McHugh spent over twenty years in China, where he served as intelligence officer for the 4th Marines and U.S. Asiatic Fleet, Shanghai, from 1933–1935, became special Assistant Naval Attaché, American Embassy at Nanjing, Hankou, and Chongqing.
He was officer in charge of the Far East Secret Intelligence and served on the staff of the Fifth Amphibious Corps (G-5), was sent to Guam in 1944 to help plan the attack on Iwo Jima.
While returning to the United States, McHugh visited Archibald Wavell, criticized Stilwell severely, and spoke favorably of Chennault's claim that Japan could be defeated by a small American air force based in China.
This infuriated George Marshall, the Army Chief of Staff, who believed that McHugh's indiscretion irreparably damaged the American war strategy in southeast Asia and China.
[2] After retirement in 1946, he was an economic consultant for corporations having interest in the Far East, including Jardine, Matheson & Co. (Hong Kong), and Balfour, Guthrie & Co. (New York).