The war is driven by the modern military which has abandoned its warrior ethic and now fights with guns -- a theme repeated in The Last Samurai. Again Funakoshi represents this position. He tells the Japanese military captain, "Who I challenge to Kung Fu and what I do is no business of the military. . . . I am not a politician." The distinction between colonial imperialism and true warrior ethic is pronounced. The military captain is disappointed in Akutagawa's failure to destroy the rival sect, and kills him, although he has the true spirit of the Samurai about honest fights and honor. The military leader can only say, "To best serve the Japanese emperor, you'd better forget what is right or wrong." This highlights the contrast between new imperialist might, technology, and economic power and the old warrior system. The symbolic struggle between national identities is epitomized in the division within the Jing Wu Men in two ways. The first breach is in the search for whoever poisoned the master. Chen Zhen breaks with filial piety and respect when he disinters the master and performs an autopsy on him. They find evidence that he was poisoned, and they come to think it was an inside job. This is unsettling for the group. The cook is under suspicion. Chen Zhen shows his influence by telling the cook, "If your food killed Master, we would all be dead by now." He further takes it upon himself to instruct the others without permission, teaching them the Japanese side-kick under the glare of Ting'en. Thus, Chen Zhen becomes a rival to Ting-en for the group's leadership. This is an important rift. It comes to represent two ways to approach the dilemma -- conflict or reconciliation. It is not until Chen Zhen's lover is found to be Japanese that tensions escalate. It casts suspicion on Chen Zhen's group and ethnic loyalties. Ting'en demands that he leave her or leave the group. This shows an obvious bias against the Japanese, the outsiders, who refuse to accept her. They wage battle and the victor, Chen Zhen, leaves anyway, showing his preference for ethnic reconciliation. Chen Zhen is labeled a traitor...

People in a hotel throw things at him. He loses group support and is forced to make a different life despite his dedication to the group. This scenario shows how the pervasive tension between Japanese and Chinese came to disrupt even the in-group. It fractured their solidarity.
The portrait of the Japanese is actually balanced outside of the ruthless captain and the guns. He ends up being killed, which affirms the ideology of Chinese victory over the Japanese and thus Chinese national identity and pride. But before this, a true movement toward cultural and ethnic reconciliation takes place in the key confrontation between the Japanese master Funakoshi and the Chinese disciple Chen Zhen. It is the film's attempt to represent peace between the two and present a final critique of racist imperial attitudes. At first they toss slurs at each other's countries, and then they battle. When it ends in a draw, the older Japanese man says, "A young man as skilful and talented as you are is very rare." Chen Zhen echoes the compliment back. Funakoshi tells him, "Only animals fight" and commends him as a good disciple. A moment of real transformation seems to take place in which Chen Zhen realizes that not all Japanese warriors are bad. His affirmation of the true warrior nature comes in his final statement to Funakoshi: "Everyone says Mr. Funakoshi is the best, what that means is his self-discipline and dignity are supreme, rather than his expertise in killing."

Most crucial in Fist of Legend is the interplay of nationalistic and ethnic tensions. The Chinese warriors despise the Japanese and conflict with them. There is mutual hatred. Yet by the end, the imperialistic system is criticized. Views have been altered. Chen Zhen is accepted back into his group, returning to the inside from the margins with his Japanese lover, who is finally accepted. And his body is preserved through a trick. People are made to believe the Japanese have killed him, but he remains alive. His contested body perseveres. He returns to Japan to reunite with his wife. The military captain has died