Yan Xishan

Yan Xishan, (8 October 1883 – 22 July 1960) was a Chinese warlord who served in the government of the Republic of China. Yan effectively controlled the province of Shanxi from the 1911 Xinhai Revolution to the 1949 Communist victory in the Chinese Civil War. As the leader of a relatively small, poor, remote province, Yan Xishan survived the machinations of Yuan Shikai, the Warlord Era, the Nationalist Era, the Japanese invasion of China, and the subsequent civil war, being forced from office only when the Nationalist armies with which he was aligned had completely lost control of the Chinese mainland, isolating Shanxi from any source of economic or military supply. Yan has been viewed by Western biographers as a transitional figure who advocated using Western technology to protect Chinese traditions, while at the same time reforming older political, social, and economic conditions in a way that paved the way for the radical changes that would occur after his rule.

Childhood
Yan Xishan was born in the late Qing dynasty in northwestern Shanxi to a family which had been bankers and merchants for generations (Shanxi was known for its many successful banks until the late 19th century). As a young man he worked for several years at his father's bank while pursuing a traditional Confucian education at a local village school. After his father was ruined by a late 19th-century depression that ravaged the Chinese economy, Yan enrolled in a free military school that was run and financed by the Manchu government in Taiyuan. While studying at this school, Yan was first introduced to mathematics, physics, and various other subjects imported directly from the West. In 1904 Yan accompanied his class to Japan, where he was entered into the Imperial Military Academy, from which he graduated in 1909.

Experience in Japan
Over the five years that Yan studied in Japan he became impressed by Japan's efforts to successfully modernize. He observed the progress made by the (previously) unsophisticated and backward inhabitants of Japan, and began to worry about the consequences if China were to fall behind the rest of the world. This formative experience was later cited as a period of great inspiration for Yan's later efforts to modernize Shanxi.

Yan eventually concluded that the Japanese had successfully modernized largely due to the Japanese government's abilities to mobilize its populace in support of its policies, and due to the close, respectful relationship that existed between the Japanese military and civilian populations. Yan attributed the surprising Japanese victory in the 1905 Russo-Japanese War to the enthusiastic mobilization of the Japanese public in support of the Japanese military. After returning to China in 1909, Yan wrote a pamphlet warning China that his country was in danger of being overtaken by Japan unless they developed a local form of bushido.

Even before studying in Japan, Yan had become disgusted with the open and widespread corruption of Qing officials in Shanxi, and had become convinced that China's relative helplessness in the 19th century was the result of the dynasty's general unprogressiveness and a grossly inept foreign policy. While he was in Japan, Yan Joined Sun Yat-sen's Revolutionary Alliance (Tongmenghui) and attempted to popularize Sun's ideology by organizing an affiliated "Blood and Iron Society" within the Imperial Military Academy. The apparent goal of this student group was to organize a revolution that would lead to the creation of a strong and united China, similar to how Otto von Bismarck had created a strong and united Germany. He also joined a more militant organization of Chinese revolutionaries, the "Dare-to-Die Corps".

Return to China
When he returned to China in 1909, Yan was assigned to be a division commander in Shanxi, but secretly worked to overthrow the Qing. During the 1911 Xinhai Revolution, Yan led local revolutionary forces to drive the Manchu forces from the province, proclaiming it independent of the Qing government. Yan justified his actions by attacking the Qing's failure to repel foreign aggression, and promised a wide range of social and political reforms.

Conflict with Yuan Shikai
In 1911 Yan hoped to join forces with another prominent Shanxi revolutionary, Wu Luzhen, in order to undermine Yuan Shikai's control of north China, but these plans were aborted after Wu was assassinated. Yan was elected military governor by his comrades, but was unable to prevent a subsequent invasion by the troops of Yuan Shikai from occupying most parts of Shanxi in 1913. During the period of Yuan's invasion, Yan was only able to survive by withdrawing northward and aligning himself with a friendly insurgent group in neighboring Shaanxi province. By avoiding a decisive military confrontation with Yuan, Yan was able to preserve his own base of power. Though he was friends with Sun Yat-sen, Yan withheld support for him in 1913, ingratiating himself to Yuan, who allowed Yan to return as military governor of Shanxi, commanding a military that was then staffed by Yuan's own henchmen. In 1917, shortly after Yuan Shikai's death, Yan solidified his control over Shanxi, ruling there uncontested. After Yuan's death in 1916, China descended into a period of warlordism.

The determination of Shanxi to resist Manchu rule was a factor leading Yuan to believe that only the abolition of the Qing dynasty could bring peace to China and end the civil war. Yan's inability to resist Yuan's military domination of northern China was a factor contributing to Sun Yat-sen's decision not to personally pursue the presidency of the Republic, which was established after the end of the Qing dynasty. The demonstrated futility of opposing Yuan's military domination can only have made it seem more important to Sun to bring Yuan into the process of ruling of the Republic, and to come to terms with his (potential) enemy.

Efforts to modernize Shanxi
By 1911, Shanxi was one of the poorest provinces in China. Yan believed that, unless he was able to modernize and revive Shanxi's economy and infrastructure, he would be unable to prevent Shanxi from being overrun by rival warlords. A military defeat in 1919 to a rival warlord convinced Yan that Shanxi was not sufficiently developed to compete for hegemony with other warlords, and he avoided the violent national politics of the time by enforcing a neutrality policy on Shanxi, freeing his province from the civil wars. Instead of participating in the ongoing civil wars, Yan devoted himself almost exclusively to modernizing Shanxi and developing its resources. The success of his reforms were sufficient for him to be dubbed by outsiders as the "Model Governor", with Shanxi the "Model Province".

Yan's determination to modernize Shanxi was mostly inspired from his experiences in Japan, but also by his experiences with foreign doctors and personnel who arrived in Shanxi in 1918 in order to help Yan suppress an epidemic which was ravaging the province. Yan was impressed with the zeal, talents, and modern outlook of these personnel, and subsequently compared foreigners favorably to his own conservative and generally apathetic officials. Conversations with other famous reformers, including John Dewey, Hu Shih, and Yan's close friend H. H. Kung, reinforced Yan's determination to Westernize Shanxi.

Involvement in the Northern Expedition
In order to maintain Shanxi's neutrality and free it from serious military confrontations with rival warlords, Yan developed a strategy of shifting alliances between various warring cliques, inevitably joining only winning sides. Although he was weaker than many of the warlords that surrounded him, he often held the balance of power between neighboring rivals, and even those that he betrayed hesitated to retaliate against him, in case they might need his support in the future. In order to resist the domination of the Manchurian warlord Zhang Zuolin, Yan allied himself with the forces of Chiang Kai-shek in 1927, during the Nationalist's Northern Expedition. While aiding Chiang, Yan's occupation of Beijing in June, 1928, brought the Northern Expedition to a successful conclusion. Yan's assistance to Chiang was rewarded shortly afterwards by his being named Minister of the Interior and deputy commander-in-chief of all Kuomintang armies Yan's support for Chiang's military campaigns and his suppression of Communists influenced Chiang to recognize Yan as the governor of Shanxi, and to allow Yan to expand his influence into Hebei.

