score:2
You might be interested in a paper "Decryption in Progress: The Sino-Japanese War of 1894-1895" appearing in pp. 9-20 of an issue of The Cryptologic Quarterly by Greg Nedved. This well-documented paper describes use of code books for encryption purposes by the Chinese government half a century before the time frame of the OP's question.
I am not myself an expert in the period or the region, but will bravely hazard: that the KMT used such cryptography often, between various headquarters for all official business. As did all armies throughout the world at the time. For various reasons military organizations prefer written orders and reports to spoken ones, and the telegraph (in the forms of manual Morse or teleprinter, carried by land line or radio) were the timeliest and (hence) main means of sending them. The nature of the Chinese writing system makes the use of code books, whose digital code groups might be subject to so-called superencipherment, more practical than then the use of cipher machines like the famous Enigma machine used in Germany up to the end of the Second World War.