Destruction of valuable naval equipment appeared during the second Sino-Japanese War (1937–45). While during its first war with Japan, Chinese naval officers sought to conserve their equipment, in the second war it was perhaps wasted needlessly. Specifically, during the second Sino-Japanese War the bulk of the Nationalist navy was sunk as blockships in what soon became clear was a useless effort to slow the Japanese advance up the Yangzi River. Competing Chinese fleets even matched each other to sink more ships. In the end, scuttling the Nationalist navy did not stop the Japanese. Since many of the sunken ships were in shallow waters, they could be salvaged and used by the Japanese invaders. For example, Ninghai and Pinghai were successfully refloated, adopted into the Japanese Imperial Navy, and renamed Mikura and Mishima.

Summary of the Nationalist Blockship Strategy

A blockship is a vessel deliberately sunk to prevent the use of a river, canal, or harbor. It may either be sunk by a navy defending the waterway to prevent the ingress of attacking enemy forces, or it may be brought by enemy raiders and used to prevent the waterway from being transited by the defending forces. This practice goes back many centuries. In China, it was a long-time tactic of the Chinese navy to block any maritime threat to China's internal rivers and canals by clogging harbors with log booms and chains strung from a row of floating junks. A famous battle scene in the 1966 Hollywood blockbuster Sand Pebbles takes place over destroying just such a river obstacle.

In 1930, Chiang Kai-shek appointed Admiral Ch'en Shao-kuan (1889–1969) the acting Minister of the Navy, and in 1932 he became the full Minister. Ch'en adopted an ambitious naval program, which envisioned 71 first-line ships, including battleships, cruisers, destroyers, submarines, and carriers, plus a total of 34 support ships, including submarines, depot ships, mine sweepers, torpedo boats, and hospital ships. The formation of this new force was to be divided into a Central, Northeast, and Guangdong Navy, with the Central navy being the largest and composed of two regular squadrons and a training squadron, the Northeast Navy accounting for the second fleet, and the Guangdong navy accounting for the third.