Because 20 cavalry divisions is a minimum of how many your going to need... Especially if you want the most Industry out of the occupied territory and run harshest occupation. As Germany I end up with around 150-200 cavalry divisions when I want to suppress partisans all over occupied Europe and a bit into Russia in 1941 with the somewhat inefficient garrison order, and building them 3 at a time @ 120 days would take me over 16 years to get enough suppression. Hopefully you agree with me that this is way way to slow rate of training?
I feel you are now mixing arguments a little -- there's quite a bit of difference between how many states Japan will typically capture, and how many Germany typically does. So while Germany might need many garrisons over the course of the game, it doesn't mean Japan is going to need large amount, especially from the get-go, too. And yes, due to the fact Germany captures more territory the rate at which they'd need to build garrison is higher... but at the same time don't forget Germany has also much stronger industrial base, which is more capable of coping with such orders.
Lets put it this way -- if the AI Germany is allowed to run unchecked, it starts WW2 with ~200 divisions, and around 1945-46 it has 500 or so divisions at its disposal (i can't remember exact numbers for JAP, but they too manage to expand their army considerably) That's with volunteer forces turned off, so it's all equipped with stuff they make on their own, despite the terrible job the AI does with keeping units equipped, etc. As such am not too worried about their ability to produce some garrison divisions in that mix, especially when, like mentioned, these divisions are quite cheaper to make than the regular ones.
My point was in the example where the AI makes zero progress and don't occupy anything. In these cases the garrisons are wasted.
If the AI never occupies anything, then under suggested approach it wouldn't produce any garrison units to begin with. Your point is about very specific and limited scenario where the garrison units become (temporarily) without use, and hinges on a very big what-if that's Japan failing to make any further gains after Sino-Japanese war. The catch is, if we want the AI to perform roughly along the lines on how it performed historically, then Japan failing to make any further gains is a sign the AI underperforms, and needs further fixes. If the AI performs roughly as it "should" then these units
will be needed. Not to mention a human player in this situation
would produce these units in advance too, wouldn't they? After all, it's not like the player in this scenario expects to fail to make any further progress.