In my now 3 games I ran across something similar each time. The AI doesn´t construct any military units or at least VERY few of them. When I overran France in late 1938 they had like 8-9 divisions total. This strikes me as more than a bit odd frankly. Other nations suffer from the same problem. The USSR rarely has more than 30 units or so. Surprising enough is that the minors suffers the least but that is mostly because their militaries are about historical size initially so they don´t really have t construct new units.