Found a very interesting article from fsmith.com. So what it is saying is that in 1938 Japan announced the New Order of East Asia - Japan and China had an agreement to trade with each other and give the United States the left overs. Remember all the talk about the trade shortage with China and China has to own up. Well, the 1938 agreement with Japan was and is the barrier to any progress in that area.
So why all of a sudden did North Korea raise their head, put up their fists and challenge the U.S. and Japan to duke it out with them. Who is really at war with whom?
ARTICLE BY FRANK E. SMITHA...
Japan continued trying to convince Chiang Kai-shek to make a settlement. And in January 1938, frustrated by Chiang's lack of cooperation, Prime Minister Konoe made it clear that Japan would no longer try to deal with Chiang and his government. On January 16, Japan withdrew recognition from Chiang's government and announced a policy of annihilating his regime.
In March 1938, Japan passed the National General Mobilization Law. All aspects of Japanese life were to be arranged to bring society and the economy of Japan to a peak of military efficiency.
In May, one of those generals opposed to escalations in China, Ugaki, became Japan's foreign minister. He regretted that the war in China was interrupting plans for economic expansion of Japan's industrial base, that the war was absorbing costly imports of oil, machine tools and steel. He favored ending hostilities, but the military was not about to agree to any withdrawal from engaging the enemy.
Beginning in July, clashes occurred between Japanese and Soviet forces along the Soviet-Manchurian border. In September 1938, the frustrated Ugaki resigned. And in October, after months of bombing, the Japanese captured China's southern city of Canton.
In November 1938, the Japanese announced a New Order for East Asia. The Japanese claimed that in this New Order the Chinese were to be led by one of their own Wang Jingwei. He had been China's foreign minister and jealous of Chiang Kai-shek.
In this new order, according to the Japanese, trade would be mainly between Japan and China, while nations such as the United States, Britain, Germany and France would be allowed to continue to function in China but would have to settle for leftovers.
One supporter of the New Order was the upcoming General Hideki Tojo, former commander of the Kwantung army and now an army minister. General Tojo saw the New Order as a cooperation between the Chinese and Japanese, with China contributing its raw materials and Japan contributing capital, skills in technology and administration "for the mutual benefit of both countries."
In July 1939, the Japanese fought Soviet forces along the Manchurian-Soviet border. The world took little notice of how well the Soviet forces performed. The Japanese lost 50,000 dead and wounded – five times greater than Soviet losses. Hirohito was furious with the army not so much for losing but for having initiated the fighting.
Japan's Kwantung army was planning a new offensive against the Soviet Union when Hirohito sent an order that the battle was to stop. Hirohito told his war minister to sack the commander of the Kwantung army. Then he returned to his passivity toward the military, in tune with the popular view that the military was heroically pursuing the interests of the nation.
Hirohito and the Making of Modern Japan, chapters 9 and 10, by Herbert P. Bix, 2000.
The Causes of the Second World War, by Andrew J. Crozier, 1997, (from 1919 to 1940).
A World at Arms, by Gerhard L. Weinberg, 1994.
The Rising Sun: the Decline and Fall of the Japanese Empire, 1936-45, by John Toland, Random House, 1970.
Chiang Kai-shek: His Life and Times, by Keiji Furuya, 1981