Since 1945 East Asia has been the centre of the world struggle between capitalism and socialism.footnote* On the one hand, five victorious revolutions against capitalism have seized and retained state power in all or a substantial part of a national territory. On the other hand, and contrary to what is sometimes believed on the left, East Asia has also witnessed some of post-war capitalism’s most impressive achievements. Several of these successes, both capitalist and socialist, have taken place within the same countries—Korea and China. Moreover, it has been in East Asia, especially Korea and Indochina, that imperialism has mounted its biggest military interventions against revolution since World War II, on a scale unparallelled in the rest of the world. An important dimension of the fight against socialism has been the forcible division of countries where revolution was occurring: Korea, China, Vietnam, and Laos. Two of these countries—Vietnam and Laos—are now re-unified, while two others—Korea and China—remain divided. This article attempts to survey the role of the capitalist parts of these divided countries in the global political economy as well as analysing the present stage in the reunification of Korea and China, the linkages between the two reunifications, and capitalist attitudes towards continued division or reunification. This is done largely through the eyes of Japan, the pre-eminent Asian capitalist power and the world’s second largest economy. Japanese capitalism is in the vanguard in the structuring of new relations between world capitalism and the post-revolutionary societies of East Asia.

During us Congressional hearings on Korea in 1970, Senator Stuart Symington discussed the us strategy of ‘country splitting’. Senator Symington, ‘We go into this country splitting business. First we split Germany. Then we split China. We stay with billions and billions of dollars and hundreds of thousands of people in the case of Germany. China we stay with billions of dollars and thousands of people. Then we split Korea, and stay there with billions of dollars and tens of thousands of military . . . Then we split Vietnam . . . Now we split Laos . . . Do you know of any other country we plan to split pretty soon?’ Mr. Porter (us Ambassador to Seoul), ‘No, Sir.’ Symington, ‘This has been quite an interesting policy, hasn’t it, over the years? . . . Our allies don’t do this, nor do our possible enemies. We do it all over the world.’footnote1

There are two immediately striking features of this strategy. First, with the special exception of Germany, East Asia alone has been the arena of ‘country splitting’ and civil war. Second, the divided nations of East Asia have been subjected to two different sets of economic and political constraints, partially determined by their differential historical relationships to the consolidation of Japanese capitalism’s regional periphery. The two countries most intimately tied to Japanese capitalism—Taiwan and South Korea (rok)— have experienced a far more important and dynamic insertion into world and regional markets than did the formerly divided nations of Indochina. There are several reasons why Korea and China stand in such a complex and interdependent relationship to the contemporary expansion of Japanese capital. First, Korea and Taiwan, together with Manchuria, were the core of Japan’s old overseas empire. Secondly, the post-war reconstruction of Japanese capitalism under American aegis was directly linked to the revolutions and counter-revolutions in China and Korea. Thus Japanese economic restoration was accelerated by the us in reaction to the victories of the Chinese Revolution in 1947–49 and consolidated with the Korean War boom. The Americans sponsored a Japanese trade reorientation based upon an advantageous exchange rate for the yen (which boosted exports) and a new triangular commercial nexus between Japan, Southeast Asia, and the us.footnote2 Thirdly, the intimate ties of the pre-war period have continued to provide the basis for the contemporary collaboration of the Japanese, South Korean, and Guomindang elites. Pak Jung Hi, the dictator of Korea from 1961 to 1979, had been an officer in the old Japanese Imperial Army; likewise many leading Japanese politicians, including Kishi Nobusuke (Prime Minister, 1957–60) and Kodama Yoshio (the key figure in the Lockheed scandal) had extensive pre-war connections to China and Korea. Finally, the Korean and Chinese Revolutions were also used as pretexts for widespread repression against the Japanese left in the later 1940s and early 1950s as well as for the construction of a joint us-Japanese security sphere incorporating the capitalist parts of East Asia.

For these and other reasons, the West divided China through the Taiwan Straits in 1950 and Korea along the 38th Parallel in 1945, a demarcation only slightly modified at the end of the Korean War in 1953. Hong Kong and Macao had already been detached from China in preceding centuries.footnote3 These dividing lines, unlike those in Indochina, have proven stable. Behind these barriers a remarkable capitalist transformation has occurred, creating a series of new social, political and economic structures. These, in turn, have given the Seoul and Taibei regimes a much stronger base than that of the governments of Saigon, Vientiane/Luang Prabang, or Phnom Penh prior to 1975.footnote4 Although they remained deeply dependent upon Japan and the United States, Chiang Kai-shek (Taiwan, 1949 to 1975) and Pak Jung Hi (Korea, 1961 to 1979) were not mere puppets of imperialism like Thieu or Lon Nol. The Taiwan and South Korean regimes achieved what the anti-communist governments of Indochina found impossible: they established a real social base through land reform, industrialization, greatly increased export earnings, and correspondingly more efficient systems of political repression. Even the ultracorrupt Guomindang overhauled and modernized itself in the transition from mainland China to Taiwan in 1949, carrying out land reform policies it had stubbornly refused to implement on the mainland.footnote5

In what follows, I shall principally discuss the territories which I have elsewherefootnote6 called the ‘Inner Arc,’ viz., Taiwan, South Korea, Hong Kong, and Macau. Singapore is also discussed since, as an enclave/exclave transformed by world capitalism, it shares many features with Hong Kong.footnote7 There is no entirely satisfactory way of both abbreviating and defining the often overlapping but yet not identical situations of these five territories. Strictly speaking they fall into three groups: (1) Hong Kong and Macau—territories excised from China during the colonial period under unequal treaties, but whose excision is currently tolerated by the Peoples’ Republic (prc); (2) Taiwan and South Korea—territories amputated by external (us) intervention against socialist revolution immediately after World War II, whose removal is not tolerated by these revolutions; and (3) Singapore—a city-state created by secession from non-socialist Malaysia in 1965. Four of these states—Taiwan, South Korea, Hong Kong, and Singapore—are considered to be ‘newly industrializing countries’ (nics); in fact they are the Asian nics.