Flag of Wang Jingwei regime

During the Second Sino-Japanese war, the invading Japanese established a variety of puppet governments such as the Provisional Government of China and the Reformed Government of China which used the flag of Five Races Under One Union even though the legitimate Chinese Government had switched to the current day modern flag of the Republic of China.

National Flag of the Reorganized National Government of China

Use	Civil and state flag
Proportion	2:3
Adopted	1940
Relinquished	1943
Design	Flag of Republic of China with pennant: Peace, Anti-Communism, National Construction (和平反共建國)

When the Wang Jingwei regime was established on 30 March 1940 in Nanjing, Wang Jingwei was slated to take over the previous Japanese-installed governments and centralize the Chinese nationalists under what they claimed to be the legitimate successor to the Republic of China he demanded to use the modern flag as a means to challenge the authority of the Chongqing government under Chiang Kai-shek and position himself as the rightful successor to Sun Yat-sen.

The flag used indoors next to the flag of Nazi Germany.

However, the Japanese preferred the five-colored Five Races Under One Union flag. As a compromise, the Japanese suggested adding a triangular yellow pennant on top with the slogan "Peace, Anti-Communism, National Construction" (和平反共建國, Hépíng fǎn'gòng jiàn guó) in black, but this was rejected by Wang. In the end, Wang and the Japanese agreed that the yellow banner was to be used outdoors only, until 1943 when the banner was abandoned, leaving two rival governments with the same flag, each claiming to be the legitimate government of China.[1]