western powers, who proposed to make use of it in opposition to Japan's
policy of expansion in the Pacific sphere. On the strength of this
favourable situation in its foreign relations, the Nanking government
succeeded in getting rid of one after another of the Capitulations.
Above all, the administration of the "Maritime Customs", that is to say
of the collection of duties on imports and exports, was brought under
the control of the Chinese government: until then it had been under
foreign control. Now that China could act with more freedom in the
matter of tariffs, the government had greater financial resources, and
through this and other measures it became financially more independent
of the provinces. It succeeded in building up a small but modern army,
loyal to the government and superior to the still existing provincial
armies. This army gained its military experience in skirmishes with the
Communists and the remaining generals.

It is true that when in 1931 the Japanese occupied Manchuria, Nanking
was helpless, since Manchuria was only loosely associated with Nanking,
and its governor, Chang Hsueeh-liang, had tried to remain independent of
it. Thus Manchuria was lost almost without a blow. On the other hand,
the fighting with Japan that broke out soon afterwards in Shanghai
brought credit to the young Nanking army, though owing to its numerical
inferiority it was unsuccessful. China protested to the League of
Nations against its loss of Manchuria. The League sent a commission (the
Lytton Commission), which condemned Japan's action, but nothing further
happened, and China indignantly broke away from her association with
the Western powers (1932-1933). In view of the tense European situation
(the beginning of the Hitler era in Germany, and the Italian plans of
expansion), the Western powers did not want to fight Japan on China's
behalf, and without that nothing more could be done. They pursued,
indeed, a policy of playing off Japan against China, in order to keep
those two powers occupied with each other, and so to divert Japan from
Indo-China and the Pacific.

China had thus to be prepared for being involved one day in a great war
with Japan. Chiang Kai-shek wanted to postpone war as long as possible.
He wanted time to establish his power more thoroughly within the
country, and to strengthen his army. In regard to external relations,
the great powers would have to decide their attitude sooner or later.
America co