But what was the industrial capacity for China back then? Can they produce enough ammo and firearms for the troops? I know Japan controls Manchuria, which makes them self sufficient, but what about Chinese industry inland.
China had the entire Allied forces behind them, in term of support. Burma/India had been taken care of and the path from Burma/India to Yunnan and to Sichuan had been open. The supply line was secure. Plus, Sichuan province has always been self-sufficient since the ancient times. Yes, Manchuria was an industrial center, but none of its production could be sent to Japan islands. With its resources depleted, Japan had no way of sustaining itself. How could the Japanese troops keep fighting when their family was being starved to death? Without central control, how could the Japanese keep fighting at all? Further, Manchuria is thousands of miles away from central China. With the CCP/PLA (the whole 1.2 million worth) harrassing them behind the front line, it would be so difficult for the Japanese to maintain an effective supply line. How much of Manchuria's supply could actually be sent to the hands of the troops in the central China is a huge question.
As to China's supply. They could field a large force like that because they had enough supply. The fact that they could successfully organize and mobilize this huge force suggests that these troops were still loyal and disciplined, meaning that they were well-supplied. Otherwise, they would have a huge mutiny on their hands. No one would be dumb enough to recruit a force that large without knowing they have enough supply to support it. The Nationalists might be corrupted, but they were no fools. no one would put guns in the hands of millions of people who might not have enough to eat in a couple months... That's called suicide.