The Kuomintang secretly launched a large-scale purge against the Red Flag, inflicting heavy casualties on Communist Party spies embedded in Nancheng. To get the news out safely, Jackal decided to carry out a surprise bombing raid. Amid the chaos caused by blowing up the arms depot, he would smuggle the Japanese documents he had obtained out of the city and deliver them to his superiors. The mission would determine whether the underground network in Nancheng survived.
A mistake occurred at the end of the mission. The blast spread far beyond the planned area, and Jackal went missing after the operation. Jiang Baichuan, chief of the Reconnaissance and Defense Section, was severely injured while fighting off the assault and fell into a coma.
To prevent the intelligence from being exposed, the Military Statistics Bureau urgently suspended Project Caged Wolf and sealed Order Caged Wolf S. This gave the Red Flag a chance to regroup and rebuild its Nancheng headquarters.
Six months later, less than half a month after the Military Statistics Bureau successfully assassinated Kigawa Hara, chief of the Japanese Special Services Section in Nancheng, the Japanese Special Higher Police sent its new chief, Ishikawa Soma, to Nancheng, where he established the Co-Prosperity Hall.
