Back in 1978, on December 18, the Communist Party Central Committee convened an extraordinary session in Beijing and agreed to back ``capitalist roadster'' Deng Xiaoping and his economic opening policies.

The about-turn left conservative Hua Guofeng, heir to Mao's visions of a Communist utopia, out in the cold and set impoverished China on a path of rapid economic growth and gradual integration with the rest of the world.

It also brought an end to the political terror and economic chaos wrought by Mao's Great Leap Forward (1958) and the subsequent Great Proletarian Cultural Revolution (1966-76).

``It doesn't matter if the cat is black or white, so long as it catches mice,'' became China's new slogan, replacing chants of communist revolution and slavish loyalty to Chairman Mao.

The phrase, coined byDeng, emphasised that the political systems of socialism and capitalism were immaterial, so long as the ``mouse'' of modernisation was caught and China opened its doors to foreign technology and capital.

``At that time, peasants were dying of hunger. No one was working in the fields because it wasn't worth the effort and the state took everything,'' said Guo Zhaodi, a former farmer from impoverished Anhui province now living in Beijing.

Anhui, where peasants were dying like flies, was one of the first areas to benefit from Deng's new system -- the dreaded farming communes were abolished in favour of a household responsibility system where farmers had incentives to grow grain for their own profit.

As food markets, banned under Mao, sprang up across the country with farmers selling their excess production, the government slowly started to decentralise and all owed local collectives to manage themselves.

These industrial collectives spearheaded China's fledgling modernisation drive and, from 1979,legislation on foreign investment opened the country to multinationals and advanced foreign technology.

In the last 20 years, exports have witnessed a 20-fold growth and China's foreign trade volume has risen in world rankings from 32 to 10.

Per capita gross domestic product has seen a comparable rise, growing by a factor of 16 to reach 6,079 dollars in 1997 as economic growth has witnessed average annual 9.6 percent growth since 1980.

But the huge transformation across the country also threw up new divisions in a society where everyone was once equal -- albeit impoverished and cut off from the outside world. Differences between rich and poor, between city and countryside, and between the developed coastal areas and the backwards hinterland escalated.

As wealthy cities expanded with upmarket office blocks and hotels, cars chased bicycles off the streets and pollution, crime, prostitution, exploitative labour and drug problems multiplied.

``To get rich is glorious,'' proclaimed Deng on his countlesstours of new enterprises and modern farms around the country.

But his words were followed to the letter by millions of officials across the country, who extracted bribes for approvals, helped themselves to state assets and created a tangled web of corruption and graft.

Popular discontent erupted in the spring of 1989, spreading across the nation and causing a paralysis among the top leadership until Deng ordered his troops into Tiananmen Square on June 4, and ended all further protest in a crackdown that shocked the world.

Casualties of the massacre included China's liberal-leaning leaders, and significant foreign capital and further reforms were put on ice until 1992.Only in March 1998, after the death of Deng, did new Premier Zhu Rongji press ahead with he final round of deep-cutting reforms that struck at the remaining vestiges of socialist China.

Ailing state enterprises now must sink or swim, while millions of workers are losing their jobs-for-life, again throwing up the spectre of demonstrationsin the streets of cities across China.