Involvement in the Central Plains War
Yan's alliance with Chiang was interrupted the next year, in 1929, when Yan joined Chiang's enemies to establish an alternative national government in northern China. Yan's allies included the northern warlord Feng Yuxiang, the Guangxi Clique led by Li Zongren, and the left-leaning Kuomintang faction led by Wang Jingwei. While Feng and Chiang's armies were annihilating each other, Yan marched virtually unopposed through Shandong, capturing the provincial capital in June, 1930. After these victories, Yan attempted to forge a new national government, with himself as President, by calling an "Enlarged Party Conference". Yan was to be president, and Wang Jingwei was to serve as Yan's prime minister. This conference attempted to draft a national constitution and involved the participation of numerous high-ranking Chinese militarists and politicians from among Chiang's rivals. These deliberations were deliberately interrupted by Chiang Kai-shek who, after decisively defeating Feng's armies, invaded Shandong and virtually annihilated Yan's army. When the governor of Manchuria, Zhang Xueliang, publicly declared his allegiance to Chiang (whose support Zhang required in order to contest the Russians and Japanese), Yan fled to Dalian in Manchuria, only returning to an unconquered Shanxi after making peace with Chiang in 1931. During this "Central Plains War", the Kuomintang encouraged Muslims and Mongols to overthrow both Feng Yuxiang and Yan. Chiang's defeat of Yan and Feng in 1930 is considered the end of China's Warlord Era.

The events between 1927 and 1931 are best explained as the strategies of warlords accustomed to the constantly shifting, chaotic alliances which had characterized Chinese politics since the breakdown of the central government a decade earlier. The main cause of Yan's defeat was the low population and lack of development in the areas that Yan had under his control, making him incapable of fielding a large and well-equipped army similar to the armies commanded by Chiang at the time. Yan was also unable to match the quality of leadership in Chiang's officer corps and the prestige that Chiang and the Nationalist army possessed at the time. Before Chiang's armies defeated Feng and Yan, Yan Xishan appeared on the cover of TIME Magazine, including the subtitle "China's Next President." The attention given to him by foreign observers in this period, and the support and assistance that he had secured from other high-profile Chinese statesmen, implies that there was a credible expectation that Yan would lead a central government if Chiang failed to defeat Yan's alliance.

Return to Shanxi
Yan was only able to return to Shanxi through a complex effort of intrigue and politicking. Much of Chiang's failure to immediately and permanently eject Yan or his subordinates from Shanxi was due largely to the influence of Zhang Xueliang and the Japanese, who were anxious to prevent the extension of Chiang's authority into Manchuria. In Yan's absence, the civil government of Shanxi ground to a halt, and the various military leaders of Shanxi struggled with each other to fill the vacuum, forcing Chiang's government to appoint Shanxi's leaders from among Yan's subordinates. Although he did not immediately declare his return to provincial politics, Yan returned to Shanxi in 1931 with the support and protection of Zhang. This move was not protested by Chiang due to Chiang's involvement in suppressing the forces of Li Zongren, who had marched up to northern Hunan from his base in Guangxi in support of Yan.

Yan remained in the background of Shanxi politics until the Nanjing government's failure to resist the Japanese takeover of Manchuria after the Mukden Incident gave Yan and his followers an opportunity to informally overthrow the Kuomintang in Shanxi. In December 18, 1931, a group of students (supported and perhaps orchestrated by officials loyal to Yan) gathered in Taiyuan to protest the Nanjing government's policy of not fighting the Japanese. This demonstration became so violent that Kuomintang police fired into the crowd. The outrage that this "Massacre of December Eighteenth" generated was strong enough that it gave Yan's officials a pretext to expel the Kuomintang from the province, on the grounds of public safety. After this event the Kuomintang ceased to exist in Shanxi except as a dummy organization whose members were more loyal to Yan Xishan than to Chiang Kai-shek.

Future difficulties in securing the loyalty of other Chinese warlords across China, the ongoing civil war with the Communists, and the ongoing threat of Japanese invasion motivated Chiang to let Yan retain the title of Pacification Commissioner in 1932, and he appointed Yan to the central government's Mongolian and Tibetan Affairs Commission. In 1934 Chiang finally flew to Taiyuan, where he praised Yan's administration in return for Yan's public support for Nanjing. By publicly praising Yan's government, Chiang in effect admitted that Yan remained the undisputed ruler of Shanxi.

Subsequent relationship with the Nationalist government
After 1931, Yan continued to give nominal support to the Nanjing government while maintaining de facto control over Shanxi, alternatively cooperating and conflicting with Communist agents active in his province. Although he was not an active participant, Yan supported the 1936 Xian Incident, in which Chiang Kai-shek was violently arrested by Nationalist officers led by Zhang Xueliang, and released only when Chiang agreed to make peace with the Communists and form a "united front" to resist the impending Japanese invasion of China. In his correspondence with Zhang Xueliang in 1936, Yan indicated that the growing rift between Yan and Chiang was due to Yan's anxieties over the potential for a Japanese invasion and a concern for the subsequent fate of China, and because Yan was not convinced of the correctness of focusing China's resources on anti-Communist campaigns. During the Xian Incident itself, Yan actively involved himself in the negotiations, sending representatives to prevent Chiang's execution (and the civil war that Yan believed would follow), while pushing for a united front to resist the Japanese invasion of China that Yan believed was imminent.

The financial relationship between Shanxi and the central government remained complicated. Yan was successful in creating a complex of heavy industries around Taiyuan, but neglected to publicize the extent of his success outside of Shanxi, probably to deceive Chiang Kai-shek. Despite his measured successes in modernizing the industry of Shanxi, Yan repeatedly petitioned the central government for financial assistance in order to extend the local railroad, and for other reasons, but was generally refused. When Yan refused to send taxes collected from the trade of salt (produced in Shanxi's public factories) to the central government, Chiang retaliated by flooding the market of northern China with so much salt (produced around coastal China) that the price of salt in China's northern provinces dropped extremely low: due to these artificially low salt prices, neighboring provinces virtually stopped purchasing Shanxi salt altogether. In 1935, Chiang's announcement of a "five year plan" to modernize Chinese industry was perhaps inspired by the successes of the "Ten Year Plan" that Yan had announced several years before.

Public policies
In Shanxi, Yan implemented numerous successful reforms in an effort to centralize his control over the province. Although embracing the traditional values of the landed gentry, he denounced their "oppression" of the peasantry, and took steps to initiate land reform and to weaken the power of landowners over the populace in the countryside. These reforms weakened potential rivals in his province in addition to benefiting Shanxi farmers.

Yan attempted to develop his army as a locally recruited force which cultivated a public image of being servants, rather than masters, of the people. He developed an all-encompassing, idiosyncratic ideology (literally "Yan Xishan Thought") and disseminated it by sponsoring a network of village newspapers and travelling dramatic troupes. He coordinated dramatic public meetings in which participants confessed their own misdeeds and/or denounced those of others. He devised a system of public education, producing a population of trained workers and farmers literate enough to be indoctrinated without difficulty. The early date by which Yan devised and implemented these reforms (during the Warlord Era) contradicts later claims that these reforms were modeled on Communist programs, and not vice versa.

Military policies
When Yan returned from Japan in 1909 he was a firm proponent of militarism, and proposed a system of national conscription along German and Japanese lines. Germany's defeat in World War I and Yan's defeat in Henan in 1919 caused Yan to reassess the value of militarism as a way of life. Yan then decreased the size of the army until 1923 (in order to save money), until a rumor circulated that rival warlords were planning on invading Shanxi. Yan then introduced military reforms designed to train a rural militia of 100,000 men along the lines of Japanese and American reserves.

Yan attempted, via conscription, to create a civilian reserve that would become the foundation of society in Shanxi. Because his troops were perhaps the only army in the Warlord era drawn exclusively from the province in which they were stationed, because Yan insisted that his soldiers perform work to improve Shanxi's infrastructure, including road-maintenance and assisting farmers, and because Yan's discipline ensured that his soldiers actually paid for anything that they took from civilians, the army in Shanxi enjoyed much more popular support than most of his rival's armies in China.

