Because of the KMT's defeat in the Lnan battle, Wu MengXiang was suspicious of his identity and was placed in charge of the Chongqing Garrison as a commander. At the same time, his investigation was quietly launched. The defeat of the Lon Nun battle made the top Kuomintang leaders scrambled for scapegoats, and at the same time, they started fighting for the position of Director, Strategy Division. In March 1947, Hu Zongnan concentrated troops in attacking Shaanxi, Gansu and Ningxia and occupied Yan'an. In June, the liberated area of Shandong was beleaguered by more than 600,000 Kuomintang troops and suffered heavy losses. At this crucial juncture, a captive of Dr. Li was identified as a spy sent by the Communist Party.