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When we look at communism, we must first notice that this is a revolutionary movement that wants complete change of society. Or in other words, not just change people in power (Peter instead of Paul), not just change form of government (president instead of monarch), but also do away with existing production, social and religious norms. Religion is very important here. Called "opium of the people" by Marx, it was universally targeted by communist regimes across the globe. Nevertheless, function of the religion, i.e. giving psychological aid and comfort, plus simple but firm explanation of the world, something you could always rely on no matter how hard the times are, could not be discarded by communists. So they simply replaced existing religions with marxism as state ideology and indeed new religion. Of course, this new religion needed its own gods, saints and martyrs. First god was of course Karl Marx himself, and his images were standard decorum of every official procession in communist countries. He was often joined with Lenin, as first communist head of state. However, Lenin was short lived, and both of these were dead gods - they should be revered and their words should be studied, but they could not be used to solve day-to-day problems or new situations arising in changing world.
Communism therefore needed living god, someone on whom mostly uneducated masses (poor farmers and industrial workers) could rely on in every difficulty that arises. And difficulties were plentiful, especially during civil wars and revolutions, but also latter during (often disastrous) economic transformations of the land. For these simple masses it was comforting to know that there is some comrade Stalin, or in this case Mao, that knows everything, understands everything and has a plan for every difficult situation. This was often accompanied with selected thoughts of the leader, sort of "new gospel" like for example famous Mao's Red Book , simplified cookbook they could use to find recipes for everyday life.
Note that does not mean that internal running mechanisms of communist party were free from the struggle. In fact, as we can see both in cases of Mao and Stalin, there were lot of intrigues and backstabbing and losers would be finally denunciated in party congresses as "rightists" or even "fascists" , demoted, dismissed and sometimes even imprisoned or executed. Party always maintained facade of so called "democratic centralism" and unity, real reasons of the struggle were often hidden (and sometimes remain hidden to this day) behind opaque and sometimes meaningless gibberish of "official speak". It should be noted that in such circumstances persons with psychopathic traits (like Mao Zedong, or Stalin) often thrive. They could be charming and persuasive, but really do no care about others (as Mao's famous quotes about nuclear war show), often change ideology as it suits them and never apologize, not even after millions of deaths during Great Leap Forward. However, when such person ascends to the top of the ladder, it would gladly accept cult of personality that develops around them, and it will grow its status as a living god.
In case of Mao, his cult started even before WW2, right during and after Long March. Interestingly enough, Long March was actually almost completely destructive for the communists, but party leadership maintained brave face and proclaimed it as a great success. Mao in particular used it to remove any opposition to himself in the party. Although CCP was significantly numerically reduced, for Mao it was a great success because he managed to sideline Zhou Enlai and other communist leaders at the time. Latter during the war he purged and even killed others opposing him in CCP itself, during so called Yan'an Rectification Movement and emerged as de facto leader and face of the party . Of course this only grew after communist takeover in 1949 and in period leading to Great Leap Forward in 1958.
So what happened when Great Leap Forward failed ? During so called 7000 Cadres Conference it became clear that Mao's ludicrous economic policies are disastrous. Communist control over country was threatened. However, publicly admitting that Mao is a psychopath that should be removed and possibly executed was not possible. This was perhaps similar situation with hypothetical removal of Stalin on June 30th, 1941 when Soviet Red Army was collapsing under German attack. In both cases removing the leader would mean removal of the party, because both leaders at the time had acquired godlike status. Just like Stalin, Mao was propped for too long and ingrained in the psyche of the masses. Considering overall bad situation, disbelief in him would create disbelief in the party, and potentially loss of power.
Therefore, Mao was allowed to pass with mild self-criticism, he withdraw from some functions and remained in semi-retirement, while day-to-day running of the country was left to more capable. In private, he didn't feel remorse which confirms that he had psychopathic personality. In fact he was plotting comeback and revenge, in which he succeeded during Cultural Revolution, again with great loss of life and economic damage. Tragedy of so called moderates in CCP was they were too afraid to lose power that in the end they lost not only that but some of them also their lives. As always, proverbial deals with the devil usually turn sour.