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This paper examines the distributional effects of industrial policies using a natural experiment in early twentieth-century China.Using wage-rental ratios in 104 counties in China from 1901 to 1933, I find the exogenous trade blockade due to WWI increased the ratio rapidly in coastal areas relative to inland areas.The difference remained after the war.I attribute the dramatic changes in wage-rental ratio to the rise of manufacturing industries during and after the war.Port-level trade flows on cotton products confirm the rise of manufacturing sectors.These findings provide an explanation on the persistent income gap between wage earners and land owners before WWII in China.This also helps to explain the puzzle on the persistent inequality along with recent globalization today.