After war broke out in Zhabei on August 13, the Nationalist secret service began to take over these paramilitary operations. General Dai Li met with the Green Gang leader Du Yuesheng in the French Concession to discuss the formation of a Pudong Guerrilla Brigade, a Lake Tai Special Action Command, the Loyal and Patriotic Army (Zhongyi jiuguo jun), and eventually the Jiangsu-Zhejiang Operations Committee. And at the beginning of September Chiang Kai-shek's Military Affairs Commission approved the organization of an "emergency period service group" (feichang shiqi fuwutuan) to deal with traitors and spies in Shanghai. The Military Affairs Commission subsequently put this group under the orders of General Wang Jingjiu, commander of the Eighty-seventh Nationalist Division, housing its Special Services Squad (Tewutuan) in the Shaoxing guild hall in Nandao.
The Special Services Squad also had an investigation section, which was charged with collecting evidence on hanjian so that the police could arrest the collaborators and turn them over to the Special Services Squad headquarters for questioning. So deputized, members of the investigation group and other such patriotic volunteers had ample opportunities to form "antitraitor societies" to extort money from merchants dealing in Japanese goods.
The Su-Zhe Operations Committee (Junshi weiyuanhui Su-Zhe xingdong weiyuan-hui), which was formed in late September to transform "gangland" (banghui) members into paramilitary cadres, was nominally chaired by Chiang Kai-shek. Its members included Du Yuesheng, Huang Jinrong, Wang Xiaolai, Yu Xiaqing, Zhang Xiaolin, Yang Hu, Mei Guangpei, Xiang Songpo, and Lu Jingshi. The secretary-general (shujizhang) was Dai Li, who used the authority of the committee to organize a General Command Headquarters for the Special Action Army (Biedong jun zongzhihui bu) located at Number 1 Shenjiazhai near Fenglinqiao opposite
The corpsmen themselves consisted mainly of retail clerks (dianyuan) from the Shanghai Shopkeepers Association, local ruffians (dipi and liumang) from the gangs, routed Guomindang soldiers, laborers thrown out of work by the closing of the factories and shops during the Japanese attack, and organized labor union members. Once trained and armed with Mauser pistols, these units' primary purpose was "solely to locate traitors [hanjian]" and turn them over to the nearest Chinese police bureau.
Others were former members of the Chinese Youth National Salvation Association. Toward the end of August, Sun Yaxing's group, for instance, had been renamed a Special Services Corps and transferred to Longhua for military training. In late September, after being provided grenades, pistols, and rifles, they were assigned to patrol the area surrounding the martial law commander's headquarters at West Gate. The corpsmen were authorized to take whatever measures they deemed necessary "to suppress traitors": if they arrested persons "for perpetrating traitorous acts," the suspects were tried by a military court within the headquarters and summarily executed when found guilty.
Naysayers later described the Special Services Corps as "a motley rabble" (wu he zhi zhong) that had very little military effectiveness against the Japanese. The units that were supposed to defend the zone from the south bank of Suzhou Creek along Fanwangdu and Caojiadu across to Rihuigang did quickly retreat once the Japanese launched an attack across Suzhou Creek. But Sun Yaxing's company, which was dispatched to the police station on the Nandao Bund in late October 1937 to help the police reserve unit defend the area from attack by the Japanese from the Huangpu River, held its ground. This was where the last stand of the Chinese Nationalist forces took place on November 11, the final day of the Battle of Shanghai. Some Special Services corpsmen fought valiantly and died at the water's edge. Others made their way into the French Concession and International Settlement, where the authorities rounded them up and interned them in special camps—camps that became breeding grounds for the urban terrorists who would continue the war against hanjian long after the last contingent of Special Services Corps formally withdrew from Shanghai on February 1, 1938, after issuing a farewell letter to the Chinese press stating that they were leaving the concessions "for the safety of the residents of the foreign settlements." One newspaper commented, "The death of most of the Chinese traitors may have been the work of the corps."