The Provisional Government united these smaller local councils and nominally controlled the provinces of Hebei, Shandong, Shanxi, Henan and Jiangsu.

However, the regime's real influence was largely limited to where Japanese military control extended permanently, which meant its jurisdiction was in larger cities and railways.

[1][2][3][4] The Provisional Government of the Republic of China was officially inaugurated by Wang Kemin, former Kuomintang Minister of Finance and Shanghai banker, on 14 December 1937, with its capital at Beijing.

Initially Major General Seiichi Kita, the head of the local Japanese special services and foremost "puppeteer" in north China on whose initiative the Provisional Government would be formed, wanted the head of state to be either Cao Kun or Wu Peifu, former warlords of the early republican period who had some national fame in China.

No formal treaties or other agreements were concluded by the Provisional Government, with all negotiations done directly with the authorities of the Japanese North China Area Army.

The Provisional Government took the view that the Kuomintang took unnecessarily hostile actions towards Japan, allied with the Soviet Union and the Chinese Communists, and thus ended up damaging China.

The ideas of Confucianism, such as the "kingly way," were considered by the government to be antidotes to the social damage caused by Sun Yat-sen's Three Principles of the People.

Among their activities ranged from training future civil servants, sending students to Japan, giving medical services to remote villages, providing disaster relief, establish free tea houses, promoting Chinese art and pilgrimages to Confucian temples, as well as discussing political events in their radio stations and official newspaper, the New People's Daily.

In the end, however, the organization failed to rally mass public support for the Provisional Government and Japan, being countered by the Communist Party's propaganda.

However, it was not long before mass inflation began and neither Chinese merchants nor Japanese businessmen decided to accept the new bank notes.

The Kuomintang currency remained in use everywhere outside of the Japanese military's immediate reach, while Communist guerrillas operating in north China declared it illegal to possess United Reserve Bank notes.

The circulation of Japanese military scrips for the purchases of local goods and the introduction of Bank of Japan yen notes also added to the confusion.

A so-called "Opium Prohibition Bureau" had been established, but it actually had the task of bringing the narcotics trade under the control of the authorities rather than suppressing it.