I'm quite curious as to why Japanese small arms were on a "lower tier" compared to every other major power during WW2. It seems that most other powers focused on vastly improving infantry weapons during the 20s, 30s and early 40s while Japan did not. For example, the US introduced the semi-auto Garand as a replacement for the bolt-action Springfield and as such its soldiers had a huge advantage in individual firepower compared to a bolt-action rifle. The Soviets fielded mass numbers of sub-machine guns which were dominant in close quarters fighting. The Germans had extremely effective machine guns that provided support for advancing troops.
The Japanese during the same time were lacking in all of these categories. All soldiers were issued bolt-action rifles that were outdated by the time they went to war with America. Sub-machine guns were almost non-existent (I only know of the Type-100 and from what I've read it seems to have been much less effective than the Thompson/PPSh/MP40/etc). As for machine guns, I've read that they were not even belt-fed but instead were loaded by using 5-round rifle clips stacked into a tray.
So why did a country with such imperialistic ambitions and military power neglect the average infantryman? Would Japan have fared better in the war if they had upgraded their small arms during the inter-war period the same way the other major powers did?
The Japanese didn't really neglect their infantrymen, they just didn't have the technological capability to do better. Most of their designs were imported from the west, and the truly innovative stuff was only starting to manifest itself. A good example to look into is the history of their battleship Kongo - sinking a destroyer as a part of Kurita's Center Force at Leyte Gulf, and scoring hits on an American escort carrier. Kongo was built in Britain by Vickers. The entire Japanese experience in building their own capital ships represented just those ships built after Kongo - but the end of the short series is the most powerful class of battleships ever produced.
In terms of small arms, the Japanese were at least trying. They knew they couldn't produce the mechanism behind the M1 version of the Garand, so they did the next best thing. They increased their barrel from .256 caliber up to .303 caliber (after knocking off the British .303 round earlier for MG use) in 1939 to match the Garand (I think, since I'm still not sure what the 30-0-6 round designation means, other than .30 caliber), and adopted a 5-round clip that's quite similar to the American system. The bolt action in the rifle was more reliable, especially at the poor manufacturing tolerances of Japan, but, still, they were still in the process of producing them for their troops as late as 1943 when this handbook would have been written for a 1944 publication date.
In that handbook, you will see they also developed a new rifle-launched fragmentation grenade in 1939. In 1936 they produced a cheap knockoff of the British Bren light machine gun (magazine-fed) in their small .256 caliber, and upped that to .303 in 1939. They also produced a .303 knockoff of the WWI Lewis machine gun in 1932 that was loaded with the traditional circular drum. The machine gun you're referring to is the Model 92 machine gun built in the same year as the Lewis knockoff, which used a 30-round clip of .303. A year later it looks like they increased the size of their Bren knockoff to 50 caliber machine gun. I guess they then knocked off the US 50-cal round?
Either way, it does seem from the 1939 date on the new rifle caliber and fragmentation grenade that the Japanese were seriously approaching the problem of fighting a ground war with the Western powers. Where .303 was reserved for machine guns, it was now adopted for line rifles - leading to certain bottlenecks in the manufacture and distribution of ammunition. As I said though they were generally playing catch up to the west, similar to how the Soviet Union was always a second-tier technological power, except that Japan didn't get the same bang out of their centrally planned industrialization that the Russians did.