Don’t cave to the Western Imperialists!
I.e., you were fine using the Chinese spelling of The city! 😀
Many thanks for correcting the spelling of Chungking.
As regards your question, "yes" once eliminated Chinese units are removed from play.
By way of background, in designing WIP we wanted to ensure that both sides have a variety of viable strategies. So, for instance,in reflecting the Japanese commitment to the war in China we introduced an element of "what if" by allowing the Japanese player some discretion about the level of that commitment. In order to do this, we had to give the Japanese a chance to actually win the war against China (or else they would simply deploy the minimum possible number of units to the Asian mainland.) This is the thinking behind the Japanese being able to destroy the Chinese army by permanently eliminating Chinese units.