Richard Nixon reportedly witnessed open-heart surgery being performed in Asia without anesthetics. Acupuncture is used effectively in modern times and that's all that really matters. Pain relief effects are generally attributed to endorphin production though we don't really know for sure how it works. We do know that major insurance companies cover acupuncture treatments, and they don't throw money around lightly. If we study the process scientifically, we're sure to discover the 'qi' eventually.
RE: Chinese Pseudoscience: Is there any proof of Qi Energy?