During World War II, China was divided into three occupation zones among the Communist (CCP) forces led by Mao Tse-tung based in the north, the Nationalist (Kuomintang, KMT) forces led by Chiang Kai-shek based in the west, and the Japanese armed forces along the eastern seaboard. When the U.S. enters World War II on December 8, 1941, the United States becomes an ally of China.

On February 18, 1943, as a result of German pressure, Japanese authorities established a ghetto in the Hongkew neighborhood of Shanghai for stateless Jewish refugees who had arrived in Shanghai from Germany and German-occupied areas of Europe from 1937-1942. Kanoh Ghoya was a Japanese official responsible for giving monthly passes to Jewish refugees living in the Hongkew ghetto in Shanghai, China during World War II. Ghoya was also known as the "King of the Jews" and was infamous for his inhumane treatment of ghetto inhabitants.

When the Japanese surrender on September 2, 1945, there are 25,000 to 30,000 Jews in China, 17,000 of them in Shanghai. The Shanghai ghetto is only opened with the arrival of an American goodwill mission on September 3, 1945. Communists and Nationalists race to establish positions in Japanese-occupied areas of China. During 1945-1947, Manchuria is under Soviet occupation, and Jewish community leaders of Harbin are arrested and sent to the Soviet interior. Chinese Nationalists and Communists sign a truce on January 10, 1946.