Sino–Soviet diplomatic ties had been cut following the Sino-Soviet conflict (1929). At the time the Soviet Union was undergoing a country wide program of mass industrialization in preparation for a potential war on two fronts (with Germany and Japan respectively). The establishment of Manchukuo complicated the situation as its territory now housed a colony of 40,000 Soviet citizens working on the Chinese Eastern Railway. Although the Soviets refused to officially recognize the new state, they sold the railway to the Japanese in March 1935, at a cut-rate following a series of Japanese provocations. The Soviets felt unready for a new confrontation with Japan, opting to improve relations with China as a temporary countermeasure. The League of Nations remained silent on the issue of Japanese imperialism, pushing China to reactivate its unofficial communication channels with its only remaining potential ally. The Anti-Comintern Pact, signed on 25 November 1936, erased the last doubts held by both sides regarding the ongoing reconciliation efforts. On 7 July 1937, the Marco Polo Bridge Incident marked the beginning of the Second Sino-Japanese War. On 21 August, China and the Soviet Union signed a non–aggression pact. Although the pact made no mention of Soviet military support, it de facto established a tacit understanding that the Soviets would provide both military and material aid.