Manchuria (if I've understood what I've read) was Chinese territory at the time of the invasion. Why didn't it lead to a Sino-Japanese war immediately, starting in 1931, separate from everything else in WW2? Why did the Chinese just let them have it, and no war ensued until the Marco Polo Bridge Incident in 1937?
The short answer: no power in China believed it could realistically defeat the Japanese in 1931.
The longer answer: the KMT's strategy against Japan up until 1937 was basically this: stall for time, until China was domestically strong enough to resist. This meant giving in to Japanese demands, while eliminating internal rivals to power ( communists, warlords, etc), and modernizing the armed forces and economy. In 1931 the KMT has not come anywhere close to being strong enough to fight the Japanese.
Even in 1936-7 there was a strong anti war faction in the KMT government, believing that they were still too weak and an all out war with Japan would spell an end to China. The decision to fight was in part driven by popular opinion, as KMT's policy of appeasement was becoming hugely unpopular and it was becoming politically infeasible to not fight, not to mention the Xian incident (though I've seen argument that Chiang already decided to fight before the incident).
So basically the KMT attempted to delay full scale warfare as much as possible to strengthen their domestic base. In 1931 they were most certainly not ready.
Source: The Battle for China: Essays on the Military History of the Sino-Japanese War of 1937-1945.