Japan’s subsequent victory allowed them to annex the region west of the old city and increase their influence on Shenyang; the Mukden Incident led the Japanese to further invade and occupy the rest of Northeast China, creating the puppet state of Manchukuo. After the Japanese surrender in 1945, Shenyang remained a Kuomintang stronghold, but was captured by the Communists in 1948 after the Liaoshen Campaign.
Along with its nearby cities, Shenyang is an important industrial center in China, and serves as the transportation and commercial hub of China’s northeast—particularly with Japan, Russia and Korea. A center of heavy industry in China since the 1930s, and the spearhead of the Chinese central government’s Northeast Area Revitalization Plan, the city has been diversifying its industry, including expanding into the service sector. Growing industries include software, automotive and electronics.