Few Chinese had any illusions about Japanese designs on China. Hungry for raw materials and pressed by a growing population, Japan initiated the seizure of Manchuria in September 1931 and established ex-Qing emperor Puyi as head of the puppet state of Manchukuo in 1932. During the Sino-Japanese War (1937–1945), the loss of Manchuria, and its vast potential for industrial development and war industries, was a blow to the Kuomintang economy. The League of Nations, established at the end of World War I, was unable to act in the face of the Japanese defiance. After 1940, conflicts between the Kuomintang and Communists became more frequent in the areas not under Japanese control. The Communists expanded their influence wherever opportunities presented themselves through mass organizations, administrative reforms, and the land- and tax-reform measures favoring the peasants—while the Kuomintang attempted to neutralize the spread of Communist influence.