Compromise Peace to End Sino-Japanese War?

[Douglas]

Originally Posted by I, Guangxu

The long and short of it is, without some prior PoD and more significant butterflies, nobody in this scenario has any great motivation to seek peace.

For my purposes the POD can be as early as October 1939. Is two years long enough for something to happen where the KMT makes peace with Japan? I don't really care about the Communists, they can keep fighting the Japanese if they want to, I'm more concerned about keeping the KMT and Japan apart at a later date.

[Hendryk]

Originally Posted by Douglas

I don't really care about the Communists, they can keep fighting the Japanese if they want to, I'm more concerned about keeping the KMT and Japan apart at a later date.

The problem is that if the Communists keep fighting, they will rapidly damage the Nationalists' already shaky legitimacy beyond repair. Then civil war will (re-)erupt and the Japanese will find themselves dragged in.

In such a scenario, expect mass defections from the regular army's ranks as entire battalions turn over to the Communists in order to fight the Japanese.

[jaybird]

Originally Posted by Hendryk

The problem is that if the Communists keep fighting, they will rapidly damage the Nationalists' already shaky legitimacy beyond repair. Then civil war will (re-)erupt and the Japanese will find themselves dragged in.

In such a scenario, expect mass defections from the regular army's ranks as entire battalions turn over to the Communists in order to fight the Japanese.

Hell, try regiments and divisions. Expect Chiang to be assassinated within the year.

[Markus]

Originally Posted by maverick

Now for a semi Japanese expert opinion

You need a really good Chinese army bleeding the Japanese Army white to convince the nationalist leadership in Tokyo that its not worth it, and then get some concessions, like Manchuria and a puppet state in Northern China, or something.

Interestingly this sort-of happened. While the IJA won all the battles they lost a lot of men in China and there was no end in sight as the Chinese were not willing to give in to the Japanese demands. Some Japanese officers were getting worried China might turn into a bottomless manpower sink, making them to weak to fight what they considered the real enemy: the USSR! The same USSR that decisively beat the Kwantung Army in 1939. This disaster could have been the start of a different japanese policy towards China.

[Typo]

Was China close to collapse at any point 1937-1945 at all?

[Mostlyharmless]

After July 1937, Japan may had two narrow windows to try to escape the China quagmire.

The first was too early for your requirement but between 23rd November 1937 and 12th December 1937, Chiang might have been willing to make peace or at least he told the German Ambassador that he was interested (possibly on 2nd December). The logic was that Chiang had hoped that there would be intervention by either the Anglo-Americans or by the USSR but on 23rd November the Nine Power Conference broke up without proposing any action. Chiang's forces had been heavily defeated both around Beijing and Shanghai. His capitol was threatened and he had lost sufficient forces that his power relative to the warlords was reduced. Clearly his position would have been even weaker after he had accepted an unpopular peace but he might have accepted a peace based on status quo ante (with the arguments about what was the status quo ante left for later). At that point, he may not have been totally confident that he could withdraw into Sichuan because that area was held by warlords especially Liu Xiang, who was not a close ally. On 12th December, the Japanese sank the USS Panay and renewed the hope of foreign intervention. Simultaneously, atrocities around Nanking made it much harder for any Chinese leader to make peace. On 20th January, Liu Xiang died (some have suspected poisoned by Chiang's agents) and subsequently Chiang gained control of Sichuan.

The second window occurred within your required period from May/June to September 1940. The effects of the German victories was that the North of French Indochina fell into Japanese control (the USA reacted later to Japanese forces entering Southern Indochina to threaten Malay) and Britain agreed to shut the Burma Road. Meanwhile the USSR was now focused on Germany and was willing to agree a non-aggression pact. Thus none of the powers wanted to be distracted from Germany by Chinese affairs and Japan could have moved forces from Manchuria into China while mobilizing their economy to build tanks and trucks to use in China. Japan could also have built up Wang Ching-wei's Government. Naturally, Chiang again offered negotiations, probably as a device to win time. Amazingly, the Japanese neither launched major offensives in China nor offered generous peace terms (with a strict time limit for acceptance) but instead signed the Tripartite Pact in September 1940 and concentrated on building up their navy for the clash to come (actually spending on the Navy was the Navy's price for agreeing the Tripartite Pact).The British then reopened the Burma Road and the USA moved towards Lend-Lease.

[I, Guangxu]

Originally Posted by Typo

Was China close to collapse at any point 1937-1945 at all?

"Collapse" is a very relative term. At this time there were three different governments all laying claim to being the "legitimate" one. There was collaborationist government set up by the Japanese in occupied Beijing under KMT-defector Wang Jingwei, the KMT government-in-exile operating out of inland Chongqing under Chiang Kaishek, and finally the Communist shadow-government operating out of Yannan under Mao Zedong. Heck, if you want to throw Manchukuo into the mix for flavor you can count out four different "Chinese" governments. In this schema, China has already long since "collapsed", but where none of these (specifically the Nationalists and the Communists) were really a country, they were certainly an army. Unfortunately, the Japanese can't just crush one and call it a day, they have to crush both. Neither Chiang nor Mao was going to give up (or even give a shit) if the other surrendered. They'd thank Tokyo for doing their work for them and then likely fight even harder now that they didn't need to worry about fighting anyone once they were done with Japan (both sides still fought eachother occasionally even during the war, just less frequently).
While neither side was gaining much ground in rolling back Japanese conquests, each had fallen back to logistically remote positions with treacherous terrain that let them continue bleeding the invaders. While it is still within the realm of possibility that Japan could crush both opposition forces, really the only way they're going to make peace (by winning, in essence), it would require a significant investment of corpses.