Yan's officer corps was drawn from Shanxi's gentry, and given two years of education at government expense. Despite efforts to subject his officers to a rigorous, Japanese-style training regimen, and to indocrinate them in Yan Xishan Thought, his armies never proved to be especially well-trained or disciplined in battle. In general, Yan's record of military defeats is not considered positive, and it is unclear whether Yan's officer corps either understood or sympathized with Yan's objectives, instead entering his service solely in the interests of achieving prestige and a higher standard of living. Yan built an arsenal in Taiyuan that, for the entire period of his administration, remained the only center in China capable of producing field artillery. The presence of this arsenal was one of the main reasons that Yan was able to maintain Shanxi's relative independence. While not effective fighting rival warlords, Yan's army was successful in eradicating banditry in Shanxi, allowing Yan to maintain a relatively high level of public order and security. Yan's successes in eradicating banditry in Shanxi include his cooperation with Yuan Shikai to defeat Bai Lang's remnant rebels after the failed 1913-1914 Bai Lang Rebellion.

Attempts at social reform
Yan went to great lengths to eradicate social traditions which he considered antiquated. He insisted that all men in Shanxi abandon their Qing-era queves, giving police instructions to clip off the queves of anyone still wearing them. In one instance, Yan lured people into theatres in order to have his police systematically cut the hair of the audience. Yan attempted to combat widespread female illiteracy by creating in each district at least one vocational school in which peasant girls could be given a primary-school education and taught domestic skills. After Kuomintang military victories in 1925 generated great interest in Shanxi for the Nationalist ideology, including women's rights, Yan allowed girls to enroll in middle school and college, where they promptly formed a women's association.

Yan attempted to eradicate the custom of footbinding, threatening to sentence men who married women with bound feet, and mothers who bound their daughters' feet, to hard labour in state-run factories. He discouraged the use of the traditional lunar calendar and encouraged the development of local boy scout organizations. Like the Communists who later succeeded Yan, he punished habitual lawbreakers to "redemption through labour" in state-run factories.

Attempts to eradicate opium use
In 1916 at least 10% of Shanxi's eleven million people were addicted to opium, and Yan attempted to eradicate opium use in Shanxi after he came to power. At first, Yan dealt with opium dealers and addicts severely, throwing opium addicts in prison and exposing them and their families to public humiliation. Many convicted of opium-related offences then died of sudden withdrawal from the drug. After 1922, partly due to public opposition to harsh punishment, Yan abandoned punishing addicts in favor of attempting to rehabilitate them, pressuring individuals through their families and constructing sanitariums designed to slowly cure addicts of their addictions.

Yan's attempts to suppress the opium trade in Shanxi were largely successful, and the number of opium addicts in the province was reduced by 80% by 1922. In the absence of efforts by other warlords to combat opium production and trade, Yan's efforts to combat opium use only increased the price of opium so high that narcotics of all kinds were drawn into Shanxi from other provinces. Users often switched from opium to pills mixed from morphine and heroin, which were easier to smuggle and use. Because the most influential and powerful gentry in Shanxi were often the worst offenders, officials drawn from the privileged class of Shanxi seldom enforced Yan's decrees outlawing the use of narcotics, and often evaded punishment themselves. Eventually Yan was forced to abandon his efforts to suppress opium trafficking, and attempted instead to establish a government monopoly on the production and sale of opium in Shanxi. Yan continued to complain about the availability of narcotics into the 1930s, and after 1932 executed over 600 people caught smuggling drugs into Shanxi. The traffic persisted, but Yan's interests in opposing it were perhaps limited by a fear of provoking the Japanese, who manufactured most of the morphine and heroin available in China inside their concession area in Tianjin, and who came to control much of the drug trade in northern China in the 1930s.

Limitations of economic reforms
Yan's efforts to stimulate Shanxi's economy mostly consisted of state-led investment in a broad variety of industries, and he generally failed to encourage private investment and trade. Though gains were made to improve the economy of Shanxi, Yan's efforts were limited by the fact that he himself had little formal training in economic or industrial theory. Yan also suffered from a lack of experienced, trained advisers capable of directing even moderately complicated tasks related to economic development. Because most of the educated staff that he did have access to were solidly entrenched within the landed gentry of Shanxi, it is possible that many of his officials may have deliberately sabotaged Yan's efforts for reform, preferring that the peasants working their fields continue their cheap, traditional labour.

Yan Xishan Thought
Throughout his life Yan Xishan attempted to identify, formulate, and disseminate a comprehensive ideology that would improve the morale and loyalty of his officials and the people of Shanxi. During his time of study in Japan, Yan became attracted to militarism and Social Darwinism, but he renounced these after World War I. Throughout the rest of Yan's life, he identified with the position of most Chinese conservatives at the time: that social and economic reform would progress from ethical reform, and that the problems confronting China could only be solved by the moral rehabilitation of the Chinese people. Believing that no single ideology existed to unify the Chinese people at the time that he came to power, Yan attempted to generate an ideal ideology himself, and once boasted that he had succeeded in creating a comprehensive system of belief that embodied the best features of "militarism, nationalism, anarchism, democracy, capitalism, communism, individualism, imperialism, universalism, paternalism, and utopianism". Much of Yan's attempts to spread his ideology were through a network of semi-religious organizations known as "Heart-Washing Societies".

Influence of Confucianism
Yan was emotionally attached to Confucianism by virtue of his upbringing, and because he identified its values as a historically effective solution to the chaos and disorder of his time. Yan justified his rule via Confucian political theories, and attempted to revive Confucian virtues as being universally accepted. In his speeches and writing Yan developed an extravagant admiration for the virtues of moderation and harmony associated with the Confucian Doctrine of the Mean. Many of the reforms that Yan attempted were undertaken with the intention of demonstrating that he was a junzi, the epitome of Confucian virtue.

Yan's interpretations of Confucianism were mostly borrowed from the form of Neo-Confucianism that was popular in the Qing dynasty. He taught that everyone had a capacity for innate goodness, but that in order to fulfill this capacity people had to subordinate their emotions and desires to the control of their conscience. He admired the Ming dynasty philosophers Lu Jiuyuan and Wang Yangming, who disparaged knowledge and who urged men to act on the basis of their intuition. Because Yan believed that human beings could only achieve their potentials through intense self-criticism and self-cultivation, Yan established in every town a Heart-Washing Society, whose members gathered each Sunday to meditate and listen to sermons based on the themes of the Confucian classics. Everyone at these meetings was supposed to rise and confess aloud his misdeeds of the past week, inviting criticism from the other members.

Influence of Christianity
Yan attributed much of the West's vitality to Christianity, and believed that China could only resist and overtake the West by generating an ideological tradition that was equally inspiring. Yan appreciated the efforts of missionaries (mostly Americans who maintained a complex of schools in Taigu) to educate and modernize Shanxi. Yan regularly addressed the graduating classes of these schools, but was generally unsuccessful in recruiting these students to serve his regime. Yan supported the indigenous Christian church in Taiyuan, and at one time seriously considered using Christian chaplains in his army. Yan's public support of Christianity waned after 1925, when he failed to come to the defense of Christians during anti-foreigner and anti-Christian demonstrations that polarized Taiyuan.

Yan deliberately organized many features of his Heart-Washing Society on the Christian church, including ending each service with hymns praising Confucius. Yan urged his subjects to place their faith in a supreme being that he called "Shangdi": he justified his belief in Shangdi via the Confucian classics, but described Shangdi in terms very similar to the Christian interpretation of God. Like Christianity, Yan Xishan Thought was permeated with the belief that, through accepting his ideology, people could become regenerated or reborn.

