On December 29, as the Chinese Red Army was on its way, the news of the fall of Dragon Hill to the nationalist 18th Division reached the communists. They devised a plan to trap the advancing nationalists with a pincer manoeuvre. On the morning of December 30, 1930, the 18th Division of the nationalist 9th Route Army began their push toward Five Gates Ridge from Dragon Hill, headed by the 52nd brigade. Around 09:00, the most important battle of the first counter-encirclement campaign began at Short Separation, east of Dragon Hill, with elements of the Chinese Red Army firing the first shot. By noon of December 30, the entire 3rd Legion of the Chinese Red Army was engaged in the battle. Zhang Huizan, the commander of nationalist 18th Division, only devoted two more regiments in support of his 52nd brigade, under the mistaken belief that the enemy forces he had encountered were merely guerillas. By 15:00, Zhang Huizan was leading the charge of four regiments to clear the communist resistance, but was driven back. Taking advantage of this, the 4th Army and part of the 3rd Legion of the Chinese Red Army moved to cut off the nationalist 18th Division from Donggu and Yinfu, attacking Dragon Hill from behind. The majority of the 3rd Legion of the Chinese Red Army took Shanggu, cutting off the escape route of the nationalist 18th Division at Dragon Hill, and preventing any nationalist reinforcement from the north-west. Realising they were trapped, morale amongst the nationalist ranks plummeted as they attempted an escape. By 16:00, the encirclement of the nationalist 18th Division was complete and the nationalist attempt to escape toward the north-west had been beaten back. The nationalist army quickly became disorganised, and by this point Zhang Huizan had insufficient control of his forces to arrange an orderly retreat or muster any counter-attack. He was eventually taken prisoner by the communist forces. By 18:00 the battle was over, the entire nationalist division having been wiped out. The complete destruction of the 18th Division of the nationalist 9th Route Army marked the immediate end of the nationalist assaults. The five nationalist divisions deep inside Jiangxi Soviet immediately started to retreat towards nationalist positions. The 50th Division of the nationalist 9th Route Army became the communists' next target as it began its retreat toward Dongshao from Southern Regiment on January 2, 1931. The communist leaders decided on the same day to pursue the enemy in three directions:   The headquarters of the Chinese Red Army would move forward to Longtan to command the upcoming battle.