You’re mostly right, ElCapitan. However, if Germany or Italy captured the territory from China, they would be able to use the IC normally. It’s no different from Japan taking India and building an IC there, then the UK recapturing it, then Germany taking it. It doesn’t matter who built the IC, only who controls the territory.
Thank you. I thought since Japan was the original owner of the teritory (taken from China before the start of the scenario, that some of the same rules for the IC in Karelia for Allies applied.