After the observation ended, the British and Dutch fleets felt there was no need to continue watching. Since the People's Party Army had already landed on Taiwan on a large scale, the outcome wasn't hard to guess. After the Japanese Navy suffered a significant blow, the war's victory or defeat was no longer worth considering. Leaving a small fleet to continue observing, the main force of the joint British and Dutch fleet headed south back to port.

This time, without sending liaison personnel, the Governor of Singapore and the Governor of the Dutch East Indies met in person. The Dutch Governor seriously proposed that strategy is not a joke; if China uses its army to strike Britain and its navy to strike the Netherlands simultaneously, all of Southeast Asia would be in danger.

Regarding this highly confrontational viewpoint, the British Governor of Singapore didn't really take it to heart. The biggest taboo in diplomacy is believing whatever others say. The Dutch spoke as if China would attack Britain tomorrow, which was clearly unrealistic. The Governor of Singapore laughed, "Why doesn't the Dutch side reduce the total amount of oil exported to China? That way, China's navy won't be able to move."

This sounded very reasonable, but the Dutch Governor was no fool; he knew immediately this was mockery. The Dutch could stop selling oil to China, but the Americans would sell in large quantities. Not only would the Americans sell, but the British right in front of him would also sell in large quantities. In such a terrible period of the Great Depression, countries were engaging in extremely fierce competition for the export of bulk commodities. The hostile state between the Netherlands and China was also the Dutch Governor trying to make a fortune, not that the Netherlands was really so full it wanted a military conflict with China. The oil trade between the Netherlands and China had not been affected at all; what should be sold was sold, what should be bought was bought.

Seeing that the British side had no intention of endorsing the Netherlands, the Dutch Governor realized he had really been played by the British this time. Japan, which had originally jumped the highest, was now visibly about to be defeated. Britain had the strongest power but acted the most moderately. The Netherlands was still holding China's Wang Qinian. Given the Dutch attitude of being seven kinds of dissatisfied and eight kinds of indignant, insisting on bringing Wang Qinian to justice, giving up so disheartenedly would be hard on the Dutch authorities' face.

Doing so wasn't really a big deal. Military disputes between China and Japan were just things that had erupted continuously in recent decades; it wasn't strange for the two countries to fight. Complete peace would be what was strange. Similarly, the sudden deterioration of relations between the Netherlands and China was the seemingly strange thing.

Wang Qinian's matter couldn't be dragged on forever. The Netherlands had wanted to handle Wang Qinian in a high-profile manner, but now couldn't continue to do so. Even though Wang Qinian's attitude was like a stone in a latrine—hard and smelly—and he had remained quite high-profile in his opposition to Dutch detention. On the fourth day after Britain and the Netherlands watched the battle, the court of the Dutch East Indies hastily opened a session and handled a pile of cases with unprecedented "efficiency."

Regarding the so-called "tax evasion" case, a fine was imposed. As for Wang Qinian, after fabricating some charges, he was declared an "persona non grata" and deported. As for Chinese banks, the Dutch side changed its initial method. Instead of ordering the Bank of China to hand over all data, they prohibited the Bank of China's private deposit business in the Netherlands. Within a deadline of four months, Chinese banks were to clear up all depositor accounts.

This seemingly much milder handling method did not satisfy the Chinese side at all. Bank deposits are meant to be loaned out. The Chinese side had not brought the money in the Dutch East Indies banks back to China but was investing in the Dutch East Indies. This was mainly targeted at Chinese enterprises. Now suddenly requiring the Chinese side to stop private business meant short-term loans couldn't be collected at all, and banknotes had to be hurriedly shipped from China.

The trouble and losses involved couldn't be judged in the short term. The Chinese banking industry had long begun implementing financial operational independence. Chen Ke was most afraid of a replay of the situation he had seen where a leader could get a bank loan just by signing a note, so there were strict regulations in the banking system. Even if it couldn't be called arrogant domestically, the banking industry, which was considered an important department, was treated this way by the Netherlands and Britain. Even comrades in the banking industry who were not from military backgrounds began to show an attitude of declaring war on the Netherlands. It was just that China and Japan were fighting fiercely at this time, so this voice wasn't too obvious.

The war between China and Japan over Taiwan did not end in a short time. This wasn't because China wanted a protracted war; the Chinese side wanted to resolve the battle for Taiwan quickly. But Japan seemed determined to keep Taiwan even if it meant pouring the whole country's strength into it. Since Japan was so persistent, the Workers' and Peasants' Revolutionary Army didn't mind prolonging the war with Japan.

Even after three Kongō-class ships were sunk, the Japanese Navy still had no intention of stopping. Japan insisted on sending a fleet to transport over a hundred thousand Japanese army troops from Japan to Taiwan island, attempting to use numerical superiority to resolve the more than 60,000 Workers' and Peasants' Revolutionary Army troops who already controlled southern Taiwan.

