In January 1950 in Beiping, 20 Communists were executed. Among the condemned was General Yan Youwen, who had served under Fu Zuoyi. He had given military information to the Communists, and this was discovered by the Juntong in late 1949. The names of more Communist agents were uncovered and there were more executions throughout China. Mao Renfeng, who was head of the Juntong after Dai Li’s death in 1946, was starting to turn the tide in the espionage war. There was an increased fear that Communists had infiltrated all levels of the Chinese government, and there was some truth to those fears. Hundreds of people, not only in the government, but also in educational institutions, were fired or imprisoned for being suspected Communist sympathizers. Other Communist sympathizers, like Chiang Kai-shek’s sister-in-law Soong Ching-ling, were not affected at all.
The Communists launched attacks on Du Yuming’s overstretched army in the Northeast. Thousands of Nationalist soldiers near the Soviet border in Hejiang Province were cut off from supplies and surrendered in March. Some minor skirmishes between Communists and Nationalists were fought in Henan, Hubei, Shandong, and Suiyuan. But the most important battles were being fought in Shaanxi Province. Shaanxi was home to the Communist headquarters in Yulin, where they had been moved from Yan’an after the city was taken by Nationalists in 1947 (though Yan’an had since fallen back into Communist hands). Chiang Kai-shek tasked General Ma Bufang with fighting the Communist forces in the province. Throughout 1949, his forces battled against the Communists in Shaanxi and Gansu.
In July, Ma Bufang’s forces captured Yan’an, and moved North to take Yulin as well. The Republic of China Air Force carried out air strikes against Communist positions, but the bombers mostly missed their targets. On August 5, the bloody battle of Yulin began. Nationalist artillery attacks were followed by assaults from the East, South, and West. 30,000 Nationalists and 25,000 Communists died with many more wounded before the Communists retreated on the 8th. Most of the survivors fled to Suiyuan Province. During the battle, Mao Zedong died, killed by artillery. It was hailed as a major victory, and Ma Bufang’s popularity and prestige rose rapidly. The Communists were devastated by the loss of Chairman Mao. Later in August, General Peng Dehuai would assume control of Communist forces.
In September, Nationalist forces under Bai Chongxi encircled Communists in the border regions of Guangdong, Jiangxi, and Hunan province. While some managed to escape the encirclement, the majority were killed or captured. General Bai Chongxi declared in October that Southern China had now been pacified (this was mostly, but not entirely, true). Li Mi continued to campaign against and defeat the scattered Communist forces in Shandong. A wave of optimism spread through the Nationalist ranks. Minister of Defense He Yingqin remarked to Chiang Kai-shek in November that, barring Soviet intervention, the Communists cannot win. The Soviet Union was not interested in getting into a war with China, but was content to continue aiding Communists in order to weaken the Chinese state. Chiang Kai-shek was himself optimistic, and was making plans for the reconstruction of China and the possibility of future intervention in Tibet and Indochina.