After 1949, China tried to create a democratic society without the democracy. There were no democratic principles instilled in the hearts of the people. The elimination of classes didn't make everyone equal. CCP cadres became the new upper class and the Hukou system created a two tiered society. (See "What the heck is a hukou?")
The upswing is that Chinese people are very polite and respectful, even reverential at times, of people above them. The downside is those who are considered second tier (the migrant workers, farmers, uneducated and disabled) are thought to be of little account and are often neglected or mistreated. I have seen waitresses in Beijing yelled and and shoved and bus drivers demoralized by an impatient passengers for traffic that's out of their control. Americans would probably be shocked to see this happen in their hometowns and might even intervene to defend the waitress or bus driver.
This is why guanxi (describes a personal connection between two people in which one is able to prevail upon another to perform a favor or service, or be prevailed upon. The two people need not be of equal social status.Guanxi can also be used to describe a network of contacts, which an individual can call upon when something needs to be done, and through which he or she can exert influence on behalf of another. - from wikipedia.
Guanxi is what get things done in China. If you have guanxi, then you'll get what you want sooner or later. So, as a result, China's society has become vertical despite the attempts at reform. Corruption is rampant in China and shows little sign of improving and will never be stopped.
This all may take some time to figure out and some Westerners will always be bothered by the concept of guanxi. But being in China has opened my eyes to new ways of doing things and even gave me a fresh look at my own culture. .
For some very insightful and well written articles in China society, check out the blog Seeing Red in China