The large peasant wears a People's Militia armband (民兵 - min bing). He holds a small Guomindang bandit (匪首 - feishou), who drops a pistol labelled "US".

In the background, scenes with a Guomindang 'bandit spy':
People's militia lies in ambush for spies (围剿 - weijiao - to encircle and annihilate).
Spy robs and spreads rumors (抢劫 - qiangjie - robbery and 造谣 - zaoyao - spreading a rumor).
Spy poisons a well (放毒 - fangdu - poisoning).
Spy sets fire to a grain field (纵火 - zonghuo - committing arson).
Spy hands in his US pistol with a confession of repentance (自新 - zixin - reforming oneself).

We have not deciphered the two characters below right, probably the artist's signature.