From 1933 onward Japan followed up her conquest of Manchuria by bringing her influence to bear in Inner Mongolia and in North China. She succeeded first, by means of an immense system of smuggling, currency manipulation, and propaganda, in bringing a number of Mongol princes over to her side, and then (at the end of 1935) in establishing a semi-dependent government in North China. Chiang Kai-shek took no action.

Since the Japanese invasion of Manchuria in 1931 followed by the Japanese attack of Shanghai in 1932, there had been ongoing armed conflicts between China and Japan without an official declaration of war. These conflicts finally escalated in July 1937, when the Marco Polo Bridge Incident triggered the full advance from Japan. Dogged Chinese resistance at Shanghai was aimed at stalling Japanese advance, giving much needed time for the Chinese government to move vital industries to the interior, while at the same time attempting to bring sympathetic Western powers to China's side. During the fierce three-month battle, Chinese and Japanese troops fought in downtown Shanghai, in the outlying towns, and on the beaches of the Yangtze River and Hangzhou Bay, where the Japanese had made amphibious landings.

The Japanese began the war with just over half a million men in China. Most of these were stationed in the newly annexed area of Manchukuo, but a substantial number were based in and around the Japanese concessionary areas, like Beijing. From this number, it is easy to decipher the intent of Japan before the Marco Polo Bridge Incident. Half a million troops were not needed to protect the concessionary areas, and the Soviet Union had shown no intention of becoming involved in Manchukuo, though the Japanese believed they were. The half-million troops were actually there waiting for the opportunity to invade China, regardless of any future Chinese "aggression," which all of the world knew was a ridiculous claim.

By 1939, the Japanese had over a million men in China. These were joined by a small number of Chinese collaborators and a sizable militia in Manchukuo, which was mostly used for keeping order and protecting vital installations and resources. These few hundred thousand men essentially waved the white flag the minute the Soviet and Chinese Communist troops attacked at the very end of the war.

The Japanese troops, however, were (at least at the start of the war) highly motivated and trained. They were well-equipped and generally well-led. These advantages allowed the Japanese to carry the attack to the Chinese and carry the day in most of the pitched battles between the two. However, the image that many in the West have about the one-sided nature of the war in China and the major battles within it is essentially unfounded. While in most of the largest battles of the war, the Japanese prevailed, many of these battles were costly, hard-fought struggles that continually frustrated the Japanese in their search for the decisive battle that would ensure their victory in China.

It was not until the Battle of Nanjing and its almost unprecedented violence that the world began to understand the scope of Japan's plans in China and what it was willing to do to carry them out.

In the autumn of 1939, Claire Chennault and four high-ranking Chinese officers went on a mission for Chiang Kai-shek to the United States and out of the diplomacy, the 1st American Volunteer Group was established.