Japan and Russia long struggled for control of this rich, strategically important region. Japan tried to seize the Liao-tung peninsula in 1895, but was forestalled by the Triple Intervention. From 1898 to 1904 Russia was dominant. As a result of a Russo-Chinese alliance against Japan, the Russians built Harbin, the naval base at Port Arthur, and the Chinese Eastern RR. Japan, after victory in the Russo-Japanese War (1904–5), took control of Port Arthur and the southern half of Manchuria (see Liaoning), limiting Russian influence to the north. Chiefly through the South Manchurian RR, Japan developed the region's economy. From 1918 to 1931 the warlords Chang Tso-lin and Chang Hsüeh-liang controlled Chinese military power in Manchuria.
Japan occupied Manchuria in 1931–32, when Chinese military resistance, sapped by civil war, was weak. The seizure of Manchuria was, in effect, an unofficial declaration of war on China. Manchuria was a base for Japanese aggression in N China and a buffer region for Japanese-controlled Korea. In 1932, under the aegis of Japan, Manchuria with Rehe prov. was constituted Manchukuo, a nominally independent state. During World War II the Japanese developed the Dalian, Anshan, Fushun, Shenyang, and Harbin areas into a huge industrial complex of metallurgical, coal, petroleum, and chemical industries. Soviet forces, which occupied Manchuria from July, 1945, to May, 1946, dismantled and removed over half of the Manchurian industrial plant.
At the end of the war the Chinese Communists were strongly established in Manchuria and by 1948 had captured the major cities and inflicted devastating losses on the Nationalist army. From 1949 to 1954 Manchuria, ruled by Gao Gang, was the most staunch of the Communist areas in China. With the help of Soviet technicians the Communists rapidly restored Manchuria's large industrial capacity. After the Sino-Soviet rift in the 1960s there was a massive Soviet military buildup along the border, and several border incidents occurred. With the breakup of the Soviet Union, these incidents have subsided. China's changing economic policies led to renewed investment in the region in 1978, but the ensuing shift to a market economy resulted in unemployment and stagnant growth in the state-controlled businesses.