I’ve had this explained to me in the case of the Netherlands turning British once attacked. Assuming that the Brits are at war and the Netherlands aligns to the British upon being attacked by the Japanese, the alignment doesn’t occur until after the combat phase. In other words, the Japanese can attack as many Dutch territories and units as they want and the Dutch won’t change to British until the attacks are over and the territories have changed hands to the Japanese. This won’t constitute a Declaration of War against the British and trigger the American backlash.
I would play China the same way. The Japanese should be allowed to finish their Combat Phase and the territories change hands before the alignment of the Warlords and the consequences are in effect. To do otherwise, you might as well count them all up as soon as Japan starts making their Combat Moves. That would break the game and the spirit of how the rules intended the consequences of Axis belligerence to work.
You do point out something important for the Japanese player to consider though. They need to make sure they bring the KMT down below that threshold on their initial attack. Good catch.