The Japanese People's Republic, informally known as North Japan, was the state that the Soviet Union established on the Japanese island of Hokkaido and the northern part of Honshu at the end of World War II, under Fedor Tolbukhin with some Japanese Reds acting as his puppets. Similarly, the U.S. established the Constitutional Monarchy of Japan (South Japan) in southern Honshu, Kyushu, and Shikoku. Hirohito's 12-year-old son Akihito became the new emperor, although it was General Dwight Eisenhower who actually ran the country. The Agano River was the border between the two states with a demilitarized zone of three miles in either direction. North Japan's flag was a Rising Sun with a gold hammer and sickle in it.
In 1947, the Soviet military began building the "People's Liberation Army" in North Japan. In response, the U.S. created the "Constitutional Guard" in South Japan. Throughout 1947 and into 1948, U.S. commanders along the demilitarized zone sent reports to their superiors, expressing concern about North Japan's activities.
In June 1948, the North Japanese People's Liberation Army invaded South Japan, beginning the Japanese War. While the south's military was initially sent into retreat, the PLA's invasion was halted by U.S. forces at Utsunomiya. From there, the U.S. and South Japanese, with bloody and hard fighting over the following year, forced the invaders back to Sendai, well north of the border.
The United States destroyed Sendai (and a good part of the North Japanese military along with it) with an atomic bomb on August 6, 1949. In response, Soviet Premier Leon Trotsky ordered the bombing of the South Japanese city of Nagano three days later. The war ended in a stalemate, with a restoration of the status quo ante bellum.
With the fighting over, the North Japanese government began to clamp down on its population, even shooting those who attempted to cross into the South.
North Japan appears in the short story as well. The novel develops the country in somewhat greater detail. In the story, the capital of North Japan is specified as Sapporo, which is destroyed by the a-bomb, not Sendai. The novel doesn't specify the capital, although Sapporo is mentioned in passing.