The end of World War II in 1945 led to the repatriation of most foreigners in China and a civil war between the communists or the capitalists. Mao and the communists won the civil war and started the People’s Republic of China in 1949.

From 1949 until 1976 Mao along with his various ministers, most importantly Zhou Enlai quickly consolidated power and built China’s foundation of institutions, governance, and infrastructure. The new government quickly repaired transportation and communications and nationalized the banking system.

During that period, he ruled China for the workers and against the capitalists, he kept China in isolation from the rest of the world, and he followed a strict communist system in which there was government ownership and tight government bureaucratic controls over everything.  The government nationalized most businesses and redistributed agricultural land from large landowners to those who farmed the land.  No matter whether one worked or not, one got a basic pay.  These changes created a stable economy but little motivation beyond the commitment to the mission of motivating workers.  But Mao was on his way to achieving his first goal of having China’s mainland free of foreigners, and focused primarily on building a new internal order. 

While China under Mao was isolationist, it wasn’t long before the new government found itself in a war.  In 1945 the new world order divided the world into two main ideological camps—the democratic capitalists led by the United States and the autocratic communists led by the Soviet Union—with a third group of countries not aligned to either side.  China was clearly in the Soviet-led autocratic communist camp, following a Marxist-Leninist approach.  In 1950, China and the Soviets signed the Treaty of Friendship, Alliance, and Mutual Assistance to cooperate and come to each other’s aid militarily.  

At the end of World War II in 1945, Korea was divided at the 38th parallel into two zones of occupation, the Soviets having control of the north and the Americans having control of the south.  In June 1950, the North Koreans invaded the South.  Initially the Chinese weren’t involved in the fighting as they were preoccupied by their own challenges and didn’t want to be drawn into a war.  The United States, in conjunction with the United Nations, responded to the invasion by bringing its forces into the fighting and then taking the fighting into North Korea, which is on the Chinese border.  The Chinese viewed this as a threat, so China had to fight.  China, like most countries, was very sensitive about having enemies on its borders.  Though the Soviets and the Chinese had a pact to support each other, Stalin didn’t want to go war with the United States and so he didn’t provide China with the military support it expected.  Though the Chinese were ill-prepared for a war against the much greater American power, the Chinese entered the war and pushed the US and UN troops back to the previously established border.  This was the first great challenge to Mao and China and was considered a great victory by the Chinese.  Given China’s history with foreigners Mao/China understandably wanted extreme isolation within its sovereign border and was able to achieve that.

In 1966 Mao launched Cultural Revolution to preserve Chinese communism by purging political and ideological opponents and to re-impose “Mao Zedong Thought.”  It went from 1966 until 1976, though was most violent roughly between 1966 and 1969.  The Cultural Revolution curtailed education and cost or damaged millions of lives. These conditions further undermined education and slowed advances in the Chinese economy, especially in the late 1960s.  By the early 1970s the situation began to stabilize under the operational leadership of Premier Zhou Enlai, and the economy grew at around 6% per year.  

In 1971 China was threatened by the Soviet Union, which was militarily much more powerful and shared a 2,500-mile border with China, leading to increasing border threats.  Mao identified the Soviet Union as China’s main enemy and recognized that the Soviets were in a war with the United States that hadn’t yet turned hot but could.  That led him to make the strategic move of approaching the US to neutralize the Russian threat and in the hope that would enhance its geopolitical and economic position.  It was clear that it was in the interests of both China and the United States to build a relationship.  In February 1972 Richard Nixon went to China to open relations and during that visit, Nixon and Zhou Enlai signed an agreement (the Shanghai Communique), in which the US stated that it “acknowledges that all Chinese on either side of the Taiwan Strait maintain that there is but one China and that Taiwan is part of China.  After these 1971-72 moves of rapprochement and appeasement, US relations with China and trade and other exchanges began.  

1976 was momentous because that was the year Zhou Enlai died (in January 1976), Mao Zedong died (in September 1976), and China faced its first generational change.  

From 1976 to 1978 there was a fight for power between the Gang of Four (hardline conservatives who fostered the Cultural Revolution) which was led by Mao’s wife and the reformists (who wanted economic modernization and opening up to the outside world and were against the Cultural Revolution).  Deng and the reformists won, leading to Deng Xiaoping becoming the paramount leader in 1978 at age 74 with a wealth of experience under his belt. 


Deng Xiaoping ran China directly or indirectly until his death in 1997.  During that phase China moved to a more collective leadership model, opened up to the outside world, introduced and developed capitalist practices, and became much stronger financially and more powerful in other ways that didn’t appear threatening to the United States and to other countries.  During most of Deng’s tenure the primary enemy of China was Russia, so he viewed building a symbiotic relationship with the United States as helpful geopolitically.  Economically the relationship was symbiotic because the US bought items that were attractively priced from China and the Chinese lent back to the Americans a lot of the money they earned to make those purchases.  As a result, the US acquired US-dollar-denominated debt liabilities to the Chinese, and the Chinese acquired dollar-denominated assets owed to them by the Americans.  After Deng’s death his successors Jiang Zemin and Hu Jintao (and those who led China with them) continued in the same directions so China continued to quietly become richer and more powerful in fundamentally sound ways that did not appear threatening to the US.  In 2008 the global financial crisis led to greater tensions over wealth in the United States and other developed countries, increased resentment at job losses that were going to China, and increased debt-financed growth in all countries including China.  That, and the development of China that began to appear more threatening, started to change the relationship.  

Deng also reformed government’s decision-making structure.  More specifically he moved China’s government decision-making process from one that was dominated by a single leader  to one in which the Politburo Standing Committee made decisions using majority voting when consensus couldn’t be reached.  He also changed the system of choosing the Standing Members of the Politburo from the supreme leader personally selecting members to choosing them via consultation and negotiation with experienced party elders, generally drawing from the most qualified government officials.  In order to institutionalize his philosophy and how it would be implemented in this government, Deng shaped a new version of the Chinese constitution, which was adopted in 1982.  This new constitution also made a number of changes to facilitate the economic reforms and open-door policies that Deng wanted.  It established governance changes such as leadership term limits consisting of two five-year terms (10 years) and limiting the power of one leader by making decision making more collective.  The new constitution also provided for greater freedoms such as freedom of religion, freedom of opinion, freedom of speech, and freedom of the press.  These reforms later led to the first orderly and rule-based transition of power from Deng to others in the next-generation Politburo Standing Committee, at first led by Jiang Zemin, then led by Hu Jintao, with these transitions occurring via the prescribed 10-year term limits.  Each successive leadership team followed Deng’s same basic path of making China richer and more powerful by making the economy more market-driven/capitalist and by increasing China’s trade with and learning from those in other countries, with those in other countries feeling more excited than threatened by their interactions and trade with China.  

Reuniting China by regaining the territories that were taken away during the “Century of Humiliation” was also a very important long-term goal.  Progress was made by Deng along these lines when in 1984 it was agreed that Hong Kong would return to Chinese sovereignty in 1997, with its “one country, two systems” approach.  Then in 1986 China reached an agreement with Portugal to obtain Macau’s return to Chinese sovereignty in 1999.  


Xi Jinping came to power in 2013 and quickly consolidated his political control. Xi accelerated economic reforms, took on the challenge of trying to contain debt growth while aggressively reforming the economy, and supported the building of leading technologies and going global.  He is also proactive in reducing the gaps in educational and financial conditions and in protecting the environment.  As China’s powers grew and Xi’s bold objectives became more apparent, US conflicts with China rose in a way that was analogous to the rise of Japan and Germany to challenge the then-existing powers in the 1930s.  

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