Long before the Occupation began, a critical diplomatic struggle broke out in State Department circles over the administration of Japan and the rest of East Asia after the war was won. Basically, there were two distinct factions: the so-called China Crowd and the Japan Crowd.
Simply put, the China Crowd wanted China, and a China under Mao at that, as the centerpiece of American foreign policy in East Asia. Mao's opponent, Chiang Kai-shek, had through the years generated great antipathy and distrust among American liberals because of his corruption and indifferent war effort against the Japanese. With Mao's China as a U.S. ally, reasoned these strategists, Japan's future was that of a neutral country. Japan would be reduced to a nonmilitary power, shorn of its emperor and purged of its bellicose right wing. The nation, if it behaved itself, would be allowed to become the Switzerland of East Asia.
The Japan Crowd, on the other hand, wanted Japan's military power to be reduced and realigned, not eliminated. They wanted the economic structure to be left largely as it was before the war. Japan would be the keystone of America's Asian interests, and Japan would provide a line of defense against the Soviet Union, clearly a rival for the riches of northeast Asia. Japan could also partially counter the threat posed by a Communist China, if it came to that.