The term came into more frequent use after the Battle of Nanking, when Chiang Kai-shek evacuated the government of the Republic of China to Chungking (modern Chongqing).

Conflict between the Communists and Kuomintang continued in the area of Free China, the most severe example being the New Fourth Army Incident.

However, the Nationalist government transferred hundreds of thousands of Chinese troops away from the front with Japan towards western provinces like Gansu, Qinghai & Xinjiang between 1942-1944 in order to seize Xinjiang from the Soviet Red Army and pro-Soviet warlord Sheng Shicai bringing Xinjiang under "Free China" and weakening China's front lines with Japan.

It was only in December 1944, that the Japanese Operation Ichi-Go succeeded in taking control of Guangxi, giving them a continuous railway link between Manchukuo and Southeast Asia.

The Japanese planned an invasion of Sichuan in an attempt to destroy the KMT government in Chongqing but were never able to implement it.