Second Sino-Japanese War
Post-war struggle and resumption of the civil war

In 1945, China emerged from the war nominally a great military power but economically weak and on the verge of all-out civil war. The economy was sapped by the military demands of a long costly war and internal strife, by spiraling inflation, and by corruption in the Nationalist government that included profiteering, speculation and hoarding.

The poor performance of Nationalist forces opposing the Ichi-go campaign was largely viewed as reflecting poorly on Chiang's competence. Chiang blamed the failure on the United States, particularly Stilwell, who had used Chinese forces in the Burma Campaign and in Chiang's view, left China insufficiently defended.

As part of the Yalta Conference, which allowed a Soviet sphere of influence in Manchuria, the Soviets dismantled and removed more than half of the industrial equipment left there by the Japanese before handing over Manchuria to China. Large swathes of the prime farming areas had been ravaged by the fighting and there was starvation and famine in the wake of the war. Many towns and cities were destroyed, and millions were rendered homeless by floods.

The problems of rehabilitation and reconstruction after the ravages of a protracted war were staggering, and the war left the Nationalists severely weakened, and their policies left them unpopular. Meanwhile, the war strengthened the Communists both in popularity and as a viable fighting force. At Yan'an and elsewhere in the communist controlled areas, Mao Zedong was able to adapt Marxism–Leninism to Chinese conditions. He taught party cadres to lead the masses by living and working with them, eating their food, and thinking their thoughts.

The Chinese Red Army fostered an image of conducting guerrilla warfare in defense of the people. Communist troops adapted to changing wartime conditions and became a seasoned fighting force. With skillful organization and propaganda, the Communists increased party membership from 100,000 in 1937 to 1.2 million by 1945.

Mao also began to execute his plan to establish a new China by rapidly moving his forces from Yan'an and elsewhere to Manchuria. This opportunity was available to the Communists because although Nationalist representatives were not invited to Yalta, they had been consulted and had agreed to the Soviet invasion of Manchuria in the belief that the Soviet Union would cooperate only with the Nationalist government after the war.

However, the Soviet occupation of Manchuria was long enough to allow the Communist forces to move in en masse and arm themselves with the military hardware surrendered by the Imperial Japanese Army, quickly establish control in the countryside and move into position to encircle the Nationalist government army in major cities of northeast China. Following that, the Chinese Civil War broke out between the Nationalists and Communists, which concluded with the Communist victory in mainland China and the retreat of the Nationalists to Taiwan in 1949.
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