Karabiner 98k rifles). The Chiang Kai-shek and Hanyang 88 rifles remained as the predominant firearm used by Chinese armies throughout the war. Another factory was established to produce gas masks, but plans for a mustard gas plant were eventually scrapped. In May 1938, several arsenals were built in Hunan to produce 20mm, 37 mm, and 75 mm artilleries. In late 1936, a plant was built near Nanking to manufacture binoculars and sniper rifle sights. Additional arsenals were built or upgraded to manufacture other weapons and ordnance, such as the MG-34, pack guns of different calibres, and even replacement parts for vehicles of the Leichter Panzerspähwagen. Several research institutes were also established under German auspices, such as the Ordnance and Arsenal Office and the Chemical Research Institute, under the direction from IG Farben. Many of those institutes were headed by Chinese engineers who had returned from Germany. In 1935 and 1936, China ordered a total of 315,000 of the M35 Stahlhelm and many Gewehr 88, 98 rifles and the C96 Broomhandle Mauser. China also imported other military hardware, such as a small number of Henschel, Junkers, Heinkel and Messerschmitt aircraft, some of them to be assembled in China, and Rheinmetall and Krupp howitzers, anti-tank, and mountain guns, such as the PaK 37mm, as well as armoured fighting vehicles such as the Panzer I. The modernization efforts proved to be useful in the war. Although the Japanese were able to capture the Nationalist capital at Nanking, the process took several months, with far larger losses than either side had anticipated. Despite the defeat, the fact that Chinese troops could challenge Japanese troops boosted Chinese morale. In addition, the cost of the campaign made the Japanese reluctant to go more deeply into the Chinese interior, allowing the Nationalist government to relocate China's political and industrial infrastructure into Sichuan. End of co-operation The outbreak of the Second Sino-Japanese War, on July 7, 1937, destroyed much of the progress and promises that had been made. Hitler chose Japan as his ally against the Soviet Union because Japan was militarily capable. In addition, the Sino-Soviet Non-Aggression Pact of August 21, 1937 did not help change Hitler's mind, despite protest from Chinese lobbies and German investors. However, Hitler agreed to have Hapro finish shipments that had been ordered by China though he refused to allow taking any more orders from Nanking. There were plans of a German-mediated