Influence of Chinese Nationalism
In 1911 Yan came to power in Shanxi as a disciple of Chinese Nationalism, but subsequently came to view Nationalism as merely another set of ideas which could be used to achieve his own objectives. Yan stated that the primary goal of the Heart-Washing Society was to encourage Chinese patriotism by reviving the Confucian church, leading foreigners to accuse him of attempting to create a Chinese version of Shinto.

Yan attempted to moderate some aspects of Sun Yat-sen's ideology that he viewed as potentially threatening to his rule. Yan altered some of Sun's doctrines before disseminating them in Shanxi, formulating his own version of Sun's Three Principles of the People that replaced the principles of nationalism and democracy with the principles of virtue and knowledge. During the 1919 May Fourth Movement, when students in Taiyuan staged anti-foreign demonstrations, Yan warned that patriotism, like rainfall, was beneficial only when moderate.

After the Kuomintang succeeded in forming a nominal central government in 1930, Yan encouraged Nationalist principles that he viewed as socially beneficial. During the 1930s Yan attempted to set up in every village a "Good People's Movement" in order to promote the values of Chiang Kai-shek's New Life Movement. These values included honesty, friendliness, dignity, diligence, modesty, thrift, personal neatness, and obedience.

Influence of socialism and communism
In 1931 Yan returned from his exile in Dalian impressed with the apparent successes of the Soviet Union's first Five-year plan, and attempted to reorganize the economy of Shanxi using Soviet methods, according to a local "Ten Year Plan" that Yan himself developed. Throughout the 1930s Yan bluntly equated economic development with state control of industry and finance, and he was successful in bringing most major industry and commerce under state control by the late 1930s.

Yan's speeches after 1931 reflect an interpretation of Marxist economics (mostly drawn from Das Kapital) that Yan gained while in exile in Dalian. Following this interpretation, Yan attempted to change the economy of Shanxi to become more like that of the USSR, inspiring a scheme of economic "distribution according to labour". When the threat of Chinese Communists became a significant threat to Yan's rule, Yan defended the Communists as courageous and self-sacrificing fanatics who were different from common bandits (contrary to Kuomintang propaganda) and whose challenge must be met by social and economic reforms that alleviated the conditions responsible for communism.

Like Marx, Yan wanted to eliminate what he saw as unearned profit by restructuring Shanxi's economy to reward only those who worked. Unlike Marx, Yan reinterpreted Communism to correct what he believed was Marxism's chief flaw: the inevitability of class warfare. Yan praised Marx for his analysis of the material aspects of human society, but professed to believe that there was a moral and spiritual unity of mankind that implied that a state of harmony was closer to the human ideal than conflict. By rejecting economic determinism in favor of morality and free will, Yan hoped to create a society that would be more productive and less violent than he perceived communism to be, while avoiding the exploitation and human misery that he believed was the inevitable result of capitalism.

Yan interpreted Roosevelt's New Deal as promoting socialism in order to combat the spread of communism. "The New Deal is an effective way of stopping communism," Yan said, "by having the government step in and ride roughshod over the interests of the rich." Yan then undertook a series of public works projects inspired by the New Deal in order to reduce unemployment in his own province.

Extent of success
In spite of his efforts, Yan did not succeed in making Yan Xishan Thought widely popular in Shanxi, and most of his subjects refused to believe that his true objectives differed substantially from those of past regimes. Yan himself blamed the failure of his ideology to become popular on the faults of his officials, charging that they abused their power and failed to explain his ideas to the common people. In general, the officials of Shanxi misappropriated funds intended to be used for propaganda, attempted to explain Yan's ideas in language too sophisticated for the common people, and often behaved in a dictatorial manner that discredited Yan's ideology and failed to generate popular enthusiasm for Yan's regime.

Early conflict with Japan
Yan did not come into serious conflict with the Japanese until the early 1930s. While he was in exile in Dalian in 1930, Yan became aware of Japanese plans to invade Manchuria, and feigned collaboration with the Japanese in order to pressure Chiang Kai-shek into allowing Yan to return to Shanxi before warning Chiang of Japan's intent. Japan's subsequent success in taking Manchuria in 1931 terrified Yan, who stated that a major objective of his Ten Year Plan was to strengthen Shanxi's defense against the Japanese. In the early 1930s Yan supported anti-Japanese riots, denounced the Japanese occupation of Manchuria as "barbarous" and "evil", publicly appealed to Chiang to send troops to Manchuria, and arranged for his arsenal to arm partisans fighting the Japanese occupation in Manchuria.

In December 1931 Yan was warned that, after taking control of Manchuria, the Japanese would attempt to take control of Inner Mongolia by subverting Chinese authority in Chahar and Suiyuan. In order to prevent this Yan took control of Suiyuan first, developing Suiyuan's large iron deposits (24% of all iron in China), and settling the province with thousands of soldier-farmers. When Manchurian soldiers (armed and led by the Japanese) finally invaded Chahar in 1935, Yan virtually declared war on the Japanese by accepting a position as "advisor" of the Suiyuan Mongolian Political Council, an organization created by the central government to organize Mongolian opposition to the Japanese.

The Japanese began promoting "autonomy" for northern China in the summer of 1935. Apparently, many high-ranking Japanese in China believed that Yan and many others in the north were fundamentally pro-Japanese, and would readily subordinate themselves to the Japanese in exchange for protection from Chiang Kai-shek. Yan published an open letter in September in which he accused the Japanese of desiring to conquer all of China over the next two decades. According to Japanese sources, Yan entered into negotiations with the Japanese in 1935, but was never very enthusiastic about "autonomy" and rejected their overtures when he realized that they intended to make him their puppet. Yan likely used these negotiations to frighten Chiang Kai-shek into using his armies to defend Shanxi, since he was afraid that Chiang was preparing to sacrifice northern China to avoid fighting the Japanese. If these were Yan's intentions, they were successful, as Chiang assured Yan that he would defend Shanxi with his army in the event that Shanxi was invaded.

Early conflict with the Chinese Communist Party
Although Yan admired its philosophy and economic methods, he feared the threat posed by Chinese communists almost as much as the Japanese. In the early 1930s Yan observed that, if it invaded Shanxi, the Red Army would enjoy the support of 70% of his subjects, and would readily be able to recruit one million men from among the most desperate citizens of Shanxi. Yan remarked that "the job of suppressing communism is 70 percent political and only 30 percent military, while the job of preventing its growth altogether is 90 percent political." In order to prevent a Communist threat to Shanxi, Yan sent troops to fight the Communists in Jiangxi and (later) Shaanxi, organized the gentry and village authorities into anti-corruption and anti-communist political organizations, and attempted (mostly unsuccessfully) to undertake a large-scale programme of land reform.

These reforms did not prevent the spread of Communist guerilla operations into Shanxi. Led by Liu Zhidan and Xu Haidong, 34,000 Communist troops crossed into southwestern Shanxi in February 1936. As Yan predicted, the Communists enjoyed massive popular support; and, although they were outnumbered and ill-armed, succeeded in occupying the southern third of Shanxi in less than a month. The Communists' strategy of guerilla warfare was extremely effective against, and demoralizing for, Yan's forces, who repeatedly fell victim to surprise attacks. The Communists in Shanxi made good use of cooperation supplied by local peasants to evade and easily locate Yan's forces. When reinforcements sent by the central government forced the Communists to withdraw from Shanxi, the Red Army escaped by splitting into small groups that were actively supplied and hidden by local supporters. Yan himself admitted that his forces had fought poorly during the campaign. The KMT forces that remained in Shanxi expressed hostility to Yan's rule, but did not interfere with his governance.

