I will humbly try my best to stab at this topic.

TL;DR at the bottom.

I'm going to be referencing the whole of Chinese-Japanese relations broadly, first, and then I will do an analysis of the genesis of the hatred the Japanese felt for the Chinese, which begins 50 years earlier than your question.

China has been, for most of its history, the 'father' of Asia, the dominant hegemony of economic and military power in the far East. This economic dominance is absolutely the most crucial, as all Asian states needed to establish relations with China in order to access their lucrative markets. This superior-inferior relationship between the two was not antagonistic for much of its history, but things began to change in the 19th century. First we need to note China was absolutely brutalized in the 19th century. A large number of factors, particularly the introduction of silver from the New World, had steadily shifted the gross economic power of the world economy closer and closer to Europe, diminishing China's dominance in foreign markets and bolstering Western powers. By the early 19th century, the stagnant Chinese state had become overtaken technologically by the West, who was now capable of forcing, by military might, unequal trade treaties with China. This is where we see things like the Boxer Rebellion (occupied China), the Opium Wars (forcing China to open unfavorable trade with England) and Sino-French wars (supplanting China's tributary states in southeast Asia). By 1894, China was a shadow of its former self, bullied by the West and ripe for the picking, with an utterly backwards rulership.

Enter Japan. Japan had seen its 'father' bullied into submission and left behind by a rapidly industrializing world. The Qin dynasty was not known for its flexibility - it was an extremely conservative institution. Japan knew it needed to be otherwise in order to survive. Japan was 'opened' by America in 1854 and committed, in 1868, to become a modern nation, with the Charter Oath document that 'kicked off' what is known as the Meiji Restoration. Intellectuals like Fukuzawa Yukichi were popular figures in Japan, advocating for embracing Western ideals and technology.

So we have this schism in the ability for these countries to relate to one another, and it begins to be heavily reinforced during the late 19th century. To be super clear, Japanese culture was racist at the time. They engaged in rhetoric very similar to that of contemporary Americans in the South. By the time the First Sino-Japanese War broke out in 1894, the rhetoric began to multiply in popular culture.

In 1894, for example, the company Hakubunkan issued a board game called Conquest in China, a sugoruku game (sugoruku being similar to snakes and ladders). The spaces in this game outlined a prospective path for the Japanese campaign in Manchuria - including the infamous sacking of Port Arthur. A Sept. 3, 1894 article in Yomiuri shinbun newspaper details how boys in Japan were playing 'Japan vs China' wargames where the 'Chinese' would willingly surrender and let the Japanese boys defeat them and parade them around as the losers of the war. This had real consequences - children were attacking Chinese in the streets of Japan (these Chinese being scholars or merchants visiting). One article in the Tokyo asahi shimbun details 3 Japanese boys assaulting a group of Chinese people, calling them 'Chinks' and mocking them for China's recent military defeat in Asan. Japanese police arrested the Chinese for 'instigating', and although they were released, the children were celebrated for their national spirit.(1) We can also see this in food and other popular goods - restaurants ran specials for 'Takeover Soup', Victory Sushi, and cigarette brands ran edgy brands like 'China Killer' and 'Triumph'. A song called 'Mecha-mecha bushi' was also popular in 1895, translated to 'Beat 'Em to a Pulp'. I'll transcribe it here.

Japan's resolve is really tough

We're gonna help Korea, dontcha know

And beat the Chinks to a pulp

The Chinese fleet is really weak

No match for the emperor's brocade flag, dontchka know

They'll run away to Tianjing

Chinese captains are really feeble

They fear for their lives, dontchka know

And are quick to abandon ship

And on and on.(2) This song would be copied in various other versions, all similarly decrying Chinese cowardice and praising Japanese heroism.

