Short answers, pulled from the story.
The incident began when Chiang Kai-shek ordered Nationalist troops to move from Anhui and Jiangsu by December 1940. This action ended the United Front cooperation between the Communist Party and Nationalists that had paused the Chinese Civil War against Japan.
Historians debate who initiated the conflict, with Gregor Benton arguing the Communists attacked first while Republic of China claims the Communist Party launched unprovoked attacks. The PRC describes the event as Nationalist treachery against a united front instead.
Maolin Township became the site of a deadly trap where eighty thousand Nationalist soldiers led by Shangguan Yunxiang surrounded nine thousand Communist fighters. The New Fourth Army tried to cross three routes toward Jiangsu before being crushed by overwhelming numbers.
Chiang Kai-shek ordered the New Fourth Army disbanded on the 17th of January 1941. The CCP responded by reorganizing the army on January 20 from Yan'an under Chen Yi and Liu Shaoqi.
Only about 2,000 people escaped under Huang Huoxing and Fu Qiutao during the engagement. Political commissar Xiang Ying died during the battle before negotiations began and Ye Ting was detained immediately.