Britain's new tank design, along with reports from Manchuria of the Type 89's inability to keep up with other motorized vehicles–given its inadequate 25 km/h top speed–brought about plans for a replacement.

Rather than focusing on performance improvements, the Chief-of-Staff Operations made a lighter weight the main requirement in order to lower production costs.

[3] The Engineering Department believed that it was highly regrettable that their efforts would be devoted solely to weight reduction, so instead, two concurrent projects were built.

[4] The initial design requirements for the two prototypes were: The Chi-Ni was envisioned as a smaller, lighter alternative to the Chi-Ha, a medium tank closer to the original Chief-of-Staff Operations preference for more "lightly armored infantry support vehicles".

The Chi-Ni also shared the same bell crank scissors suspension as the Chi-Ha that would continue to be used by later Japanese tanks until the end of the Second World War.

The crew of the Chi-Ni, unlike the Chi-Ha was only made up of three men, with the tank commander acting as both a gunner and loader in the small, single-man turret.

With the out-break of hostilities the peacetime budgetary limitations were removed and the more capable and expensive Mitsubishi Chi-Ha model was accepted as the new Type 97 medium tank by the army.