structural:summarization, structural:reformatting
Second Sino-Japanese War (1937–1945)

During Japan's invasion and occupation of Manchuria, Chiang Kai-shek saw the CCP as the greater threat. Chiang refused to ally with the CCP, preferring to unite China by eliminating the warlord and CCP forces first. He believed his forces were too weak to face the Japanese Imperial Army; only after unification could the KMT mobilize against Japan. He ignored the Chinese people's discontent and anger at the KMT policy of compromise with the Japanese, instead ordering KMT generals Zhang Xueliang and Yang Hucheng to suppress the CCP. However, their provincial forces suffered significant casualties in battles against the Red Army.

On 12 December 1936, the disgruntled Zhang and Yang conspired to kidnap Chiang and force him into a truce with the CCP. The incident became known as the Xi'an Incident. Both parties suspended fighting to form a Second United Front to focus their energies and fight the Japanese. In 1937, Japan launched its full-scale invasion of China and its well-equipped troops overran KMT defenders in northern and coastal China.

The alliance of CCP and KMT was in name only. Unlike the KMT forces, CCP troops shunned conventional warfare and instead waged guerrilla warfare against the Japanese. The level of actual cooperation and coordination between the CCP and KMT during World War II was minimal. In the midst of the Second United Front, the CCP and the KMT were still vying for territorial advantage in " Free China " (i.e., areas not occupied by the Japanese or ruled by Japanese puppet governments such as Manchukuo and the Reorganized National Government of China).

The situation came to a head in late 1940 and early 1941 when clashes between Communist and KMT forces intensified. Chiang demanded in December 1940 that the CCP's New Fourth Army evacuate Anhui and Jiangsu Provinces, due to its provocation and harassment of KMT forces in this area. Under intense pressure, the New Fourth Army commanders complied. The following year they were ambushed by KMT forces during their evacuation, which led to several thousand deaths. It also ended the Second United Front, formed earlier to fight the Japanese.

As clashes between the CCP and KMT intensified, countries such as the United States and the Soviet Union attempted to prevent a disastrous civil war. After the New Fourth Army incident, US President Franklin D. Roosevelt sent special envoy Lauchlin Currie to talk with Chiang Kai-shek and KMT party leaders to express their concern regarding the hostility between the two parties, with Currie stating that the only ones to benefit from a civil war would be the Japanese. The Soviet Union, allied more closely with the CCP, sent an imperative telegram to Mao in 1941, warning that civil war would also make the situation easier for the Japanese military. Due to the international community's efforts, there was a temporary and superficial peace. Chiang criticized the CCP in 1943 with the propaganda piece China's Destiny, which questioned the CCP's power after the war, while the CCP strongly opposed Chiang's leadership and referred to his regime as fascist in an attempt to generate a negative public image. Both leaders knew that a deadly battle had begun between themselves.

In general, developments in the Second Sino-Japanese War were to the advantage of the CCP, as its guerrilla war tactics had won them popular support within the Japanese-occupied areas. However, the KMT had to defend the country against the main Japanese campaigns, since it was the legal Chinese government, a factor which proved costly to Chiang Kai-shek and his troops. Japan launched its last major offensive against the KMT, Operation Ichi-Go, in 1944, which resulted in the severe weakening of Chiang's forces. The CCP also suffered fewer losses through its guerrilla tactics. By the end of the war, the Red Army had grown to more than 1.3 million members, with a separate militia of over 2.6 million. About one hundred million people lived in CCP-controlled zones.