In January 1915, Japan moved to exploit the temporary power vacuum in the region by presenting the Chinese with the "Twenty-One Demands." This harsh challenge was designed to extract widespread political and economic concessions to make Japan the dominant colonial power in China. The First World War changed the political situation in East Asia. It had eliminated German and Russian influence and weakened that of Britain and France. Japan, without an active involvement in the war had been spared the cost, and had taken the chance to strengthen its trade and industry. Despite acquiring the former German Pacific colonies as mandated territories, Japan felt aggrieved that its objectives were not fully realized at the Paris Peace Conference. This sentiment added to the feeling that, just as in 1895 and 1905, the potency of its military victories had been watered down. .
The beginning of the worldwide Depression in 1929 increased the desire for expansion, which many Japanese felt was necessary to ensure nation survival. Japan suffered severely from the collapse, with its rural economy particularly badly hit. The depression lead to Japanese aggression, they feared that if they did not do anything they might lose the military position that hey worked so hard to get. However, America did very little to try and stop Japan because they thought that military action on them was not reasonable as Japan was to far away. Economically, neither country wanted to damage the valuable trade they had built in the 1930's. .
On July 7, 1936, after a minor incident at the Marco Polo Bridge near Peking, war broke out between Japan and China. The Japanese Army, which by now had over 700,000 troops, won impressive victories in 1938. Nevertheless, by 1939, the war was costing 5 million dollars per day, adversely affecting Japan's industrial expansion and restricting its ability to pay for the vital finished goods and raw materials it needed from the rest of the world.
