 At the height of this cooperation, Sino-German exchange accounted for 17% of China's foreign trade and China was the third largest trading partner with Germany.The cooperation of Nationalist China and Nazi Germany declined with the Second Sino-Japanese War in 1937, as Germany favoured Japan, its Anti-Comintern Pact ally, as a bulwark against the Soviet Union.Contacts persisted for some time, until July 1941, when Nazi Germany recognized the Japanese puppet Wang Jingwei Government, extinguishing ties with Chiang's government.