Invasion by Mengguguo
In March 1936, Manchurian troops occupying the Inner Mongolian province of Chahar invaded northeastern Suiyuan, which Yan controlled. These Japanese-aligned troops seized the city of Bailingmiao in northern Suiyuan, where the pro-Japanese Inner Mongolian Autonomous Political Council maintained its headquarters. Three months later, the head of the Political Council, Prince Teh (Demchugdongrub) declared that he was the ruler of an independent Mongolia (Mengguguo), and organized an army with the aid of Japanese equipment and training. In August 1936 Prince Teh's army attempted to invade eastern Suiyuan, but it was defeated by Yan's forces under the command of Fu Zuoyi. Following this defeat, Prince Teh planned another invasion while Japanese agents carefully sketched and photographed Suiyuan's defenses.

To prepare for the imminent threat of Japanese invasion that Yan felt after Suiyuan was invaded, Yan attempted to force all students to undergo several months of compulsive military training, and formed an informal alliance with the Communists for the purpose of fighting the Japanese, several months before the Xi'an Incident compelled Chiang Kai-shek to do the same. In November 1936 the army of Prince Teh presented Fu Zuoyi with an ultimatum to surrender. When Fu responded that Prince Teh was merely a puppet of "certain quarters" and requested that Teh submit to the authority of the central government, Prince Teh's Mongolian and Manchurian armies launched another, more ambitious attack. Teh's 15,000 soldiers were armed with Japanese weapons, supported by Japanese aircraft, and often led by Japanese officers. (Japanese soldiers fighting for Mengguguo were often executed after their capture as illegal combatants, since Mengguguo was not recognized as being part of Japan).

In anticipation of this war, Japanese spies destroyed a large supply depot in Datong and carried out other acts of sabotage. Yan placed his best troops and most able generals, including Zhao Chengshou and Yan's son-in-law, Wang Jingguo, under the command of Fu Zuoyi. During the month of fighting that ensued, the army or Mengguguo suffered severe casualties. Fu's forces succeeded in occupying Bailingmiao on November 24, 1936, and was considering invading Chahar before he was warned by the Kwangtung Army that doing so would provoke an attack by the Japanese Army. Prince Teh's forces repeatedly attempted to retake Bailingmiao, but this only provoked Fu into sending troops north, where he successfully seized the last of Teh's bases in Suiyuan and virtually annihilated his army. After Japanese officers were found to be aiding Teh, Yan publicly accused Japan of aiding the invaders. Yan's victories in Suiyuan over Japanese-backed forces were praised by Chinese newspapers and magazines, other warlords and political leaders, and many students and members of the Chinese public.

The Second Sino-Japanese War
During the Second Sino-Japanese War (1937–1945), most regions of Shanxi were quickly overrun by the Japanese, but Yan refused to flee the province after losing the provincial capital, Taiyuan. He relocated his headquarters to a remote corner of the province, effectively resisting Japanese attempts to completely seize Shanxi. During the Second Sino-Japanese War, the Japanese made no less than five attempts to negotiate peace terms with Yan and hoped that Yan would become a second Wang Jingwei, but Yan refused and stayed on the Chinese side.

Alliance with the Communists
After the failed attempt by the Chinese Red Army to establish bases in southern Shanxi in early 1936, the subsequent continued presence of Nationalist soldiers there, and the Japanese attempts to take Suiyuan that summer, Yan became convinced that the Communists were lesser threats to his rule than either the Nationalists or the Japanese. Yan then negotiated a secret anti-Japanese "united front" with the Communists in October 1936; and, after the Xi'an Incident two months later, he successfully influenced Chiang Kai-shek to entered into a similar agreement with the Communists. After establishing his alliance with the Communists Yan lifted the ban on Communist activities in Shanxi. He allowed Communist agents working under Zhou Enlai to establish a secret headquarters in Taiyuan, and released Communists that he had been holding in prison (including at least one general, Wang Ruofei).

Yan, under the slogan "resistance against the enemy and defense of the soil" attempted to recruit young, patriotic intellectuals to his government in order to organize a local resistance to the threat of Japanese invasion. By 1936 Taiyuan had become a gathering point for anti-Japanese intellectuals who had fled from Beijing, Tianjin, and Northeast China who readily cooperated with Yan, but he also recruited natives of Shanxi who were living across China regardless of their former political associations. Some Shanxi officials attracted to Yan's cause in the late 1930s later became important figures in the Chinese government, including Bo Yibo.

Early campaigns
In July 1937, after the Marco Polo Bridge Incident provoked the Japanese into attacking Chinese forces in and around Beijing, the Japanese sent a large amount of warplanes and Manchurian soldiers to reinforce Prince Teh's army. This caused Yan to believe that a Japanese invasion of Shanxi was imminent, and he flew to Nanjing to communicate the situation to Chiang Kai-shek. Yan left his meeting in Nanjing with an appointment as commander of the Second War Zone, comprising Shanxi, Suiyuan, Chahar, and northern Shaanxi.

After returning to Shanxi, Yan encouraged his officials to be suspicious of enemy spies and hanjian, and ordered his forces to attack Prince Teh's forces in northern Chahar, hoping to surprise and overwhelm them quickly. The Mongolian and Manchu forces were quickly routed, and Japanese reinforcements attempting to force their way through the strategic Nankou pass suffered heavy casualties. Overwhelming Japanese firepower, including artillery, bombers, and tanks, eventually forced Yan's forces to surrender Nankou, after which Japanese forces quickly seized Suiyuan and Datong. The Japanese then began the invasion of Shanxi in earnest.

As the Japanese advanced southward into Taiyuan basin, Yan attempted to impose discipline on his army by executing General Li Fuying and other officers guilty of retreating from the enemy. He issued orders not to withdraw or surrender under any circumstances, vowed to resist Japan until the Japanese had been defeated, and invited his own soldiers to kill him if he betrayed his promise. In the face of continued Japanese advances Yan apologized to the central government for his army's defeats, asked it to assume responsibility for the defense of Shanxi, and agreed to share control of the provincial government with one of Chiang Kai-shek's representatives.

When it became clear to Yan that his forces may not be successful in repelling the Japanese army, Yan invited Communist military forces to re-enter Shanxi. Zhu De became the commander of the Eighth Route Army active in Shanxi and was named the vice-commander of the Second War Zone, under Yan himself. Yan initially responded warmly to the re-entry of the arrival of Communist forces, and they were greeted with enthusiasm by Yan's officials and officers. Communist forces arrived in Shanxi just in time to help defeat a decisively more powerful Japanese force attempting to move through the strategic mountain pass of Pingxingguan. After the Japanese responded to this defeat by outflanking the defenders and moving towards Taiyuan, the Communists avoided decisive battles and mostly attempted to harass Japanese forces and sabotage Japanese lines of supply and communication. The Japanese suffered, but mostly ignored the Eighth Route Army and continued to advance towards Yan's capital. The lack of attention directed at their forces gave the Communists time to recruit and propagandize among the local peasant populations (who generally welcomed Communist forces enthusiastically) and to organize a network of militia units, local guerrilla bands, and popular mass organizations.

Genuine Communist efforts to resist the Japanese gave them the authority to carry out sweeping and radical social and economic reforms, mostly related to land and wealth redistribution, which they defended by labeling those who resisted as hanjian. Communist efforts to resist the Japanese also won over Shanxi's small population of patriotic intellectuals, and conservative fears of resisting them effectively gave the Communists unlimited access to the rural population. Subsequent atrocities committed by the Japanese in the effort to rid Shanxi of Communist guerrillas aroused the hatred of millions in the Shanxi countryside, causing the rural population to turn to the Communists for leadership against the Japanese. All of these factors explain how, within a year of re-entering Shanxi, the Communists were able to take control of most of Shanxi not firmly held by the Japanese.

