The settlement transformed a pre-existing armistice into an intranational alliance; technically it amounted to submission by the Communists and their incorporation into the national government and armies. The area of the Chinese Soviet Republic assumed the name Special Regional Government of the Chinese Republic (_Chunghua Min-kuo T'ê-ch'ü Chêng-fu_), which it had been using informally for months; the Chinese Red Army became the Eighth Route Army (_Pa-lu-chün_); and the Chinese Communist Party accepted the _San Min Chu I_ as the constitutional state ideology of China, abandoning immediate measures of class war and expropriation. The settlement was in the form of a Communist reply to Kuomintang terms offered in February 1937 and the reply of the Generalissimo as Chief of the Kuomintang to the Communist declaration.[8] [Footnote 8: See Council of International Affairs, _The Chinese Year Book, 1938-39_ [Hong Kong], 1939; article by Chu Chia-hua, "Consolidation of Democracy in China," Chapter IV; "Reconciliation with the Communists," p. 339-40. This Council is an informal and extra-legal offshoot of the Chinese Ministry of Foreign Affairs; accordingly the annual, rich in official materials, provides insufficient data on Communist, guerrilla, and unofficial activities. See also, Epstein, I., _The People's War_ [Shanghai], 1939, p. 88 _ff._, for an excellent, clear account of this period.] For the first few months the war kept its quasi-European pattern. The greater part of the fighting was done in the Shanghai area, while Japanese forces proceeded down from North China. The Japanese still had some expectation of localizing the North China and the Shanghai conflicts. At most, they expected the war to be a short one, not extending beyond the capture of Nanking. Occupation of the capital was counted on for the ruin of the central government, the end of Chiang and the reversion of China to a condition of malleable anarchy. December 1937 was the blackest month of the war for the Chinese. The Japanese advanced toward Nanking, with Chinese resistance crumbling; part of the armies withdrew in good order, but on occasion there were hopeless, panicky routs. To this month the Japanese looked for victory, and were so confident that they formed the pro-Japanese Provisional Government of the Republic of China, in Peking on December 11.[9] Four days later the Japanese forces entered Nanking, and the ensuing fortnight set the record for atrocity in the modern world. The Japanese forces were preoccupied with their own disorder. The National Government escaped up-river to Hankow, where it promptly began to function under the three-headquarters plan: some offices at Hankow, some at Changsha and some at Chungking. The presence of the foreign affairs, propaganda, and military agencies at Hankow made this the practical capital of China, although Nanking was and is the constitutional capital.