Japanese ultranationalist ideology, termed
Shōwa statism, always argued for a greater degree of state control over the economy, particularly in regards to mobilization. The
Imperial Way Faction, based out of
Manchuria, regarded the traditional monopolies of Japan, the
Zaibatsu, with contempt and distrust. The radicals in the army saw the Zaibatsu corporations as an extension of the "corrupt political parties" and loathed their perceived support for foreign minister
Kijūrō Shidehara, who had advanced liberal foreign policy. The army first advanced its ideas of
dirigisme and economic
central planning in the puppet state of
Manchukuo. Under the
reform bureaucrats, corporations like the
Showa Steel Works and
Manchurian Industrial Development Company were established by the army, who implemented a five year plan. The policies of the reform bureaucrats laid the groundwork for Japanese wartime policy as the state and military asserted control over the economy. The government, prior to the passage of the law, began a process of "creeping control", gradually amalgamating and centralizing crucial sectors such as steel and petroleum production. At the onset of the
Second Sino-Japanese War, Japan had not yet transitioned to a wartime economy, with many civilian sectors remaining outside of government guidance. In 1938, with the war in China bogging down, the army began pressuring the civilian government to pass numerous ordinances expanding military control over civilian industries in order to reach the state of a "quasi-wartime economy" (
junsenji keizai), by progressively increasing government influence over the civilian economy. ==Timeline of passage==