Xibei San Ma
Shanxi is a minor power, a warlord state controlling the north of China, bordering Communist and Nationalist China, Japan, Mongolia and Xibei San Ma. Thus it is threatened on almost all sides. However one's main concern is the looming Japanese invasion. Playing as Shanxi is no more than a pure fight for survival, and defence is your number one priority.
Shanxi is awful for technology. There is only one team and one slot. The best thing to do is to research land doctrine, following Mobility Focus Doctrine through to Blitzkrieg. This ensures a high Organisation for defence against Japan.
Shanxi is friendly with all Chinese nations bar the Communists and thus a chance of joining the Nationalists and Xibei is very high. However the Japanese and Manchukuo are not your friends and they will be your nemesis throughout the game.
With a fairly small IC of around 10 you must try to reach Central Planning as soon as possible to attain your 25% IC increase.
Shanxi will need to use its money or supplies to pay for natural resources, which are fairly scarce. Alliance with Nationalist China will result in handouts.
As before, you must have a high production of either supplies or consumer goods. Remember to not let dissent get over 3.50% or you will start losing precious IC.
Militia is the key to Shanxi military development, they are cheap and quick to build. Continue to build on your already fairly large army with militia and infantry to ensure safety when the Japanese DOW you. You should be able to survive with about 30 divisions.
You have no navy and should have no interest in getting one.
There is no need for an air force. Ally with Nationalist China and let their planes do the work.
Straight from the off you must move all your troops to the Japanese border. Pay particular attention to the provinces of Jining and Tianjin, where the Japanese could make a breakthrough. AFTER the end of the Communist/Nationalist war, if they have not formed a united front you should join Xibei and Nationalist China in an alliance. Continue steady military growth until Japan DOWs you and your allies. Remember that you are the first line of Chinese defense and that the Nationalists would rather annex you than help you, thus victory over Japan is paramount. Take the Japanese provinces first and wait before launching an attack on Manchukuo to ensure that you regain organization and strength. If you push too much the Japanese will soon push you all the way back and more. Annex Manchukuo and sue for peace with Japan, allowing them a route through to the Nationalists. Then turn on your allies and sweep through Xibei before holding firm against the Nationalists, waiting for the Japanese to destroy them and grabbing as much IC as possible. After that you are free to do what you want, but Yunnan, Sinkiang and Tibet are the obvious targets. Do not attempt to take on the Communists, who have superior armies.