I have to disagree with the assessment that the Japanese truly believed that they would achieve victory through showing the Americans "martial spirit." While that may have been what was fed to the common troops, the realities of the doctrine were quite different.

Unlike most of the other industrialized major powers, Japan had no source of oil and had relatively weak industry. Add to the fact that she required a strong navy to protect her interests, requiring a high level of industrial production, and this left very little room for heavy guns, armor, and the mechanized warfare that we saw dominate the war in Europe.

This leads me to another point that I would like to refute-namely, Japan's manpower actually went UP through the war. You can see here that Japan's manpower went from 1.7 million in 1940 to 7.2 million in 1945. Hardly a "shrinking of numbers!"

So given the fact that Japan certainly had the manpower for her armies, but lacked the industrial strength to produce a mechanized force, the Japanese high command would pursue a doctrine that allowed them to maximize the impact of the former while minimizing the impact of the latter. As such, the use of airpower and light infantry tactics became prominent in the IJA. The IJA maintained its own separate air force from the navy, and as such was able to deploy it to support army objectives with ease, especially in China. Their air support was extremely effective, for instance causing so much disruption among the defending troops in Malaya that the Japanese were able to occupy most of the peninsula with little resistance. On a smaller scale, Japan was able to resist the Chinese attempt to wipe out their beachhead in Shanghai due to massive air strikes from Taiwan and naval artillery support from an old cruiser in the port.

That being said, some of Japan's major successes did come in the form of using their few mechanized units in major offensives with air superiority. For instance, Operation Ichi-Go, which severely weakened the Allied position in China. They also occasionally deployed tanks in their initial landings, including in Malaya where they were used in a very risky but successful night attack at Slim River. So the question becomes why is it commonly portrayed that the Japanese would fight using bayonets and banzai charges.

The answer is simple: Allied air superiority, and extremely poor Japanese logistics. Japan lacked the amphibious capability to rapidly transfer large amounts of troops, especially heavy equipment, and did not have sufficient defenses to protect the little capability they had. This is seen nowhere better than Guadalcanal. Here, due to the US swift capture of the airbase, and a massive Allied fleet, the Japanese was only able to reinforce their presence on the island using the infamous Tokyo Express, where squadrons of destroyers would drop off troops and supplies. Because destroyers are small and not designed for transport, they were only able to carry small arms and small bodies of troops. In addition, the Japanese did not understand exactly how invested the Allies were on the island, and committed land troops piecemeal. These small groups were immediately routed by superior American firepower.

The idea that the Japanese threw their troops away in suicide attack is also a bit misleading. Banzai attacks were not intended to be suicide per se: they were intended to be sudden shock attacks that would surprise the enemy and demoralize them. If anything, the real contributor to Japanese land defeats was the lack of supplies, heavy equipment, air superiority, and naval support. It also didn't help that the large island bastions (like Rabaul) where heavy Japanese defenses were in place were isolated and ignored by the Allies, rendering them unable to interfere with Allied operations and depriving Japan of their ability to redeploy these troops.

One more point-at Okinawa and Iwo Jima, unlike Guadalcanal, there was no way for Japan to retrieve these troops-any defense was by its nature to the death. At least at Guadalcanal, the navy was still strong enough to transport the remaining Japanese troops to safety. At Okinawa and Iwo Jima, there was no navy left.

Sources:

Kirby, Germany and Republican China

Harmsen, Shanghai 1937, Stalingrad on the Yangtze

Senshi Sosho, Japanese Official History of WWII

At the start of WWII, the Japanese did see the bayonet as an essential part of their fighting system. I would argue that the bayonet represented more than their preferred weapon, as obviously they used artillery, machine guns and planes like everyone else, but was a symbol of their martial spirit that they wanted every soldier to have. They believed that their martial spirit, symbolized by their willingness to close to hand to hand distance, would be enough to defeat American soldiers, who they saw as soft and not possessing the same stomach for close combat. Their weapon designs often supported this concept of being willing to close in with the enemy, as far as I know they are the only country to have bayonet attachments for their submachine guns and even light machine guns. I'm not as familiar with their war in China.

As the war went on, and their numbers and territory grew smaller, you can see some of the changes that they adopted. Towards the end, on Iwo Jima and Okinawa, they preferred to fight from prepared and deep defensive positions. Charges were seen as a last resort, once their defensive options had been used up. They did not attempt to break through American lines as they had in the past, like around the airfields of Guadalcanal.

If you'd like, I have a few quotes from "Inferno: The World at War 1939-1945" by Max Hastings to back some of this up, but it's sometimes hard to find an exact page on my older kindle.