AND HOW...
You have to realize that a HUGE sum of the Japanese arsenal, air and ground, was based on a theater in which the Japanese excelled: China. Your air arm not only has a huge range due to the fact that it's operating over vast plots of ocean, but also because it's operating over China. Your aircraft are light and agile, as they have to fend off light, cheap, and generally obsolete Chinese fighters (often biplanes) from your bombers. Do you now understand the design of fighters like the Zero and the Oscar?
Likewise, when you have need of stomping down the ill-equipped Chinese ground forces, you don't need a world-beating tank. A cheap, crappy vehicle that... might... (LOL) keep the crew safe from small arms is all you need. Thus, the Chi-Ha is explained as well.