Fall of Taiyuan
By executing commanders guilty of retreating, Yan succeeded in improving the morale of his forces. During the Battle of Pingxingguan Shanxi troops successfully resisted numerous Japanese assaults while the Eight Route Army harassed the Japanese from the rear and along their flanks. Other units of Yan's army successfully defended other nearby passes. After the Japanese successfully broke into the Taiyan basin, the Japanese continued to encounter ferocious resistance. At Yuanping, a single brigade of Yan's troops held out against the entire Japanese advance for over a week, allowing reinforcements sent by the central government to take up defensive positions at Xinkou. The Communist generals Zhu De and Peng Dehuai criticized Yan for what they called "suicidal tactics", but Yan was confident that the heavy losses suffered by the Japanese would eventually demoralize them, forcing the Japanese to abandon their effort to take Shanxi.

During the Battle of Xinkou, the Chinese defenders resisted the efforts of Japan's elite Itakagi Division for over a month, despite Japanese advantages in artillery and air support. By the end of October, 1937, Japan's losses were four times greater than those suffered at Pingxingguan, and the Itakagi Division was close to defeat. Contemporary Communist accounts called the battle "the most fierce in North China", while Japanese accounts called the battle a "stalemate". In an effort to save their forces at Xinkou, Japanese forces began an effort to occupy Shanxi from a second direction, in the east. After a week of fighting, Japanese forces captured the strategic Niangzi Pass, opening the way to capturing Taiyuan. Communist guerrilla tactics were ineffective in slowing down the Japanese advance. The defenders at Xinkou, realizing that they were in danger of being outflanked, withdrew southward, past Taiyuan, leaving a small force of 6,000 men to hold off the entire Japanese army. A representative of the Japanese army, speaking of the final defense of Taiyuan, said that "nowhere in China have the Chinese fought so obstinately".

The Japanese suffered 30,000 dead and an equal number wounded in their effort to take northern Shanxi. A Japanese study found that the battles of Pingxingguan, Xinkou, and Taiyuan were responsible for over half of all casualties suffered by the Japanese army in North China. Yan himself was forced to withdraw after having 90% of his army destroyed, including a large force of reinforcements sent into Shanxi by the central government. Throughout 1937 numerous high-ranking Communist leaders, including Mao Zedong, lavished praise on Yan for waging an uncompromising campaign of resistance against the Japanese.

Re-establishment of Yan's authority
Shortly before losing Taiyuan Yan moved his headquarters to Linfen, in southwestern Shanxi. Japanese forces halted their advance in order to focus on combating Communist guerilla unts still active in their territory, and communicated to Yan that they would exterminate his forces within a year, but that he and his supporters would be treated with consideration if they severed relations with the central government and assisted the Japanese in suppressing the Communists. Yan responded by repeating his promise not to surrender until Japan had been defeated. Possibly because of the severity of his losses in northern Shanxi, Yan abandoned a plan of defense based on positional warfare, and began to reform his army as a force capable of waging guerrilla warfare. After 1938 most of Yan's followers came to refer to his regime as a "guerrilla administration".

Yan's intransigence obliged the Japanese to invade Linfen. Yan's defenses, under the command of Wei Lihuang, put up a stiff defense at Lingshi Pass, but were eventually forced to abandon the position when a Japanese column broke through a different pass and threatened Linfen from the east. Wei was successful in preventing the Japanese from seizing the strategic Zhongtiao mountain range, but the loss of Linfen and Lingshi forced Yan to withdraw with what remained of his army across the Yellow River, into neighboring Shaanxi.

In the spring of 1938 the Japanese redistributed many of their forces away from Shanxi, and Yan succeeded in re-establishing his authority, setting up a headquarters in the remote, mountainous district of Qixian. The Japanese made several raids into southern Shanxi, but withdrew after encountering heavy resistance. By 1938, Yan's tactics had evolved to resemble the guerrilla warfare practiced by Communist forces in other parts of Shanxi, and his defenses featured coordination with Communist forces and with regular divisions of the Nationalist army.

Yan's alliance with the Communists eventually suffered as tensions escalated between the KMT and CCP in other parts of China. Yan himself eventually came to fear the rapid power and influence that Communist forces operating in Shanxi quickly gained, and this fear caused Yan to become increasingly hostile to Communist agents and soldiers. These tensions eventually led to the breakdown of Yan's good relations with the Communists in 1939, when Yan began another offensive against the Japanese and attempted to wipe out the units of his army most friendly with the Communists by having them do most of the fighting. These units eventually rebelled against Yan, receiving assistance from the Communists, while soldiers aligned with the central government aided Yan. Yan eventually succeeded in driving the Communists and their sympathizers from the territory that he controlled, but most of the rural territory of northwestern Shanxi passed into the control of the Eighth Route Army. Yan's forces continued to battle the Japanese throughout 1940 as part of an indecisive guerilla campaign.

Negotiations with the Japanese
In 1940 Yan's friend, Tanaka Ryukichi, became chief of staff of the Japanese First Army, which was stationed in Shanxi. After Yan's animosity with the Communists became apparent, Tanaka began negotiations with Yan in the effort of inducing Yan to enter into an anti-Communist alliance with Japan. Yan agreed to send a high-level representative to meet with the Japanese, and obtained permission from the central government to negotiate with the Japanese for an agreement to remove all troops from Shanxi in exchange for Yan's cooperation. Perhaps because the Japanese were unwilling to meet these demands, Yan withdrew from negotiations in December, 1940, when Tanaka's superiors recalled him to Japan. Two months later the Japanese repeated their charge that Yan was a "dupe" of the Communists.

In May 1941 Tanaka Ryukichi returned to Shanxi and reopened negotiations with Yan, despite a general resistance from other Japanese military leaders in North China. Tanaka returned to Tokyo in August 1941, paving way for talks between Yan and General Iwamatsu, then the commander of the Japanese First Army in Shanxi. In the summer of 1942 Yan told the Japanese that he would aid them in their fight against the Communists if the Japanese withdrew a large part of their forces from Shanxi and provided his army with food, weapons, and CH$15 million of precious metals.

When Iwamatsu sent his chief of staff, General Hanatani, to Qixian for the purpose of delivering what Yan demanded, Yan called the Japanese concessions inadequate and refused to negotiate with the Japanese. This refusal is variously explained as Yan's resentment over the arrogance of the Japanese, his conviction that the Japanese would lose the war in the Pacific after he heard about the Battle of Midway, and/or the result of a translation error that convinced Yan that the Japanese were using the negotiations as a ploy to ambush and attack him by surprise. Because they had allowed Yan to deceive yhem, Iwamatsu lost his command and Hanatani was reassigned to the Pacific.

After 1943 the Japanese began to negotiate with Yan clandestinely through civilian representatives (notably Yan's friend, Komoto Daisaku) in an effort to avoid being humiliated by him. Through Komoto's efforts Yan and the Japanese came to observe an informal ceasefire, though the terms of this agreement are unknown. By 1944 Yan's troops were actively battling the Communists, possibly with the cooperation and assistance of the Japanese. Yan's relationship with Chiang also declined by 1944, when Yan warned that the masses would turn to communism if Chiang's government did not improve considerably. An American reporter who visited Shanxi in 1944 observed that Yan "was thought of not necessarily as a puppet but rather as a compromise between the extremes of the treason at Nanjing and national resistance at Chongqing" by the Japanese.

