The Japanese occupation severely disrupted China's traditional economic structures, particularly in the occupied territories where the Japanese extracted resources for their war effort. In response, the CCP implemented alternative economic policies focused on self-sufficiency and mass mobilisation. They promoted the development of cooperative industries and agriculture in the base areas, which were less reliant on traditional markets and more resistant to occupation forces' disruptions. The Communists also instituted land reforms, redistributing land from landlords to peasants, which undermined the traditional feudal economy and won them vital support from the rural population. These policies helped to sustain the Communist-controlled areas during the occupation and built the foundation for the CCP's economic programs after the war.

The concept of 'People's War' was central to Mao Zedong's military strategy, predicated on the idea of mobilising the masses to participate actively in both military and support roles. During the Sino-Japanese War, this strategy entailed engaging the broader population in the fight against the Japanese, thereby expanding the base of resistance beyond regular military units. The CCP encouraged peasant participation through land redistribution and anti-Japanese propaganda, fostering a sense of ownership in the war effort among the peasantry. This strategy also meant avoiding set-piece battles in favour of guerrilla tactics, undermining Japanese control, and sustaining a protracted conflict, which the CCP believed they were better positioned to survive. 'People's War' thus became a defining principle of the CCP's successful resistance against both Japanese occupiers and, later, Nationalist forces.

The 'Hundred Regiments Offensive' in 1940 was a large-scale campaign by the Communist forces against the Japanese and demonstrated the CCP’s capacity to mobilise and coordinate significant military operations. Despite its initial successes, the offensive led to harsh Japanese reprisals against both the Communist forces and the civilian population, resulting in substantial losses. Consequently, the CCP leadership reassessed their military strategy, shifting towards a more cautious approach that emphasised guerrilla warfare over conventional engagements. This strategic shift allowed them to conserve their forces and gain popular support, which was critical for their endurance during the war and eventual success in the subsequent Civil War.

The New Fourth Army Incident in 1941 marked a crucial turning point during the Sino-Japanese War, where the simmering tensions between the Nationalists and Communists erupted into open conflict. This clash resulted from the Nationalists’ attempt to disband the Communist-led New Fourth Army, which was officially part of the united front against Japan. The incident significantly undermined the already fragile Second United Front, with the Nationalists’ aggressive actions bolstering the Communists' image as staunch defenders of Chinese sovereignty against Japanese aggression. It also revealed Chiang Kai-shek’s prioritisation of eliminating Communist influence over resisting the Japanese, a strategic miscalculation that would contribute to the Nationalists’ declining popularity and eventual defeat.

The 'Dixie Mission' was the first official U.S. military presence in areas controlled by the Chinese Communist Party during World War II. American observers and officers were sent to Yan'an to establish a U.S. Army Observation Group, which assessed the CCP as a potential military ally against Japan. The mission facilitated a brief period of U.S.-CCP cooperation, with the Americans providing limited aid and gaining insight into the Communist movement. Although the mission did not result in significant material support, it was symbolically important, representing a form of international legitimacy for the CCP. However, U.S. policy ultimately favoured the Nationalists, and the mission did little to alter the trajectory of U.S. support during the Chinese Civil War.