This article discusses how economic motivations behind the Japanese decision to invade North China in the late 1930s were understood by two contemporaries, Freda Utley and Nawa Toichi. During the interwar period, East Asian economies, including those of Japan and China, considerably strengthened mutual economic ties through trade, investment, migration, and the transfer of technological and managerial skills. Although Japan was technologically ahead of other countries, her economic superiority was by no means overwhelming. For example, the development of a modern Chinese cotton industry centred around Shanghai reduced Japanese exports of cotton textiles to China, which resulted in Japanese cotton mills both diversifying into higher-value goods and artificial fibres and investing in China. This also explains Japanese textiles being suddenly sent to South-east Asia and India in large quantities in the 1930s. The development of Manchuria played an important role in the expansion of Japanese heavy industry in terms of market, investment opportunities, and the securing of resources. It also attracted largescale migration from China. Indeed, against a background of world depression and collapse of trade in the 1930s, East Asia stood as a notable exception where the dynamics of regional integration continued to work well. The region's economy and trade was outperforming the rest of the world by a significant margin (see Table 1).1 There is thus no doubt that the Japanese idea of an East Asian co-prosperity sphere could have had good economic grounds if an equal political footing had been assumed. That this was not the case is well-known; Japan con-