South Manchurian Railway, Japanese-developed enterprise, with a trackage of 701 mi (1128 km). The line from Changchun to Lüshun (Port Arthur), originally belonging to the Russian-built Chinese Eastern Railway, was part of Japan's indemnity in the Russo-Japanese War (1904–5). Japan later constructed a line to connect Shenyang (Mukden) and Dandong. Other cities served by the railroad are Dalian (Dairen), Anshan, and Fushun. The prosperity of Manchuria is in large part attributable to the linking by the railroad of the coastal ports and the hinterland. The South Manchurian Railway Company, formerly the largest economic enterprise in Manchuria and the main agency of Japanese penetration, was organized shortly after the Russo-Japanese War. It undertook construction of towns, harbor improvements, coal and iron mining, utility development, and agricultural experimentation. When the Manchurian warlord Chang Hsüeh-liang refused to halt construction of a competing Chinese railway network, the Japanese Kwantung army staged the Manchurian Incident (1931) and set up the state of Manchukuo (1932). At the end of World War II, China expropriated the company's property.
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