France attacked 25 October 1939

Soviet Intelligence Briefing – the Kremlin early December 1942
Stalin was still getting information on the Japanese from the spy-network there.
The end of IJN and IJA to continue fighting was near as even with rationing and most of IJN heavy units sunk or still in repair even that pool of oil was shrinking with domestic production no where near fullfilling needs.
The latest WAllied offensive in China had showed that IJA had little ability to fuel movement of reserves except on train or by foot.
Part of the Kwantung Army had been railed south but had been caught up in fighting Communist Partisans and the advancing WAllies in Shansi Province.

IJN building projects had stalled due to lack of fuel for the furnaces to make steel which was also impeding the continued production of aircraft for both services.
Demand had reached a level industrial production couldn't supply.

Not just oil but also metals as IJN had continued building Battleships robbing themselves of metals needed for other more rewarding and needed builds such as AT-guns and Trucks.
The IJA had personnel throwing themselves at WAllied Tanks with explosives tied to their body to take them out due to the lack of 75mm+ AT-guns.

The Japanese was also losing ships faster than shipyards could produce but that problem was of lesser importance as a lot of Japanese shipping had been moored at quay's for some months due to lack of oil though production of steamengines had begun to propel merchantmen with coal which was in abundance.
Japan had tried to build plants for synthetic oil from coal but didn't have the knowledge or means to do this on a real needed industrial scale.

As a result the population of Taiwan was on the brink of starvation as items had to be moved by musclepower be it animal or human as a lot of the railway infrastructure had been destoyed by the WAllied bombings.

IJN was about to take into commission three new Light Carriers rebuild from liners and other merchantmen though two more was worked on but had stalled.
With the arrival more WAllied Aircraft Carriers and these larger than previously the IJN was being desparate.

The WAllies had been able to up their industry with France no longer reliant on imports of Aircraft from the USA though it still had a large Truck import.
British shipbuilders was turning out Aircraft Carriers and Battleships at a rate not expected.
The major import of the WAllies was oil from the USA though that was countered by export of rubber from British Far East and NEI to the USA.
France was heavily involved in rebuilding Poland actually surpassing the Soviet rebuilding of acquired Polish areas.

The majority of WAllied Armies had been demobilized as the need in the Far East being much lower than what had been mobilized to defeat Nazi-Germany.
The French were back to their usual 24 Infantry Divisions including the Motorized seven in France, 5 in FNA and 4 Colonial. However at least 1 Division in FIC had been a new raised Senegalese and 1 a Foreign Legion so figures couldn't be relied on though it seemed the 55 Reserve Infantry Divisions in France had been demobilized.
Most of the 7 Armoured Divisions seemed to have been retained though with reduced personnel and 1½ had been deployed to FIC – now in China.
9 Infantry Divisions in FIC/China of which 3 were raised in FIC.

The British had also demobilized though had 2 Armoured and 5 Infantry Divisions in FIC/China/Malaya but also 8 Commonwealth and Indian Infantry. It was estimated that 1 Armoured and 2 Infantry Divisions of the British were in fact from the Army in India. There was still the NZ Division in Borneo and a British in Malaya though the exact identity of the British units were difficult to assess as there as mentioned was British Divisions in India as well as in Britain and in other Colonies as well.

Basically the WAllied European forces were estimated at pre-war figures though the Navies and Airforces had been much enlarged.
Both Nations were still building Battleships though the RN seemed to be placing less interest in these and prioritizing Aircraft Carriers.

The French Navy building had taken up steam following the end of War in Europe with return of skilled workers to shipbuilders.
There had been some unrest in both nations as the large number of females employed in industry during the War had been sent back to the kitchen.
This had been most so in France where women had made large demonstrations which the French Communist Party had tried to infiltrate but had been rebuffed – it being a gender not a political struggle.

At the end of the intelligence resume an aide approached Stalin – Molotov had been receiving a diplomatic note from Imperial Japan asking for the Soviet Union to call a peaceconference in Vladivostok of Imperial Japan, Britain, France, Netherlands, China and Manchuria for negotiating an end to the war in the Far East.
Stalin grabbed something heavy and threw it through the room!