But the equipment gap between the two sides was too large. Taiwan is mountainous, and weapons more suitable for mountain warfare are automatic firearms. The Type 31 automatic rifle is a product imitating the Type 59 submachine gun and the Type 81 gun family, and is also China's future standard infantry weapon. The bullet uses a 7.62mm caliber and employs the famous future steel-core cavity design. The steel core head also has a lead sleeve extension. Although it won't shatter like a dum-dum bullet after hitting a human body, the hollow point easily deforms and bends. After the warhead decelerates, the lead sleeve in front of the steel core shifts, promoting further instability and tumbling of the warhead. The human body will bear almost all the damage. Compared to Japan's Type 38 rifle which makes "one hole on both sides," the People's Party's Type 31 automatic rifle is simply a demonic design.

The Japanese Army and the Workers' and Peasants' Revolutionary Army fought in the mountains. For every shot the Japanese Army fired with their Type 38 rifles, the Workers' and Peasants' Revolutionary Army here fired at least three shots, holding a comprehensive advantage in firepower. The Type 31 bolt-action rifle took the path of precision shooting. With the new coating technology, the 2x optical sight replaced the traditional sight, suppressing the Japanese army in accuracy as well. If soldiers of the Workers' and Peasants' Revolutionary Army were hit by bullets, as long as it wasn't a fatal vital point, they could continue fighting after bandaging. If Japanese soldiers were hit, they would either die or suffer fractures, immediately losing combat effectiveness.

Unable to contest the mountains, the Japanese army dared not drive straight south. As fierce fighting continued, the Japanese army was soon full of wounded soldiers.

The People's Navy also had no intention of attempting a decisive battle with Japan. Generally speaking, the side in a psychological disadvantage always hopes to achieve victory in a decisive battle through some "miracles." This has nothing to do with national character. For example, when Chen Ke played games as a casual player against professional players, he always fantasized about performing above his level while the professional player suddenly messed up. Such things have happened, and miracles will always appear as long as one is willing to try and the base of attempts is large enough. The problem is that naval battles don't offer that many opportunities for repeated attempts, just as the People's Navy chose to turn and run when facing one against three.

Japan's so-called national character is that the country's mentality is always one of psychological weakness. The enduring popularity of anime like Gundam, which features decisive battle weapons, in Japan is due to this traditional mentality.

The People's Navy knew its strength was weak, but it didn't have Japan's psychological weakness. In every battle, everyone would despise the enemy strategically but value the enemy tactically, accumulating small victories into a big victory.

The Taiwan Strait is relatively shallow and unsuitable for battles of the battleship class. The People's Navy utilized the "Air-Sub-Fast" model. Four torpedo boats accompanied by a supply ship roamed the Taiwan Strait. Encountering an opponent they could fight, the torpedo boats would rush up and unleash a barrage of torpedoes, then turn and run. For opponents they couldn't fight, they would immediately call for air force sorties. Light cruiser-class warships were dealt with by torpedo bombers, and destroyers were dealt with by medium twin-engine bombers. As for other deep-sea areas, the Japanese could go wherever they wanted; there were People's Navy submarine forces patrolling there. The submarine forces adopted a mode of taking a potshot when they saw a chance and then retreating.

What Japan feared most was not a short-term decisive battle, but a long-term war of attrition. After fighting turned into this mode on both land and sea, Japan's losses skyrocketed.

The fighting lasted from June to July. China lost over two thousand tons of vessels, while the Japanese Navy's losses were more than double China's. After all, what China had sunk were torpedo boats, while many of Japan's losses were destroyer and frigate class. In land battles, Japan lost nearly 30,000 troops, while the Workers' and Peasants' Revolutionary Army lost less than four thousand.

The Central Military Commission was very puzzled by Japan's gritty determination to hold on. Had Japan taken the wrong medicine? Or had they not taken any medicine at all? But once the war started, Japan strictly blocked internal news, leaving the People's Party's intelligence department with no clue. Apart from the endless daily battles, they could only wait for the final news to come out.

By July, the Central Military Commission carried out tentative work, ordering the Air Force to drop surrender leaflets on the Japanese garrison in Taiwan. They contained information about how hard the lives of the Japanese people were, and how the Japanese financial conglomerates and warlords levied exorbitant taxes and forced the Japanese people to die.

Chen Ke always felt that history proved Chairman Mao's attitude about distinguishing between the Japanese people and Japanese militarists was generally correct, but in reality, there were problems. The Japanese people themselves also supported the war. Apart from war, Japan had no means to resolve its domestic pressure.

So he just executed it according to the method of propaganda warfare. He didn't have much confidence in the propaganda warfare of the WWII era. In the Yan'an period, the Party even collected wanted posters printed with many leading cadres to use as writing paper. It was common to tear such things to roll cigarettes. The revolutionaries and Red Army soldiers back then were not illiterate people.

However, the matter greatly exceeded China's expectations. On the third day after the leaflets were dropped in large quantities, Japanese soldiers began to defect to the Chinese side. The news they brought was even more surprising. Large-scale political struggles had occurred within Japan!