencies in accordance with the necessities of the time and location.The CPC led Beihai Bank to engage in the entire process of the currency war and economic construction,and ultimately won the military conflict and currency war as the decision-makers and implementers of Shandong anti-Japanese base regions and freed territories.Fourth,Beihai Bank continued to flourish and thrive throughout the currency war and economic reconstruction,gradually transitioning from a startup bank to a legitimate bank in Shandong base areas and liberated territories.Therefore,this paper presents an integrated analysis framework for red finance and the political power of the CCP into a unified analysis framework,sorts out the currency war between Beihai Bank and the Japanese puppet forces and Kuomintang die-hards in a challenging war environment,and carries out business such as deposit absorption,credit,remittance,and agency treasury,and further discusses its contribution to regional economic development.This contribution is analyzed from two perspectives:promoting economic development and improving people’s livelihood in the red region,as well as supporting red political power finance.In doing so,this article aims to clarify the relationship between red financial development and national capacity enhancement,both in terms of theoretical analysis and historical practice.The main conclusions of the article are as follows:First,national capacity is the fundamental basis of red financial development.By constructing a currency search model,this article explores the impact of national government behaviour on the change in currency market share.It has been found that national political influence,population size,and government intervention in the currency market have an impact on the risk and cost associated with holding currency.This,in turn,leads to changes in the market share of currencies.Furthermore,the paper examines the developmental history of the Beihai currency and concludes that the fluctuation history of the Beihai currency market share aligns with the aforementioned findings.Specifically,on one hand,the victory in the military war was the foundation and guarantee for the development of the Beihai currency.By comparing the market share of Beihai currency with the changes in the area controlled by the CPC regime in Shandong,it can be observed that the historical process of the market share of Beihai currency,from expansion to contraction and then expansion again,essentially mirrors the history of the regime’s control over the liberated area of Shandong.The CCP’s victory in the military war in Shandong directly resulted in the expansion of the regime’s territory and population.This,in turn,created a significant market for the development of Beihai currency.At the same time,the military victory increased the regime’s influence,and the currency,as a symbol of the regime,also bolstered its credibility.On the other hand,when considering the role of the Beihai currency in the currency wars,the CCP’s intervention in the currency market played a crucial role in expanding the market share of the Beihai currency.Through a series of economic measures,the CCP rationalized resource allocation and improved the stability of the Beihai currency’s value.This,in turn,minimized the risk and cost associated with holding the currency compared to other currencies in the liberated regions.As a result,the market share of the Beihai currency expanded.Second,mastering financial sovereignty,particularly independent and autonomous monetary sovereignty,is a crucial method for enhancing national capability.By examining the history of the Beihai currency’s role in the currency wars,it becomes evident that the CCP only gained the ability to address financial crises in the Shandong anti-Japanese base area currency market when the Beihai currency became the exclusive local currency.Before the outbreak of the Pacific War,the currency market in Shandong was primarily based on fiat currency.During this period,in the Shandong currency market,the currency war mainly manifested as a competition for market share between the pseudo-currency and the existing old currency in Shandong.The currency war strategy of the Japanese and pseudo forces was primarily aimed at forcefully collecting and exchanging fiat currencies,while also devaluing and undermining the credibility of these currencies.This strategy essentially increased the risk and cost associated with holding fiat currencies and Beihai currencies in the base area.In response,Beihai Bank adopted a strategy to consolidate fiat currencies in order to prevent the outflow of these currencies.The Beihai currency was issued solely as a secondary currency to the fiat currency,and a fixed exchange rate system was employed between the two currencies.Although the union of the Beihai currency with the fiat currency facilitated the establishment of credit for the Beihai currency and the expansion of the currency market,and slowed down the Japanese and pseudo forces’ attack on the currency market of the anti-Japanese bases in Shandong,it also caused the value of the Beihai currency to increase along with the fiat currency.However,the value of the Beihai currency fluctuated with the fluctuations of the fiat currency.The CCP did not have financial autonomy in the Shandong Anti-Japanese Base Area and was unable to withstand the impact of the significant changes in the value of the fiat currency in the area.After the outbreak of the Pacific War,the centre of gravity of the currency war policy of the Japanese and pseudo forces against Shandong was changed from the original absorption of fiat currency in order to compete for monetary sovereignty and foreign exchange to the crowding out of the flat currency and absorption of materials to the base areas.Although the specific implementation of the currency war against the Shandong anti-Japanese bases by the Japanese and pseudo forces changed,its essence remained the same:to increase the risk and cost of holding Beihai and French currencies by dumping French currencies.This was done in order to undermine the stability of the financial system of the Shandong anti-Japanese bases.The CCP realized that under the free flow of capital,it was not possible to simultaneously maintain the independence of monetary sovereignty and the stability of the exchange rate system.Only by severing the link between the Beihai currency and the fiat currency and by asserting monetary sovereignty,can it truly possess the ability to resolve the financial crisis in the base area.Therefore,the strategy of Beihai Bank was adjusted to reduce the reliance on fiat currency in order to prevent an influx of fiat currency.In terms of implementation,the Communist Party achieved monetary sovereignty in the base area through the "exclusion of fiat currency" war.This allowed for the integration of finance,trade,and production,ultimately leading to victory in both the currency war and the military war.Therefore,the establishment of financial and monetary sovereignty fundamentally resolves the financial crisis.Thirdly,the development of red finance has enhanced the country’s resource extraction and allocation capacity.As the state builds its financial system,it also uses the financial system to gain a stronger ability to draw and allocate resources.On the one hand,from the point of view of the history of the Bank of the North Sea’s participation in the external currency war,the expansion of the market share of the North Sea currency and the establishment of the single local currency have expanded the breadth of the CPC regime’s ability to draw resources;from the point of view of the history of the Bank of the North Sea’s participation in the internal economic governance,the low-interest credit and other businesses have been carried out with the people’s interests in mind,which has increased the political influence of the CPC regime,and thus expanded the depth of the state’s ability to draw resources with the help of the financial system.The depth of the country’s access to resources through the financial system has been expanded.On the other hand,in the process of improving the financial system and cultivating human resources,the efficiency of national resource allocation has also been enhanced.Together,the two have contributed to the development of national capacity.Therefore,from the point of view of the development process of Beihai Bank,red finance and state capacity have formed a development pattern of mutual promotion in practice.National capacity is the fundamental basis for the creation and development of red finance.At the same time,the development of red finance also enhances the country’s ability to draw and allocate resources,and promotes the realisation of the dual goals of the country’s external war and internal governance. |