Relationship with the Japanese after 1945
Yan Xishan was notable for his ability to recruit thousands of Japanese soldiers stationed in northwest Shanxi in 1945, including their commanding officers, into his army. He was recorded to have successfully used a variety of tactics to achieve these defections: flattery, face-saving gestures, appeals to idealism, and genuine expressions of mutual interest. In cases where these were not completely successful, he sometimes resorted to "bribes and women". His tactics in both convincing the Japanese to stay and in preventing them from leaving were highly successful, as the efforts of the Japanese were instrumental in keeping the area surrounding Taiyuan free from Communist control for the four years before the Communists won the civil war.

Yan was successful in keeping the presence of the Japanese from American and Nationalist observers. He was known for making shows of disarming Japanese, only to rearm them at night. In one instance, he disarmed several units of Japanese, had a reporter take a picture of the stacked weapons to show that he was following orders, and then gave the weapons back to the Japanese. He once officially labelled a detachment of Japanese troops as "railway repair labourers" in public records before sending them, fully armed, into areas without railway tracks but full of Communist insurgents.

By recruiting the Japanese into his service in the manner that he did, Yan retained both the extensive industrial complex around Taiyuan and virtually all of the managerial and technical personnel employed by the Japanese to run it. Yan was so successful in convincing surrendered Japanese to work for him that, as word spread to other areas of north China, Japanese soldiers from those areas began to converge on Taiyuan to serve his government and army. At its greatest strength, the Japanese "special forces" under Yan totaled 15,000 troops, plus an officer corps that was distributed throughout Yan's army. These numbers were reduced to 10,000 after serious American efforts to repatriate the Japanese were partially successful. By 1949, serious casualties had reduced the number of Japanese soldiers under Yan's command to 3,000. The leader of the Japanese under Yan's command, Imamura Hosaku, committed suicide on the day that Taiyuan fell to Communist forces.

Civil war
After the Second World War, Yan's troops (including thousands of former Japanese troops) held out against the Communists during the Chinese Civil War for four years. His forces held out until April, 1949, after the Nationalist government had lost control northern China, allowing the PLA to encircle and besiege his forces. The area surrounding the provincial capital of Taiyuan was the longest to resist Communist control.

The Shangdang Campaign
The Shangdang Campaign was an attempt by Yan (authorized by Chiang Kai-shek) to re-assert control over southern Shanxi, where the People's Liberation Army was known to be especially active. The total forces sent by Yan into southern Shanxi consisted of 35,000 of his provincial troops. The PLA contested this force with approximately 31,000 regular PLA troops, and were able to supplement this force with approximately 50,000 irregular militia soldiers, which were used mainly for logistical support and to maintain low-level suppression activities against already besieged (and stationary) forces. Yan's forces in general were much better armed and supplied than the forces fielded by the PLA at the time.

The PLA forces were led by Liu Bocheng (later named one of the "Ten Great Marshals of the People's Republic of China"). Deng Xiaoping, China's future leader, served as Liu's political commissar. Yan's forces were initially led by Shi Zebo, and were later reinforced by Peng Yubin.

Hostilities began on September 10, 1945. After initial engagements between Shi Zebo and Liu Bocheng's forces, Shi barricaded his forces inside the regional center of Chengzhi. Liu's army occupied the area surrounding Chengzhi, but was not able to take the city, leading to a stalemate. Peng Yubin's forces were sent to reinforce Liu's position. Peng was initially successful in defeating PLA detachments, but eventually his forces were led into an ambush, and were completely lost. During this time, Shi's forces attempted a breakout from Chengzhi, but were also ambushed and defeated on October 12, 1945.

Most of the PLA casualties in the campaign occurred when they attempted to confront Peng's reinforcements in an orthodox battle, allowing Yan's forces to successfully target Liu's forces with their superior arms. After these tactics failed, PLA forces were able to kill or capture both Shi's and Peng's forces by leading them each into a series of well-orchestrated ambushes. Although both forces suffered the same amount of dead or wounded, 4,000-5,000, the Communists were able to capture 31,000 of Yan's troops, who surrendered once they fell into these ambushes. Of Yan's commanders, Peng Yubin was killed in action and Shi Zebo was taken alive as a prisoner of war.

The Shangdang Campaign ended with the Communists in firm control of southern Shanxi. Because the army fielded by Yan was much better supplied and armed, the victory allowed the local PLA to acquire much greater arms than had previously been available to them (including, for the first time, field artillery). It is said that the PLA victory in the Shangdang campaign altered the course of the ongoing Chongqing peace negotiations, allowing Mao Zedong to act from a stronger negotiating position. Their victory in the Shangdang campaign boosted the long-term prestige of both Liu Bocheng and Deng Xiaoping.

By the winter of 1947 Yan's control of Shanxi was restricted to the area of northern Shanxi adjacent to Taiyuan. Yan observed that the Communists were growing stronger, and predicted that within six months they would rule half of China. After losing southern Shanxi Yan undertook preparations to defend Taiyuan to the death, perhaps in the hopes that if he and other anti-Communist leaders could hold out long enough the United States would eventually join the war on their side, saving his forces from destruction.

The Taiyuan Campaign
By 1948, Yan's forces had suffered a series of serious military defeats to the PLA, losing control of southern and central Shanxi, and were surrounded on all sides by territory controlled by the Communists. Anticipating an assault on northern Shanxi, Yan prepared his armies by fortifying over 5,000 bunkers, constructed over the rugged natural terrain surrounding Taiyuan. The Nationalist 30th Army was airlifted from Xian to Taiyuan to fortify the city, which was protected by over six hundred pieces of artillery. Yan repeatedly declared his intentions to die in the city during this period. The total number of Nationalist troops present in northern Shanxi by the fall of 1948 was 145,000.

To overcome these defenses, the Communist commander Xu Xiangqian developed a strategy of engaging positions on the outskirts of Taiyuan before besieging the city itself. The first hostilities in the Taiyuan Campaign occurred on October 5, 1948.

By November 13, 1948, the Communists succeeded in taking the area around the eastern side of Taiyuan. The Nationalists suffered serious setbacks when entire divisions defected or surrendered. In one case, a Nationalist division led by Dai Bingnan pretended to surrender, but then arrested the Communist officers who entered Dai's camp to accept. Yan Xishan mistakenly believed the leader of the arrested group, Jin Fu, was the high-ranking Communist leader Hu Yaobang (who the Nationalists believed was active in the region). Yen airlifted the captured group to Chiang Kai-shek, who executed them after they failed to produce important information. Dai himself was rewarded with a large amount of gold for his actions, but was not allowed to be airlifted out of Taiyuan. After the city fell he was captured, put on a well-propagandized show trial, and publicly executed.

Between November, 1948, and April, 1949, a stalemate was reached and there was little advancement by either side. Tactics used by the Communists during this time included psychological warfare, forcing relatives of the Nationalist defenders to the front to ask for the defenders' surrender. These tactics were successful as, from December 1, 1948, through March, 1949, over 12,000 Nationalist soldiers surrendered.

After major PLA victories in Hebei in late January, 1949, Communist armies in Shanxi were reinforced with additional troops and artillery. After this reinforcement, the total number of men under Liu's command exceeded 320,000 men, of which 220,000 were reserves. By the end of 1948, Yan Xishan had lost over 40,000 troops, but attempted to supplement this number through large-scale drafting.

