Japan and the Soviet Union sign a neutrality pact. Japan has already signed the Tripartite Pact that created the Axis (Seotember 27, 1940) and now the diplomatic system which will enable it to launch the December attacks is in place.
One of the reaons for the general (but by no means universal) tendency for Allied military personnel to under-estimate the Japanese was racism: some senior figures did indeed believe that the Japanese were an inferior 'race' with poor eyesight who wouldn't last long if they ever dared attack a modern army. But another reason was the poor performance of the Japanese army in the now often forgotten Soviet-Japanese border dispute of 1939, which arose over disagreements between Russia and Mongolia on the one hand and the Japanese on the other about the frontier of their puppet-state Manchukuo (Manchuria, taken from China in the 1931 attack.) At a battle generally known as Nomanhan (crucial stage August 25-31, 1939) the Red Army, even though many of its officers had been killed in Stalin's purges, destroyed the Japanese 23rd Infantry. Fear of Russia now became an important element in Japanese policy.
The Soviet troops were led by Georgy Zhukov, later to become one of the greatest generals of WW11, but then relatively unknown, so it was easy to assume that the Japanese, who by 1941 had failed to definitively defeat the under-equipped Chinese, were not a serious military threat to European armies.
Another consequence of the Japanese defeat was to have significance for Hong Kong: Rensuke Isogai, Chief of Staff of the Kwantung Army which occupied Manchuria, who had already been involved in the Japanese defeat by the Chinese at the Second Battle of Taierzhuang, was retired from active service as a result of this new disaster. In February 1942 he was to be given one last chance to make good - as Governor of the Captured Territory of Hong Kong.
Nevertheless, in today's agreement both sides get what they want: the Russians are free to concentrate on preparing for the inevitable war with Germany, and the Japanese can strike southwards without having to worry about another brush with the Red Army.
Sources:
Under-estimate of Japanese: see e.g. the assessment of the Far East Combined Bureau summarised in Tim Carew, The Fall of Hong Kong, 1963 (1960), 35; there were much cruder accounts of Japanese inferiority.
Isogai: Philip Snow, The Fall of Hong Kong, 2003, 92