During the five years between Dai's seizure of power and his invasion of Japanese Korea, the Chinese and Japanese armies engaged in a number of skirmishes. The performance of the NRA in these battles boosted the Kuomintang leaders' confidence China could defeat Japan. Furthermore, the IJA saw a war with the Soviet Union as more likely than a Chinese invasion of Korea.

At 07:00 on 14 August 1941 (not June) 1941, 600 regular NRA troops and 200 Blue Shirts paramilitaries attacked a Japanese border checkpoint in Manpo near the Chinese-Korean border. A few hours later, a Chinese army under the command of Li Zongren invaded Korea, triggering an independence uprising from far-right Korean nationalists.

As expected, the NRA's advance was temporarily checked at the Battle of Changjin, but it resumed again by the turn of the year, allowing the Chinese and their Korean allies to capture Pyongyang on 6 February 1942. Kuomintang authorities then installed a Korean puppet government led by ultranationalist Lee Beom-seok, who pursued a policy of close cooperation with China.

Following the fall of Pyongyang, the United States increased its lend-lease aid to Japan, allowing the IJA to defeat Axis forces at the Battle of Seoul by January 1943. The Japanese then took advantage of their more modern military to launch a full-scale offensive against China that resulted in the occupation of most of northern China by Japan.

After Nazi Germany unconditionally surrendered on 28 July 1945, and a Soviet invasion of western China the following day, the Chinese military position became hopeless, motivating Dai that to sign an armistice on 3 August. Later that month, pro-Japanese elements of the Kuomintang overthrew him in a coup, unifying China proper under the Wang Jingwei regime.