The Japanese really did horrible stuff to China's citizens, which peaked in the Massacre of Nanking. Dozens of women, regardless of the age, where raped and many more killed in really gruesome ways. Why did China not use this, after the second world war, to increase political pressure on Japan? What troubles me most is the fact that they didn't even really try to prosecute the responsible Japanese men.
Your perception is wrong, Japanese occupation and subsequent massacres are influencing Chinese politics, and Chinese conscience in general, even today. Close parallel could be made with Soviet (latter Russian) state of mind about WW2, Germany and Germans .
Terrible losses and terrible humiliation that China suffered in that period are not forgotten. But there is another thing. Like Soviet Union, China was on the other side of Iron Curtain. Former enemies (Japan and Germany) after the war became close allies of Western powers (chiefly US) . Both Soviet and Chinese part of the WW2 story was largely left untold in the West. During Cold War, and even now, West tends to minimize participation of those countries, and to somewhat dehumanize their victims like statistics. For example, in Western cinematography, there are numerous films about Jewish suffering in WW2. But Slavs are barely mentioned and Chinese almost not at all, despite the the fact that they suffered much larger casualties and actively participated in war effort.
Anyway, current Chinese foreign policy towards Japan (from 1980 to present) is mostly pragmatic. They were and still are interested in good economic relations. But they do have territorial disputes and strategic rivalry who is going to be dominant power in East Asia . Japan is still ally of US, and China is becoming main American rival on world stage. In that context, anti-Japanese sentiment in China is substantial, and historical grievances like Nanking massacre are often used in media and popular culture, especially because Japan tries sometimes to downplay them.
A couple of reasons come to mind:
At the end of the war, Japan was devastated, probably more so than Germany. Most of their major cities had been severely damaged by fire raids. Their industry had been all but obliterated. Industrial infrastructure: power, rail transport, had been completely destroyed Their once thriving merchant fleet, critical to an island nation, was on the bottom of the ocean. There wasn't much for China to demand from Japan, even if they were in a position to do so.
When hostilities ceased, China almost immediately resumed a civil war between the Nationalists and Communists, a war the Communists won. The Chinese had more pressing matters to attend to.
Japan had been very cruel to China, beyond Nanking. Japanese troops committed wholesale slaughter and destruction in the aftermath of the Doolittle Raid, on Chinese suspected of aiding the flyers, or Chinese who just happened to be there. A very rough estimate of Japan's revenge on China for the Doolittle Raiders is in the 250,000 death range.
And the story of Unit 731. An accurate death toll is hard to establish, but it is estimated to be in excess of 500,000 people killed. It wasn't well publicized after the war, because the US wanted the technology. Japan had it's own WMD: biological weapons, and - the big breakthrough - they had perfected and tested (on the Chinese) delivery systems for those bioweapons: anthrax, bubonic plague, smallpox.
My father, who ran radar for the 14th USAAF in China during the war, related to me a story that illustrates the feelings between the Chinese and Japanese. A Japanese bomber had been dropping bombs on his base at Kunming at night. Never hit much of anything, but they might get lucky and kill someone, so he radioed another base and had them send down their P61 Black Widow night fighter. It shot up the bomber, which was seen to crash land.
Dad sent out a squad of soldiers to the crash site the next morning to see if anyone had survived, but the local Chinese got there first. They had nailed the now very dead aircrew to trees, while they were still alive.