Behind the scenes December 1942
Britain informed the Chinese that they didn't want a Chinese Tibet – as Chaing had shown himself willing to let the Soviets keep the Pamir he might as well let Tibet stay independent. Chaing agreed though only vis-a-vis Britain but still thought of Tibet as part of China.
Chaing would have liked a independent Korea as a buffer with Japan but the Soviets seemed to prefer differently and neighter Britain, France or Netherlands being against it. Britain and France wanted to trade with him – Britain the most – but not include security guarantees outside 1895 borders. He didn't like to open the case with the Press as Historians would be asked of their impression of China's historic relations with its neigbours during the past and he didn't want that to surface in Europe and it would only fuel Stalins possible want of Manchuria or at least Liaochung Peninsular and Port Arthur. Shelve that issue.
He tried to reason with the British and French – Japanese bushido wasn't dead it was very much alive with the rulers and round 2 could be round the corner once Japan had gotten the lost men replaced. Even if it take twenty years they'll come back.

One of the Chinese rebuild Tank brigades had already been sent into Sinkiang Province to send a clear signal to Moscow.

The Japanese having submitted themselves to negotiations began feeling uneasy – still no cease fire only preliminary talks on organizing the next round of talks at continued envoy level in Moscow. The Soviets certainly feeling no sympathy of their cause.
Still no imports of oil and metals – works on IJN rebuilds and repairs as well as finishing Musashi and super Carrier Shinano delayed ad infinitum. Battleship Yamato kept in Inner Sea to preserve it as WAllied Submarines still were very active against shipping in the Japanese and Yeallow Seas.
Thus the Armies in China, Manchuria and Korea were steadily going downhill.
Shenyang Arsenal still manufacturing ammunition though new builds almost not an option with the lack of material needed and those available used for the ammo casings.
Aircraft production almost stopped with production turned to spareparts to keep those still in Japan flying and ferry the most necessary to Korea and Taiwan with the Taiwan route down the Ryu-Kyu's still being watched by the WAllied Carrier Groups.

Even if unsympathic to their cause Molotov had in a Soviet – Japanese only meeting outlined that Japan could retain Korea and Taiwan. He also expressed that the WAllies wasn't adverse to this. The Dutch and Italians were but bystanders to the arrival of Circus.
China would be accepting it – they needed peace. No further explanations.
The Japanese guessed the Soviet – China issues on Sinkiang, Liaochung Peninsular and Northeast Railway in Manchuria was enough of a deterrent to keep China in reins certainly so once the WAllies had left the mainland.

As far as the IJA suspected the WAllies hadn't initiated any new offensives directed at Beijing and into Manchuria – not because they didn't want to offend the Soviets - they kept them at arms length in Europe - but because they had no interests there.

Japan had informed Molotov that they was ready to agree to 1905 borders with 1895 changes as foundation well knowing that Liaochung Peninsular lease transferred by Imperial Russia 1905 to Japan had ended 1923.
Originally Japan had acquired the area from Qing Empire 1895 as part of the Treaty of Shimosheki which Imperial Japan would consider part of the basis for further talks. Also Japan was ready to begin discussing a peace treaty though only if hostilities would cease. Japanese merchantmen should as part of a cease-fire be allowed to sail unimpeded and Japanese imports resumed.

Molotov would take the Japanese wantings to the next meeting within the week.
At this the Japanese envoy screamed - ”You are deceiving us”, at which Molotov only smiled and left.

The Japanese shipping from Kiangsu Province across the bay to Shantung Province saw one merchanman evacuating troops deviating from the stipulated route being shelled by a French Cruiser and then resuming the announced route.
A few incidents did take place on the evacuation route from Hankow pocket in which Chinese troops both Government and Communist – the route passed close by a Communist pocket in formerly IJA controlled area – had opened fire on retreating IJA troops mainly claiming Medic carts being used for transporting support-weapons and ammunition.