It was initially designed to sponsor industrial and commercial development in China to boost support for Japanese rule in occupied territories.
The Second Sino-Japanese War had not been quickly resolved as had been promised by the military, and Prime Minister Fumimaro Konoe authorized the establishment of a central agency to coordinate all government activities and economic initiatives on the Chinese mainland, aside from the issue of formal diplomatic relations, which remained within the purview of the Foreign Ministry.
It was intended that the Kōain would sponsor industrial and commercial development, creating jobs and infrastructure, and thus boost support for Japanese rule in the occupied territories.
Per historian Timothy Brook, some military members of the Kōain spoke out against expansion of the conflict in China during 1939-1940, urging genuine independence for the Japanese-sponsored collaborationist states, and were consequently punished for their views by mainstream Army officials.
[2] The Kōain was also directly involved in providing funds to opium dealers in China for the benefit of collaborationist governments in Nanjing, Manchukuo and Mengjiang.