The death of Communist China's founding father Mao Zedong 40 years ago this week was akin to the demise of an emperor and helped pave the way for the modern nation, says one of the few Westerners in Beijing at the time.

Ragnar Baldursson, a young Marxist from Iceland, was a student in Beijing in September 1976 when, after a year of upheavals, authorities announced the unthinkable -- Mao was dead.

The end of Mao's rule -- which saw the death of tens of millions from persecution or starvation -- opened the way for massive economic reforms that would lift vast numbers out of poverty and end decades of isolation.

"China today is a product of that period," Baldursson, today a diplomat at the Icelandic embassy in Beijing, told AFP.

In 1975 he was one of the first handful of western students admitted to study in China since the Cultural Revolution began roiling the country nine years previously.

He entered the Beijing Foreign Languages Institute to study philosophy at a time when portraits of the Great Helmsman were ubiquitous and Maoist slogans blared from loudspeakers every morning to wake students.

He himself fell asleep "dreaming of Mao", said Baldursson, who published a memoir, "Nineteen Seventy Six", earlier this year.

He was the youngest member of the Marxist-Leninist Organisation of Iceland, and came to the People's Republic on a Chinese government scholarship.

Young radicals at the time "thought that Mao's China could be the solution" to Europe's social problems, he said, but for him, Maoism "was more an intellectual exercise".

Once in China he quickly became frustrated that professors stubbornly avoided political topics.

A foreign contemporary of his at the school, Peter Peverelli of the Netherlands, told AFP the institution echoed with "many political slogans" that foreigners struggled to understand, and whose political significance was unclear.

Peverelli spent a week in a people's commune in the countryside and Baldursson was invited to visit a model factory. The workers, he recalled, professed fierce nationalism but the tools that were supposedly "made in China" bore Western brand names.

Nowadays urban China is unrecognisable from that era -- its teeming, towering cities transformed by the capitalism introduced under Deng Xiaoping in the decades following Mao.

- 'Year of the fire dragon' -

In the Chinese calendar 1976 was the "Year of the Fire Dragon", and the traditional designation heralded an era of political upheavals.

One million Chinese -- joined by Peverelli -- gathered in Tiananmen Square in April to pay tribute to late premier Zhou Enlai after his death earlier in the year, and to denounce Mao's circle in biting poems.

It brought the infighting between reformers and the "Gang of Four" led by Mao's wife to a head. The giant plaza was violently cleared on April 5, and Peverelli recalled that universities soon saw an outbreak of slogans attacking "capitalist" Deng Xiaoping.

In September, after a summer marked by the massive Tangshan earthquake -- whose shockwaves shook Beijing buildings -- students were stunned by the solemn announcement that Mao had died on September 9.

"It was difficult to conceive of a China without Chairman Mao. People looked grim but I didn't see anyone crying, unlike after the death of Premier Zhou," wrote Baldursson in his book. "Instead everyone was quiet. We were in shock: Mao's omnipresence was an inalienable part of New China."

An order to make wreaths led to the stripping of every branch on a cypress hedge on campus. Foreign students then went to pay their respects before Mao's remains.

"His face did not look good. It was bloated and the colour of his skin looked off," Baldursson recalled.

A month later, Hua Guofeng had the Gang of Four arrested and took power. Baldursson was in Tiananmen Square to see the new party chief hailed by crowds at the entrance of the Forbidden City.

"Standing in the midst of the crowd, I had a revelation: I was witnessing a crucial moment of China's history -- a dynastical shift," he wrote.

"A new emperor was being enthroned," he said. The surrounding jargon was Marxist, but "the scenario didn't fit the Marxism-Leninism that I had studied".

Restaurants and shops in his neighbourhood ran out of beer. "It was sold out because of the fall of the Gang of Four, the comrade serving us explained. People had been celebrating."

The nature of the transfer epitomised Mao's "failure to bring about a break with China's imperial past", he wrote.

Even so, he told AFP, "Mao cleared the ground for the changes that later happened, even though it was definitely not in accordance with his political dogma."