During the Japanese occupation, he was the head of the secret police Tèwu (also known as Jessfield 76, after the address of its Shanghai headquarters) of Wang Jingwei's collaborationist regime.

In this job Li Shiqun made the Social News (社会新聞, Shèhuì xīnwén) magazine into an organ of the party intelligence.

In early 1939 he and Ding Mocun were recruited by Zhou Fohai to set up a security organization for Wang Jingwei in close cooperation with the Japanese occupying forces under the command of Lt Colonel Haruke Keiin.

As a result, Li Shiqun, who held a number of important offices and was a loyal friend of Wang Jingwei, surpassed in his authority even the head of the Tèwu and exerted great influence.

When Wang Jingwei formally inaugurated the Nanking government in 1940, Li Shiqun was appointed to be the head of the Tèwu as well as the deputy police minister and a member of the central committee.

Li Shiqun masterminded a program euphemistically called "village clearance" (清鄉, qingxiang) focused on rooting out any resistance to the Japanese occupiers in the countryside.