Abstract: During the Anti-Japanese War,the New Guangxi clique that was ruling Anhui Province,founded the Dabie Mountain anti-Japanese base area. In the severe wartime environment, the New Guangxi clique, learning from their experiences in governing Guangxi, implemented the policy of township production in the Kuomintang-controlled areas of Anhui in order to resolve the financial crisis at the grass root level and to maintain the operation of grass-roots regime. By utilizing public resources and compulsory labour, the New Guangxi clique hoped the township production could increase the local fiscal revenue, and to restrain illegal apportion, and consolidate the Dabie Mountain base area. However, despite the increase in the income of township fiscal revenue, the compulsory implementation of township production violated people's free will and the law of economic growth. Therefore the reform deviated from its initial goal in practice failing to solve the grass root financial crisis.

Key words: Anhui Province, Kuomintang-controlled areas, the new Guangxi clique, township production, grass root finance