W ORLD W AR I I 427 SOVIET UNION 9u工s40的 MONGOLIA Sea of XINJIANG Japan KOREA Control JAPAN QINGHAI Yan'ani过 Japanese Control Reformed Government TIBET Shanghai East GMD.Control Cb射立 TAIWAN Sea INDIA BURMA REsC INDOCHINA CHINA DIVIDED N Sonth China 1938 Sea THAILAND Formation of a second puppet state in Inner Mongolia,spearheaded by the Manchukuo armies in conjunction with Mongol troops and the Japanese. had initially been stalled by tough Chinese resistance.But after the crisis at Xi'an in 1936 and the attack on Shanghai in 1937,the Japanese strategy was to appease the powers of a rising Mongolian nationalism.Chiang Kai-shek had always refused to do this,fearing the area's complete secession from China.Bolder,the Japanese formed a Federated Autonomous Government under the leadership of a Mongol prince,aided by a Japanese "supreme adviser." This new government was given control of the two provinces of Suiyuan and Chahar,as well as the northern section of Shanxi province around Datong,formerly dominated by the warlord Yan Xishan.With its capital in Kalgan,the new regime was linked economically by the Kalgan-Datong- Baotou railway line,and was designed to exploit the iron and coal resources of the region as well as develop the production of electrical power.The Japanese encouraged certain aspects of Mongolian nationalism by such devices as dating documents back to the era of the warrior-ruler Genghis Khan.But the incorporation of the population of northern Shanxi into the