With the Great Depression, Japan like some other countries turned to Fascism. While it was a unique form of the system, probably due to cultural differences, Japan parelled the western form very closely, as its Feudalism did hundreds of years earlier. Unlike Adolf Hitler and Benito Mussolini, though, Japan had two economic goals in developing an empire.
First, as with its European counterparts, a tightly-controlled domestic military industry apparently jump started the nation's economy in the midst of the depression. Also, due to the lack of resources on Japan's home islands, in order to maintain an strong industrial sector with strong growth, raw materials such as iron, oil, and coal largely had to be imported. Most of these materials came from the United States at the time. So, for the sake of military-industrial development scheme, and just industrial growth on the whole, mercantilist theories prevailed, and the Japanese felt that resource-rich colonies were needed to compete with European powers. Korea (1910) and Formosa (Taiwan, 1895) had earlier been annexed as primarily agricultural colonies. Manchuria's iron and coal, Indochina's rubber, and China's pretty much everything were prime targets for industry.
Manchuria (today part of northwest China) was invaded and successfully conquered in 1931, with little trouble. Ostensibly, this Japan did this to liberate the Manchus from the Chinese, just as the annexation of Korea was supposedly an act of protection. As with Korea, a puppet government was set up (Manchukuo). Jehol, a Chinese territory bordering Manchuria, was taken in 1933.
Japan invaded China in 1937, creating what was essentially a three-way war between Japan, Mao Zedong's communists, and Chiang Kai-shek's nationalists. Japan took control of much China's coasts and port cities, but very carefully avoided Europeans in their enclaves. The year before their Chinese invasion, Japan signed an anti-communism treaty with Germany, and another with Italy in 1937 itself.
See also: Imperialism in Asia