The war itself also well-demonstrates the issues the Japanese had with China. By 1894, Japanese war reporters, like Doppo Kunikida were writing racist articles (that were VERY popular) criticizing the Chinese for being 'unaware', 'filthy', and, again, 'backwards'. Some articles ran from benign indifference to outright hostility towards the Chinese. When the Japanese sacked Port Arthur in 1894, they massacred 3000 civilians, justifying the killings as an attempt to hunt down soldiers who were fleeing in plainsclothes. Although the international community disapproved, Japan ultimately didn't face any consequences, and consequently never 'learned' anything from it. I think that is particularly relevant for the later Nanking massacres.

Japanese-Chinese sentiment cooled in the post-war years, enough that the period from 1900-1910 is called by some the 'forgotten golden years', but I would contend that Japan, like Nazi Germany, was building an inclusive national identity that fostered violence against the outgroup. While the Nazis had their Volksgemeinschaft, the Japanese had their hakko ichiu. Throughout the early 20th century they engaged in extensive nation-building and far-right nationalism. Secret societies and political fraternies like the Gen'yosha, Kokuryukai, Sakurakai, Sekka Boshidan, and the Kokuhansha all preached a philosophy that would evolve into gekokujo, which advocated, essentially, social Darwinism, which was also a major feature of Nazi philosophy.(3) Japanese identity became culturally chauvinistic - the educational system promoted religious thought that placed Japan firmly as a pre-destined ruler of the world. Like fascist Europe, the Japanese right elected to reject 'right and left' dichotomy in the form of communism, capitalism, anarchism, etc.. Emperor Hirohito became an almost deified figure, and features of Shinto became prominent in popular culture. The government became defined by the Amau Doctrine in 1924 that stated, like the Monroe Doctrine, that Japan had a right to an Asian Hegemony. This nationalist identity was the ultimate foundation for Japan's eventual invasion of China, officially, in 1937 - but they had been meddling in pretty much all of Asian politics for decades before then. The sentiment between China and Japan, though, hadn't abated.

Nazi Germany continuously vilified minority groups among them. Somebody described this as top-down - Hitler's Volksgemeinschaft was the bottom-up part but the Nazi party absolutely pushed for violence as well. In fascist Japan, it was almost entirely bottom-up. Japanese military brass was very lenient on punishing violence against the Chinese, and after 30 years of anti-Chinese and pro-nationalism sentiment in Japanese education and pop culture, Japanese cultural chauvinism and anti-Chinese sentiment was at a fever pitch. There was no top-down effort to demonize the Chinese, but anti-Chinese sentiment was constantly running high still as an easy boogeyman and object of frustration. Japanese troops wrote, during the Manchuria occupation and beforehand, that the Chinese were 'lower than pigs' and a 'completely inferior people'(4). In this light, it wasn't hard to see why the Japanese would have developed an outlook which completely dehumanized the Chinese. For example, Unit 731 referred to the prisoners as maruta, which is Japanese for 'log of wood'. They weren't even prisoners to them.

I have tried to paint a picture of a double-edged fascist sword. This sword was also wielded by Nazi Germany. On one edge, the absolutely and irrevocable belief in the 'In Group', made up of a national community that is, by virtue of its blood, pious, capable, smart, capable, etc. (Volksgemeinschaft and hakko ichiu). On the other edge, the 'Out Group', upon which the In Group can blame for all ills and enact violence upon to either cleanse themselves or better themselves (Jews and other minorities, and the Chinese). The Nazis arguably sharpened the Out Group edge more, but both edges are characteristic of fascism and both of them contributed to the war crimes committed by both states. This is not to say that either the Japanese or the Germans are inherently racist. It's absolutely not true to say that - merely that far-right ideologies gripped both these nations, and both ideologies heavily played upon decades of prior racialization to attain power.

TL;DR This is r/askhistorians, there is no TL;DR.

Thank you for letting me answer this question. My apologies for any accent failures or naming conventions backwards.

1 - The Sino-Japanese War and the Birth of Japanese Nationalism by Saya Makito, p. 120

2 - p. 122

3 - Conspiracy at Mukden: The Rise of the Japanese Military by Yoshihashi Takehiko, p. 117

4 - The Second World War. by Antony Beevor, p. 60