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Wujiang, I think the lack of historical insight is the biggest problem in Chinese martial arts today. Because of this, it has passed into a fantasy realm of Daoist immortals, magic swords, boxers with bodies impervious to bullets, etc., so that now people disesteem them and have modified them into performance or health-cultivating arts. Chinese martial arts, gongfu, wushu, wuyi - whatever you want to call it - should return to its military origins. Weapons training needs to be re-assessed by handling accurate reconstructions of weapons and armour from the late imperial ages; full-contact sparring with padded weapons; test-cutting with live blades; and interpreting literature and artwork from the period. On top of this, an eclectic approach needs to be taken in studying the methods of a wide variety of styles existing today and putting them to the test.
I would agree with you, in fact what is known as TCMA or traditional Chinese martial arts has degenerated to what you have discribe. One of the main reason is because people find it no longer practical plus the role that tcma once played has now disappeared. During the time of my master and grand master tcma was part of the community. Martial art schools were directly involved in community policing they were the militia. Training was about preparing for actual battle and combat. TCMA training in its fullness is a boot camp comparable to what is now the Special Forces of the military. It requires the development of the human body to make it a deadly weapon. Conditioning start from the head to foot, the use of actual combat weapons was and is still being use by some surviving tcma schools.
What is happening now is that martial art in general is about sport, physical fitness & preserving the history of martial art. Sport sparring is as close as we can get in simulating martial fighting in a safe environment.
Some examples of traditional martial skills that are no longer being practice and develop is the technique of the finger thrust, smashing of the human skull with one blow, immidiate joint breaking or the conditioning of the fist, forearm and shin. Most students will not have the time or interest to train in all of that what interest them most is the short and fast way to learn and that is to box, kick and grapple that's about it. The use of wu shu type weapons (soft flexible steel) is actually a demonstration of what a good martial fighter can do with an actual combat steel.
In weapons, Japanese martial organization they were able to preserve the sword tradition and kept it sacred, unfortuantely kung fu was not able to do the same maybe it is because kung fu China got caught up with so much political instability and disunity.
There are still some tcma that practice kung fu in its pure form maybe not 100% but close to 55% pure most of them have small student population.
ANother thing that is also part of tcma training is bone setting or healing and treating wounds. It is expected that in battle fighters will get wounded this mean they must be able to treat themselves and or their comrades in recovering from their wounds and injuries.