Is the Yangtze 'River Road' hard coded into MWiF? (A major change to the map). I can never understand why so many MWiF players are fascinated by having the Chinese defend a route that is useless to the Japanese. It leads into the mountains, precisely where the Chinese want them to go. The River Road doesn't really go far enough though to be all that useful though. If Japan wants to approach Chunking by the hardest route with the least amount of strategic value, let them.
Japan is interested in resource hexes for themselves first and reducing Chinese production second. The Chinese shouldn't give things away, but neither should they just sit around waiting to be eliminated.
Nanning is an important hex to hold in the long-term, and would be lost on Turn 1 with this set-up, at least against a Japanese player that has seen the mid-game in China. Kunming would also be in some danger, and that would be very bad for China. The Japanese could likely blockade the hex, pretty much permanently, if they couldn't defeat the WarLord unit there before reinforcements arrive possibly on Turn 3 or more likely Turn 4 at best. A drive there would gain the Japanese little in the short-term but much in the long-term.
China's most valuable units at start are the two CAV units, their most mobile units. If held in reserve, they are the only units that have a good chance to respond to the Japanese axes of advance. Japan holds ALL of the strategic initiative for the first several years of the war, unless perhaps the USSR launches a DOW, though that can usually be a great opportunity for the Axis anyway.
I would also probably use the Japanese ART to attempt pin the Chinese FTR in the front-line and hopefully destroy it (Pilots always lost on a ground loss of an aircraft unit) before it could rebase away. It would be some time before it could be replaced. Drawing the long-range Mohawk is a bit of luck, it really helps deter the development of a Japanese Strategic Bombing campaign until the Japanese can get their 1940 Zeroes deployed. Even then it forces a flight by a Zero for each bombing run and does more as a Force in Being than it does by actually fighting.
The Nationalists holding Chengchow in strength is good, but they have to defend the south as well. They don't have railroads to zip around their country with as on other parts of the map. Japan holds most of the good routes and will be blocking the rest quickly.