We agree on the narrow issue that China shouldn’t be knocked out quickly and easily by Japan, but we may need to agree to disagree about the rest. It sounds to me like we’re trying to accomplish different goals. You seem mainly interested in encouraging players to re-enact the historical Japan vs. China conflict, where Japan made deep investments in the China war all through WW2, and didn’t get much to show for it. I’m more interested in making sure that all players have a variety of interesting and balanced strategies available to them – which might include a heavy war in China, or it might focus instead on Indonesia, Siberia, India, or a naval showdown with the Americans.
I think it’s very possible that given your group’s play style, your rules may work great for you and your friends – if America is in the habit of ignoring Japan, then you may as well buff up China to the max to keep Japan busy. In my playgroup, though, we often see Kill Japan First openings, where the USA builds a large navy and attacks the Japanese Empire with it starting on turn 3 or 4. If Japan has to spend most of its income fighting China, then Japan won’t have a realistic chance to even hold off the US Pacific Fleet, let alone defeat it. We do in fact sometimes invade mainland China, because Japan is usually too heavily fortified to take with an early transport fleet – the USA will only have enough cash left over to build one or two loaded transports in the opening, because the rest of their money has to go toward building up a fleet that can overwhelm the Japanese boats and planes.
Yes I think that this is something we can agree on. However I am still willing to test out your ideas.