Yan Xishan himself (along with most of the provincial treasury) was airlifted out of Taiyuan on March 1949 for the express purpose of asking the central government for more supplies. Yan left behind Sun Chu as the commander of his military police force, with Yan's son-in-law, Wang Jingguo, in charge of most Nationalist forces. Overall command was delegated to Imamura Hosaku, the Japanese lieutenant-general who had joined Yan after World War II.

Shortly after Yan himself was airlifted out of Taiyuan, Nationalist planes stopped dropping food and supplies for the defenders due to fears of being shot down by the advancing Communists. The Communists, depending largely on their reinforcements of artillery, launched a major assault on April 20, 1949, and succeeded in taking all positions surrounding Taiyuan by April 22. A subsequent appeal to the defenders to surrender was refused. On the morning of April 22, 1949, the PLA bombarded Taiyuan with 1,300 pieces of artillery and breached the city's walls, initiating bloody street-to-street fighting for control of the city. By 10:00 am, April 22, the Taiyuan Campaign ended with the Communists in complete control of Shanxi. Total Nationalist casualties amounted to all 145,000 defenders, many of which survived as POWs. The Communists lost 45,000 men and an unknown number of civilian labourers that they had drafted, all of which were either killed or injured.

The fall of Taiyuan was one of the few examples in the Chinese Civil War in which Nationalist forces echoed the defeated Ming loyalists who had, in the 17th century, brought entire cities to ruins resisting the invading Manchus. Many Nationalist officers were reported to have committed suicide when the city fell. The dead included Yan's nephew-in-law, who was serving as governor, and his cousin, who ran his household. Liang Huazhi, the head of Yan's "Patriotic Sacrifice League", had fought for years against the Communists in Shanxi until he was finally trapped in the massively fortified city of Taiyuan. For six months Liang led a savage resistance, leading both Yan's remaining forces and those of the warlord's thousands of Japanese mercenaries. When Communist troops finally broke into the city and began to occupy large sections of it, Liang barricaded himself inside a large, fortified prison complex filled with Communist prisoners. In a final act of self-sacrifice, Liang set fire to the prison and committed suicide as the entire compound burned to the ground.

President of the Republic of China
In March 1949 Yan flew to the capital of Nanjing for the purpose of asking the central government for more food and ammunition, taking most of the provincial treasury with him, and did not return before Taiyuan fell to Communist forces. Shortly after arriving in Nanjing, Yan insinuated himself into a quarrel between the acting president of the Chinese Republic, Li Zongren, and Chiang Kai-shek, who had resigned from the presidency in January 1949. Although Chiang had resigned, many officials and generals remained loyal to him, and Chiang retained over US$200 million, which he did not allow Li to use in order to fight the Communists or to stabilize the currency. The ongoing power struggle between Li and Chiang seriously disrupted the larger effort to defend Nationalist territory from Communist forces.

Yan focused his efforts on attempting to promote greater cooperation between Li an Chiang. On one occasion Yan broke down in tears when attempting, at Chiang's request, to convince Li not to resign. He repeatedly used the example of the loss of Shanxi, and warned that the Nationalist cause was doomed unless Li and Chiang's relationship improved. Li eventually attempted to form a government, including both Chiang's supporters and critics, with Yan as premier. Despite Yan's efforts, Chiang refused to allow Li access to more than a fraction of the wealth that Chiang had sent to Taiwan, and officers loyal to Chiang refused to follow Li's orders, frustrating efforts to coordinate Nationalist defenses and to stabilize the currency.

By late 1949 the Nationalist's position had become desperate. The currency issued by the central government rapidly declined in value until it became virtually worthless. Military forces loyal to Li attempted to defend Guangdong and Guangxi, while those loyal to Chiang attempted to defend Sichuan. Both forces refused to cooperate with each other, eventually leading to the loss of both regions. Yan's constant attempts to work with both sides led to his being alienated from both Li and Chiang, both of whom resented Yan for cooperating with either side. The Communists succeeded in taking all territory held on the mainland by the end of 1949, defeating both Li and Chiang. Li went into exile in the United States, while Yan continued to serve as Premier, in Taiwan, until 1950, when Chiang re-assumed the presidency.

Retirement in Taiwan


Yan's final years were filled with disappointment and sadness. After following Chiang to Taiwan he enjoyed the title of "senior advisor" to Chiang, but in reality was utterly powerless. Chiang may have held a long-term grudge against Yan due to Yan's activities on behalf of Li in Guangdong. On more than one occasion Yan requested permission to go to Japan, but was not allowed to leave Taiwan.

Yan was deserted by all but a handful of followers, and spent most of his remaining years writing books on philosophy, history, and contemporary events, which he frequently had translated into English. Yan's late philosophical perspective has been described as "anti-communist and anti-capitalist Confucian utopianism". Several months before the Korean War Yan published a book, Peace or World War, in which he predicted that North Korea would invade South Korea, that South Korea would be quickly overcome, that the United States would intervene on the side of South Korea, that the North Koreans would be pushed back to the Yalu River, that Communist China would intervene on the side of North Korea, that a stalemate would result, and that the Americans would retain a long-term presence in South Korea afterwards. All of these events later occurred over the course of the Korean War.

Yan died in Taiwan in May 24, 1960. He was buried in the Qixingjun region of Yangmingshan. For decades Yan's residence and grave were cared for by a small number of former aides, who had accompanied Yan from Shanxi. In 2011, when the last of his aides turned eighty-one and became unable to care for the residence, the responsibility of maintaining the site was taken over by the Taipei City Government.

Legacy
After the civil war, Yan, like most Nationalist generals who did not switch sides, was demonized by Communist propaganda. It was not until after 1979, with new reforms in China, that Yan began to be viewed more positively (and thus, more realistically) as a pragmatic anti-Japanese hero. The contributions by Yan during his period in office are beginning to be recognized by the current Chinese government. One of his achievements, Yan's success in containing one of the epidemics in Shanxi, was cited recently by various Chinese governmental organizations as an example to follow to contain the bird flu and SARS epidemics in China, and was used to criticize the incompetence of Chinese governmental officials in handling such epidemics.

Yan was sincere about his attempts to modernize Shanxi, and achieved success in some regards. Throughout his rule Yan attempted to promote social reforms that later came to be taken for granted, but which were highly controversial in his time: the abolition of foot binding; work for women outside the home; universal primary education; and, the existence of peasant militias as a fundamental unit of the army. Yan was possibly the warlord most committed to his province in his era, but was constantly challenged by his own dilettantism and the talents of his own officials.

Although Yan constantly spoke of the desirability and need for reforms, until the 1930s he remained too conservative to implement anything resembling the kind of reforms needed to successfully modernize Shanxi. Many of his attempts at reform in the 1920s had been attempted generations before, during the Tongzhi Restoration. These Qing Dynasty reformers had found their reforms inadequate solutions to the problems of their time, and under the Model Governor these reforms proved equally unsatisfactory. During the 1930s Yan became increasingly open to radical social and economic policies, including wealth redistribution via graduated taxation, state-led industrialization, opposition to the money economy, an orientation towards functional (vs. "moral") education, and the large-scale assimilation of Western technology. Despite his adoption of Soviet-style economic policies and increasingly radical attempts at social reform, Yan was regarded as a "conservative" throughout his career, suggesting that the term "conservative" must be used carefully within the context of modern Chinese history.

After Yan's time Shanxi became of site of Mao Zedong's "model brigade" of Dazhai: a utopian communist scheme in Xiyang County that was supposed to be the model for all other peasants in China to emulate. If the people of Dazhai were especially suited for such an experiment, it is possible that decades of Yan's socialist indoctrination may have prepared the people of Shanxi for Communist rule. After the death of Mao, the experiment was discontinued, and most peasants reverted to private farming.