The situation continued to deteriorate over the next week. By January 27, the Japanese military had already concentrated some 30 ships, a number of seaplanes, and nearly 2,000 troops around the shoreline of Shanghai to put down any resistance in the event that violence broke out. The military's justification was that it had to defend its citizens and their property. In addition,
Hongkou district, where most of the Japanese citizens resided, had been assigned as the Japanese Defense Sector as part of the International Defense Scheme enacted by the foreign powers in Shanghai the year prior. The Japanese issued an ultimatum to the
Shanghai Municipal Council demanding public condemnation and monetary compensation by the Chinese for any Japanese property damaged in the monk incident, and demanding that the Chinese government take active steps to suppress further anti-Japanese protests in the city. During the afternoon of January 28, the Shanghai Municipal Council agreed to these demands. Throughout this period, the Chinese
19th Route Army had been massing outside the city, causing consternation to the civil Chinese administration of Shanghai and the foreign-run concessions. The 19th Route Army, unpaid by the bankrupt government, were seen at worst as potential looters who might enter the wealthy Settlement, Three thousand Japanese sailors were mobilized in response, attacking the neighboring district of
Zhabei and assuming control of the "de facto" Japanese settlement in Hongkou. In what was a surprising about-face for many, the 19th Route Army, which many had expected to leave after having been paid, put up fierce resistance. Also on the 28th, the
Chinese Air Force dispatched nine planes to the
Hongqiao Aerodrome, and the first aerial battle between Chinese and Japanese aircraft occurred on that day, although neither side suffered losses. Though the opening battle took place between the Hongkou and Zhabei districts of extra-settlement Shanghai, the conflict eventually spread outwards towards
Wusong and
Jiangwan. The foreign concessions remained largely untouched by the conflict, and it was often the case that those in the
Shanghai International Settlement would watch the war from the banks of Suzhou Creek. They could even visit the battle lines by virtue of their
extraterritoriality.
The Commercial Press and the Oriental Library were destroyed. On January 30,
Chiang Kai-shek decided to temporarily relocate the capital from
Nanjing to
Luoyang as an emergency measure, due to the fact that Nanjing's proximity to Shanghai could make it a target. Because Shanghai was a metropolitan city with many foreign interests invested in it, other countries, such as the
United States, the
United Kingdom and
France, attempted to negotiate a ceasefire between Japan and China. Initially a ceasefire was brokered between the two nations, but it was subsequently broken, with both sides claiming the other side had reopened fire upon their troops. On February 12, American, British and French representatives brokered a half-day
cease fire for humanitarian relief to civilians caught in the crossfire. The Japanese issued another ultimatum, demanding that the Chinese Army retreat 20 km from the border of the Shanghai concessions, a demand promptly rejected. This only intensified fighting in Hongkou. The Japanese were unable to take the city by the middle of February. Subsequently, the number of Japanese troops was increased to nearly 18,000 with the arrival of the
9th Infantry Division and the
IJA 24th Mixed Brigade, supported by a number of warships and airplanes. On February 14, Chiang Kai-shek sent the
5th Army, including the
87th and
88th divisions, into Shanghai. On February 20, Japanese bombardments were increased to force the Chinese away from their defensive positions near
Miaohang, while commercial and residential districts of the city were set on fire. The Chinese defensive positions deteriorated rapidly without naval and armored support, although the number of defenders was nearly five divisions. Meanwhile the Japanese forces had a single division—the IJA 9th Division, alongside the IJA 24th Mixed brigade and the Shanghai Naval Landing Force, numbering around 18,000 troops, also backed by aerial and naval bombardments. On February 28, after a week of fierce fighting characterized by the stubborn resistance of the troops mainly from
Guangdong, the Japanese, supported by superior artillery, took the village of Jiangwan (now
Jiangwanzhen), north of Shanghai. On March 1, the advance contingent of the
Japanese 11th Infantry Division landed near
Liuhe behind Chinese lines. The defenders launched a desperate counterattack but were unable to dislodge the Japanese. Following their encirclement, Chinese troops abandoned Shanghai and the surrounding area, and on March 3, the Japanese Commander gave the order to stop the fighting. == Peace process ==