The first half of the 20th century was a period of utter chaos. Intellectuals searched for a new philosophy to replace Confucianism, while warlords attempted to grab imperial power. Sun Yatsen's Kuomintang (KMT, or Nationalist Party) established a base in southern China and began training a National Revolutionary Army (NRA). Meanwhile, talks between the Soviet Comintern and prominent Chinese Marxists resulted in the formation of the Chinese Communist Party (CCP) in 1921. Hopes of the CCP aligning with the KMT were dashed by Sun Yatsen's death and the rise from the KMT of Chiang Kaishek in Beijing, who favoured a capitalist state supported by a military dictatorship.

The communists were split between those who focused on urban revolt and those who believed victory lay in uniting the countryside. Mao Zedong established his forces in the mountains of Jinggang Shan, and by 1930 had marshalled a guerrilla army of 40,000. Chiang mounted four Communists extermination campaigns, each time resulting in communist victories. Chiang's fifth campaign was very nearly successful because the communists ill-advisedly met the KMT head-on in battle. Hemmed in, the communists retreated from Jiangxi north to Shaanxi - the Long March of 1934. En route the communists armed peasants and redistributed land, and Mao was recognised as the CCP's paramount leader.

In 1931 the Japanese took advantage of the chaos in China and invaded Manchuria. Chiang Kaishek did little to halt the Japanese, who by 1939 had overrun most of eastern China. After WWII, China was in the grip of civil war. On 1 October 1949 Mao Zedong proclaimed the foundation of the People's Republic of China (PRC), while Chiang Kaishek fled to Taiwan. The USA continued to recognise Chiang as the legitimate ruler of China.

The PRC began its days as a bankrupt nation, but the 1950s ushered in an era of great confidence. The people were bonded by the Korean War, and by 1953 inflation had been halted, industrial production was restored to prewar levels, the redistribution of land had been carried out and the first Five Year Plan had been launched. The most tragic consequence of the Party's dominance was the 'liberation' of Tibet in 1959. Beijing oversaw the enforced exile of the Tibetan spiritual leader and initiated the genocide of a precious culture. To this day hundreds of monasteries still lie in ruins.

The next plan was the Great Leap Forward, aimed at jump-starting the economy into first-world standards. Despite oodles of revolutionary zeal, the plan was stalled by inefficient management coupled with floods, droughts and, in 1960, the withdrawal of all Soviet aid. The Cultural Revolution (1966-70) attempted to draw attention away from these disasters by increasing Mao's personal presence via his Little Red Book of quotations, purging opponents and launching the Red Guard. Universities were closed, intellectuals were killed, temples were ransacked and reminders of China's capitalist past were destroyed.

Beijing politics were divided between moderates Zhou Enlai and Deng Xiaoping and radicals and Maoists led by Mao's wife, Jiang Qing. The radicals gained the upper hand when Zhou died in 1976. Hua Guofeng, Mao's chosen successor, became acting premier. Public anger at Jiang Qing and her clique culminated in a gathering of protesters in Tiananmen Square, and a brutal crackdown led to the disappearance of Deng, who was blamed for the 'counter-revolutionary' gathering. Deng returned to public life in 1977, eventually forming a six-member Standing Committee of the CCP.

With Deng at the helm, and the signing of the 1984 Sino-British Joint Declaration, China set a course towards economic reconstruction, although political reform was almost nil. General dissatisfaction with the Party, soaring inflation, corruption and increased demands for democracy led to widespread social unrest, typified by the demonstrations of 1989 that resulted in the bloody Tiananmen Square massacre.