I think this is more than just bad AI and may be a design fault.
As England I am involved in the German-Polish war, currently in mid 1942. In addition Germany is involved in the German-USSR war since Jan 1941. Japan is, of course, involved in the Japan-China war, which basically froze around 58% in their favour, and has no players apart from China and PRC on that side. In theory, all of my Far East operations should be protected as they are not involved in the Japan-China war.
But, Japan joined the Axis, as it did in history. So now the three faction groups are :
Allies : England, plus Australia, Canada, New Zealand, South Africa, Raj and Malaya;
France with Africa and Far East colonies,
Poland,
Holland, with Suriname and Dutch East Indies,
Belgium and Congo,
Luxembourg,
Denmark with Iceland and Greenland and
Norway. Plus Spain, who went democratic on 1st May 1942; USA and Philippines, after USA declared war on Germany on 2nd May 1942; and Yugoslavia following Germany declaring war on 25th June 1942.
Axis : German Reich, Italy, Japan with Manchukuo and Mengkukuo, Hungary, Slovakia, Romania, Bulgaria, Siam and Turkey.
Comintern : Soviet Union plus Sinkiang and Mongolia.
All of that is pretty well what one would expect. In terms of the wars we have :
Germany vs Poland : Axis vs Allies (24%)
I cleared Italy out of Africa quickly and Germany did not respond, and may be the reason that it did not create Vichy France. I have total air control in Western Europe, have sunk the Kriegsmarine each time it goes to sea and most of the Italian navy. As is often commented, Italy basically has no local army and has given them to Germany as Expeditionaries. I am clearing through Turkey, with good support from Raj, and plan to move into Bulgaria and Romania. I am about to move into Sicily, and Spain has declared war and is fighting in the Pyrenees. Yugoslavia has taken Zara and Albania.
Germany vs Soviet : Axis vs Comintern (50%)
Germany and Romania are steadily working east and have taken Leningrad, are moving on Stalingrad and Murmansk, and probably capable of Moscow very soon.
Japan vs China : Axis (except Germany) vs China and PRC (57%)
Basically, Japan took the North-East corner of China, from Guangzhou to Suiyuan, and froze in place. It has totally ignored Vietnam, Malaya and Dutch East indies, and had not declared war on USA. It did take a few of my Pacific islands, which were undefended and which I have recovered. It has left Hong Kong alone, and has allowed divisions from other players to take take them back from Japan. After Siam joined the war, myself with Raj and France quickly took it out. Soviet is working its south through Manchukuo and Mongolia is working south-east through Mengkukuo and has reached the top half of Shaanxi. I have two armies just moving north from Hong Kong towards Nanjing. Since neither Allies nor Comintern are involved in this war, all of the land that we take is assigned to us, which seems to be wrong and It does not have any impact on the war score. I am not sure what the deeper effect of that would appear as the wars are completed, and indeed if the Japan-China war could be completed if Japan is taken in the other two wars.
AI Issues
Canada, Australia and New Zealand seem to be stuck in growing its military and navy, especially after the Australian navy was sunk by the Japanese. South Africa has been good about supplying Expeditionary forces, as have Holland, Belgium and France. Raj has been very good at building and positioning a good army (English officers

). Norway managed to fight the Germans for a year, after Germany stopped sending the Italians to take them (which seems to be a sensible choice).
Battle plans get created much to early and with insufficient forces, like Italy sending 1 division to take Norway.
Moving a week later on the attached save file and look at Turkey. I found Yugoslavia plans to invade Bulgaria and Romania by sea, and through the Turkey front; a Dutch East Indies plan with 2 divisions and several other ones - these seemed to be based on the idea that my attack on Turkey could be used as a base for everyone else. That really shows a need for a multiple-player planning system between human and AI players.
Looking at the China - Raj/Vietnam boundary - there are 35 Raj divisions on the border against a similar number of Chinese divisions, and both of them have battle plans to invade each other. Hell, they are on the same side. And there are 16 USA divisions joining, with another 27 somewhere on route. That is good, but it would be better to go and fight the Japanese. This actually looks like a design fault on the assumption that Japan will have won the Japan-China war and will be occupying China.
USA has 236 divisions, but only 73 assigned to armies. The others are moving around and presumably have a plan, I hope. But why is MacArthur disembarking some of his armies, who are intended to go the the Raj-China border?, on the West coast of USA?
Spain was, in an earlier pass of this, offering me 17 expeditionary forces while it was fighting the Germans, including one division that was actually in combat. I had the same from Belgium and Holland but that would be sensibly as they were about to die and I could get some of them back to the UK. I can see the same problem with Yugoslavia - I have just joined in your wars, so I must send some of my army to join in your wars. Sure, if it was the last thing you could do before being taken, then make them as expeditionary forces, but not as the first thing to do. And if you are trying to defend your country, please create armies and battle plans, and don't just leave your navy in harbour if there is a better use for it.
I am sure that i could point out more problems but one thing that i would suggest is - to look at the save files, in detail and by country, and try to understand why we think that there are issues and anomalies.