ORIGINAL: Xargun
This is important to me as well.. My opponent throws his depleted chinese units across rivers and into my units counting on my units to destroy them and he gets a free rebuilt unit containing more squads than it had before. Seems a bit fishy to me - allows the chinese (allied) player to throw his units away, knowing he'll get it back in a stronger condition.
No, the rule, as stated in the manual and going back to WITP, allows the Allied player the option of trading time (months) and defense space (the unit appears very far back, in the capital), for the Japanese getting VPs NOW.
I fixed it for you.
(Yeah, I'm steamed. This was not a bug fix. This was a gameplay change and not disclosed so far as I can find.)