You have to research the tech before starting the ship's production. If you start the ship and later finish a new tech, it doesn't get applied until you start producing a new design.By the time the Destroyers are finished they should be new designs since we have already advanced in some Destroyer tech. And plan to Research more before they are finished.
I believe you can release either Nationalist or Communist China as a puppet, and they will get every province they have a core on (all of China including Guangxi, Yunnan, Xibei San Ma, etc.) I'm not sure how I feel about this solution because you'd essentially be creating a new great power as your puppet - it'd work well in game, but I don't know if it would make sense for Japan to do. Although, Wang Jingwei's regime was supposed to be something like this if Japan had won.I am not sure we have that option.