ABSTRACT
A growing majority believed that war between China and Japan was unavoidable. They wanted to allocate more power to the state in order to facilitate the establishment of a command economy. Regulation of this economy would take place by state agencies in accordance with rules that would determine the allocation of national resources and the organization of new industries producing energy, iron, and steel products, machine tools, minerals, chemicals, and so on. The Nationalist leaders believed that the state should organize and control heavy industrial enterprises; by the same token, it was the state's responsibility to establish natural monopolies to supply water, energy, and public transportation, as well as regulating private enterprises’ market-orientated production of consumer goods in order to enhance public welfare. Inflation had been transformed into hyperinflation, unemployment was skyrocketing, and relations between the two groups steadily worsened.
