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After establishing his capital in Guanzhong, Xiang Yu had a strong military force and proclaimed himself the Overlord of Western Chu. He was granted nine wealthy counties and made Pengcheng his capital.

Xiang Yu forced King Huai of Chu to enfeoff Liu Bang as King of Han, and specially gave the land of Bashu (because transportation was blocked at that time, it was the place where exiles who had committed crimes were sent to) and the land of Hanzhong (both were Guanzhong areas) to Liu Bang, and made Nanzheng (now Hanzhong City, Shaanxi Province) the capital.

After all, strength is respected. Although Liu Bang felt very aggrieved, when he thought of what Liu Yuan said about the strength gap and the words of forbearance, he had no choice but to accept it.

Before entering Nanzheng, Liu Bang followed Liu Yuan's arrangement and burned down the 100-mile plank road leading to and from Bashu in order to paralyze Xiang Yu and his advisers and think tanks, showing his determination not to advance eastward. This move made Xiang Yu and his advisers and think tanks relax their vigilance and alertness against Liu Bang.

Because Xiang Yu was always stubborn, domineering, and used people improperly, he established himself as king and divided the fiefs among the princes based on his own preferences. He granted fiefs to those who had made little contribution but did not deserve them, and dismissed those who had made great contributions at will if he did not like them, which caused resentment among many princes and subordinates.

Xiang Yu also killed the "Emperor Yi" (formerly King Huai of Chu) without any reason. As the saying goes, "If the name is not right, the words will not flow." The long-term perverse actions led to constant disputes, and Xiang Yu had to send troops to suppress them. As a result, the world was in chaos and many heroes were fighting for supremacy.

Most of Liu Bang's subordinates came from the east of Mount Xiao, and the wave of them hoping to return to the east was getting higher and higher, with some even escaping from the barracks and returning home without permission.

Liu Yuan suggested to Liu Bang that he should use the excuse of his subordinates returning east to "openly repair the plank road and secretly capture Chencang".

It was at this time that Xiao He recommended Han Xin and gained Liu Bang's trust. Han Xin's strategy of advancing eastward, together with Zhang Liang and others, was similar to that proposed by Liu Yuan and their views were roughly the same.

Liu Bang thought for a long time and took advantage of Zhang Han (a Qin general who surrendered to Xiang Yu and was named King of Yong by Xiang Yu) to attack Chencang. Zhang Han was killed.

Liu Bang successfully occupied a large area of ​​fertile land in Guanzhong. Xiang Yu was suppressing so-called rebellions everywhere and had no time to pay attention to Liu Bang's deployment to advance eastward.

Afterwards, Liu Bang followed Liu Yuan's strategy, "The enemy of my enemy is my own people. Unite all our forces and attack Xiang Yu together." He sent people to contact all the armed forces that resisted Xiang Yu to deal with Xiang Yu together.

A few months later, Liu Bang united several larger armed forces including "King of Qi Tian Rong", "King of Zhao Xie", "Chen Yu" and "Peng Yue", with a total of more than 500,000 troops, to attack Xiang Yu and meet in Pengcheng.

When Liu Bang led an army of 50 "rabble" and "mixed" troops to attack Pengcheng, Xiang Yu's old nest, Xiang Yu was suppressing a rebellion in Qi (Shandong). After learning that Pengcheng was under siege, he quickly dispatched elite cavalry to rescue Pengcheng.

Since Pengcheng had few troops, Liu Bang led his troops to easily capture Pengcheng.

After the city was captured, Liu Yuan advised Liu Bang to organize troops for defense as soon as possible, set up more battle formations against cavalry, and provided strategies against cavalry in order to be prepared for the response.

At this time, Liu Bang was arrogant again, thinking that Xiang Yu had not much military force left. He did not listen to Liu Yuan's dissuasion and did not carefully organize strategies to defend against cavalry, such as chariots, long weapons, horse traps, deep trenches, antler fences, three-stage long-range arrow shooting, etc. He simply deployed defensive forces.

Liu Bang really indulged himself. He held banquets every day to celebrate his victories, plundered a large amount of property and beauties, and reveled every night. He was very happy.