In late 1934, Chiang launched a fifth campaign that involved the systematic encirclement of the Jiangxi Soviet region with fortified blockhouses. The blockhouse strategy was devised and implemented in part by newly hired Nazi advisors. Unlike previous campaigns in which they penetrated deeply in a single strike, this time the KMT troops patiently built blockhouses, each separated by about eight kilometres, to surround the Communist areas and cut off their supplies and food sources.

In October 1934 the CCP took advantage of gaps in the ring of blockhouses and broke out of the encirclement. The warlord armies were reluctant to challenge Communist forces for fear of losing their own men and did not pursue the CCP with much fervor. In addition, the main KMT forces were preoccupied with annihilating Zhang Guotao's army, which was much larger than Mao's. The massive military retreat of Communist forces lasted a year and covered what Mao estimated as 12,500 km; it became known as the Long March.