Following the founding of the People's Republic of China in 1949, he withdrew his forces to Burma and Thailand, where he continued to carry out guerrilla raids into Communist-held territory.

Li Mi was able to prove his loyalty to Generalissimo Chiang Kai-shek and was named a county magistrate of one of the "red territories" the Kuomintang Nationalists had just taken over.

In the early 1930s Li joined General Xue Yue's staff, leading a crack Nationalist unit to drive the Communist forces out of the Jiangxi Soviet.

When the war between China and Japan broke out, Chiang Kai-shek had Li Mi transferred to the regular army after rumors surfaced about his loyalty towards the KMT government.

In 1944 he joined the "Y-Force", commanded by General Wei Lihuang, in the Battle of Northern Burma and Western Yunnan, which destroyed the Japanese 55th and 56th divisions.

Under President Chiang Kai-shek's personal orders, Generals Li Mi, Du Yuming and Qiu Qingquan removed local warlord Long Yun of Yunnan Province from power in June 1945.

In November 1948, Li Mi, Sun Yuanliang and Qiu Qingquan were tasked to relieve General Huang Baitao's 7th army, but they were blocked by an enemy force.

While attempting to assault enemy positions in Henan, he, Du Yuming, Sun Yuanliang and Qiu Qingquan became surrounded by PLA forces.

By the time that Communist forces had taken the mainland in 1949, Li had already withdrawn his armies south and west, into Thailand and the Shan states of Northern Burma.

At first, American strategists considered Li's "irregulars" useful to their regional efforts to contain communism; but, within a few years, Washington began to think of them as a threat to that same objective, and put serious pressure on Chiang Kai-shek to remove them.

The American secretary of state, John Foster Dulles, was concerned that the Burmese government might form a coalition with communist groups to remove Li's troops.

[3] By 1967, Nationalist Chinese troops fought a war against a rival warlord, Khun Sa, for control of local opium production and distribution.

[3] In 1961, Li's former troops who had retreated into northwestern Thailand agreed to combat local Communist insurgents in exchange for official residence, as they had no legal status.

Under the nominal command of the Thai army, the unit was renamed the "Chinese Irregular Forces" (CIF), and continued to grow and distribute opium in order to fund their anti-communist activities.