The People's Republic of China wasn't actually a thing until 1949. What happened was in 1936 the Nationalists had crushed most of the Communist forces and were essentially besieging them in their last holdout in Shaanxi province. However, in 1936, Zhang Xueliang kidnapped Chiang Kai-Shek during what was known as the Xi'an incident. Zhang Xueliang was the most powerful warlord in North China and had also been responsible for Manchuria. However, in 1931, during the Mukden incident, several Japanese forces operating independently from the government essentially unilaterally invaded Manchuria. Zhang Xueliang did not receive any assistance from Chiang in defending Manchuria from the Japanese, as Chiang was too busy fighting the Communists. As a result, he was concerned that the Japanese would continue to invade Chinese territories (especially his own) and that the only way to defend against Japan was for the Civil War to end. By kidnapping Chiang, he essentially forced Chiang to end the Nationalist attacks on the Communists, and the so-called "united front" was forged, where the Communists armies would fight technically under the banner of the Kuomintang's National Revolutionary Army (As the 8th Route Army and the New 4th Army) against the Japanese. There were secret discussions between Zhang, the Communists under Mao and Zhou Enlai, and even Joseph Stalin. Mao supposedly wanted Chiang killed, but Zhou Enlai and Stalin overruled him (as it was in Stalin's interest to keep China from fracturing against an aggressive Japan).

After the Xi'an incident, Zhang Xueliang was awarded with house arrest until Chiang Kai-Shek died in 1975. However, Chiang held up his end of the bargain and did not press his attack on the Communists, which gave them the breathing room they needed to regroup. The following year, 1937, saw the outbreak of the Second Sino-Japanese War with the Marco Polo incident sparking hostilities in North China with the quickly following Shanghai incident sparking full out war and resulting in the committal of Chiang's best troops. The Communists were mostly left alone, committing guerrilla warfare in Japanese occupied North China, although there was a notable campaign called the Hundred Regiments Offensive which committed the bulk of the Communist forces in a large scale guerrilla offensive (which ultimately did some damage but wasn't anything particularly game changing). There was still constant bickering the two sides, however, which resulted in the 1941 New Fourth Army incident where KMT troops and CCP troops clashed, effectively ending the cooperation between the KMT and the CCP.