In 2002, the charter was amended to allow entrepreneurs into the party and assert that the party represents the interests of all Chinese people, not just workers and peasants.

Meanwhile, "Mao Zedong Thought", which originated in the 1930s, continues rhetorically to be recognized as one of the party's guiding principles, an extension of Marxism-Leninism tweaked for China.

The term was introduced into the party charter first in the 1940s but was removed in the late 1950s after de-Stalinization started in the Soviet Union, dismantling the dictator's cult status. The term was re-installed in the late 1960s and has been a part of the constitution since.

"Mao Thought" has been bent and re-shaped time and again over the decades to serve the politics of the day. In practical terms "it has been completely gutted", said Karl.

REMOVING MAO

That does not make it meaningless, though.

"The erasure of 'Mao Zedong Thought' with the continued presence of the party erase the guarantee - however notional, however rhetorical, however far-fetched - of the arrival of socialism somewhere down the road," she said.

Han Deqiang, a Beijing University of Aeronautics and Astronautics professor and founder of the neo-Maoist organization Utopia, says removal of Mao thought would also pull the rug out from under the party.

"If you take out 'Mao Zedong Thought', then the regime not only has no electoral legality, but would also have no historical legality. Where will its legitimacy come from?" he said.

Mao, the man, remains a potent symbol. His Mona Lisa smile hangs over Tiananmen Square and on banknotes.

Keeping Mao without retaining an element of "Mao Zedong Thought" in the ruling ideology would require some fancy rhetorical footwork and, potentially, some honest discussions party leaders may not be ready for, including about the Great Leap and the Cultural Revolution--politically sensitive topics that are rarely discussed publicly.

"If they are unable to truthfully face up to what happened at that time then they are definitely still going to be bound by Mao Zedong Thought, and will not be able to let it go," said Zhang Sizhi, a lawyer who defended Mao's wife Jiang Qing in her 1980 trial as a member of the "Gang of Four".

(Additional reporting by Benjamin Kang Lim, Ben Blanchard and Adam Jourdan; Editing by Raju Gopalakrishnan)

Text 5. Chinese reforms could trigger domino effect (Reuters, November 5, 2012)

By John Foley

What does China want? Sustained growth, and happier citizens. How will it get there? Through economic reform. It sounds simple enough.

But reform is a slippery word. While the problems facing China’s incoming new president Xi Jinping are well known, each potential fix depends on others, and most will meet with resistance. To succeed, Xi may need to push hard in three main areas: efficiency, innovation and the environment.

Better, not less

The common complaint that China invests too much isn’t necessarily true. While investment is a high 48 percent of GDP, according to the World Bank, that isn’t always bad in a half-urbanised country. The problem is rather that China invests ineffeciently. Banks don’t price credit properly, which means they have more incentive to lend to state-connected borrowers than private companies. Corruption is part of the efficiency problem, though it contributes to inequality as well.

The best solution would be to dethrone the large state banks, which hold more than half the stock of outstanding loans, and expose them to greater competition. That would involve letting interest rates float to more realistic levels, and improving governance so banks lend according to profit, not connections – even if eliminating corruption is a distant dream.

Vested interests are strong. Banks are big employers: the four largest employed 1.5 million people at the end of June. Reallocating credit might cause bad debts, as some borrowers find themselves unable to roll over their loans. But if depositors and investors got better returns, and consumers and companies more equal access to credit, such reforms should enjoy broad support.

The second big challenge is innovation. Being able to invent and adapt is the difference between a middle-income country reliant on technologies and services from abroad, and a wealthy one that makes its own fortune. A fully functioning legal system that protects ideas would help, though that is still a long way off.

One way to aid innovation is to reduce the dominance of state-owned enterprises. State ownership isn’t necessarily bad, but protected industries tend to try less hard. Opening sectors like telecoms or energy to competition would increase efficiency, and give them an incentive to be more creative. Again, vested interests are the problem. Companies are powerful and well connected, and local governments reluctant to repeat the massive lay-offs of the 1990s.

Finally, there’s the environment. Pollution makes citizens angry, as recent protests in Ningbo showed, while guzzling scarce resources compromises future growth. One solution would be to start pricing resources like water and petrol properly, so profligate industrial users have a stronger incentive to change their ways.

Politicians, though, tend to prefer leaving environmental concerns to future generations. Besides, cleanliness and supply aren’t always compatible: coal is abundant but dirty; drilling cleaner shale gas uses lots of water. China’s best bet is to invest heavily in technologies that allow it to create clean, plentiful energy – but that in turn depends on reforms that nurture innovation and efficiency.