Liu Shaoqi’s China would play with the Soviet model longer but this has a built-in time limit. Sino-Soviet Split was highly likely to happen even without Mao as the Chinese economy become more developed. Even Yugoslavia split from Moscow and adopted hybrid economic model, and Vietnam, a country solidly in the Soviet camp encouraged village level privatization in the early 80s. After the split China will have no further use for the Soviet economic model. So I expect the late 70’s Deng era reforms still takes place, perhaps with less conviction but also much earlier if the split happens in the late 60’s.
Sino-American rapprochement is also probable in the aftermath of the Vietnam War. The end of that conflict removes the main source of tension between the two, and given Vietnam probably still goes over to the Soviet camp which provide some shared security interest between Beijing and Washington. Although without Mao’s temperament, Sino-Soviet tensions probably never arise to the level of outright hostility so US does not see China as a tacit ally in the Cold War. But it would still be important to keep potential Sino-Soviet rapprochement from happening.
I disagree on the probability of reform, though I do agree the Sino-Soviet split is likely to still occur. Eith Liu Shaoqi's own Soviet leanings and similarities to Khrushchev (there's a reason Mao hated both of them, as bureaucrats), the severity and scale of the split without Mao leading the break on ideological (and personal) grounds would be significantly lessened, likely preserving a Sino-Soviet alignment and preventing it from spiraling into open border conflict. While there could potentially be some form of Sino-American rapprochement, it would not nearly be at the same level occurred OTL that would facilitate large-scale economic reform based on export and FDI in urban areas. Without an open, visible rupture to convince anti-communist hawks in the US, and soured Sino-Soviet relations at a level that that would make the Politburo contemplate going against ideology and gambling to work with "capitalist imperialists", and the domestic political ramifications thereof, it won't be the same cataclysmic foreign affairs shift that it was OTL. The PRC will still likely be denied the UN seat and the ability to trade with the First World, remaining firmly ensconced in the Second, unless the Soviets open up to the idea of detente and deescalation without the prospect of a Sino-American alignment to motivate them.
In terms of reform, the rollback of collectivization and rural reform could occur, as well as village level privatization, but I disagree on it's likelihood given the level of control that Liu Shaoqi would seek to impose on market activities. I could certainly see him, uninhibited and unopposed by his main rival, Mao, creating an even more intrusive and bureaucratic system than the
danwei which was used to control urban economic and political life, further constricting informal market activities that were necessary for economic resuscitation. Economic development under the Soviet model was making China more and more indebted to Soviet aid and loans, which makes a break from that system more difficult. Moreover, as society and party cadres become more bureaucratized, we see the rise of a new bureaucratic/party elite, with vested interest to maintain their own stations. Ideology remains a key facet of Chinese life, given it is not completely discredited in the eyes of the (surviving) bureaucratic cadres or even former Red Guards sent to the countryside, and pragmatism does not become the defining trait of the day among these low-level bureaucrats. Tight, authoritarian state control over economic life, as prescribed by the Soviet model, will take hold and be difficult to shake up, even with a change in leadership up top when Liu Shaoqi also inevitably dies; whoever becomes his successor would likely be brought up through the bureaucracy, if not his protege Deng Xiaoping. There simply would be too much institutional inertia and power vested in the bureaucracy and the party for it to be challenged or changed, unlike the near total de-legitimization of basically all functioning institutions at the time after the Cultural Revolution and thus a desperate, underlying need for change, any kind of it. It falls under the same bureaucratic trap that the Soviets themselves found themselves, really; after awhile, the bureaucracy created to manage the planned economy ossifies and opposes any attempt to wrest power from them, and with the bureaucracy and Party going hand-in-hand in China, in addition to wielding tremendous political power without Mao constantly seeking to undermine it, I don't see the systemic, "capitalist" reforms going anywhere, even with a receptive leader at the top, simply due to how power in this new Soviet-style Chinese system would be distributed.
Hard to say if the Communist party will give up power in the 90’s. OTOH without the upheaval of the Cultural Revolution the party might not be unified in opposition to student unrest and go the way of European Communist countries. OTOH none of the Asian Communist countries collapsed. Would China be the lone exception?
Doubt it'll go the way of the East European communist nations; for one, revolts occurred there regularly due to the foreign imposition of communism. They were kept in Comintern by Russian tanks, and most people knew it, they simply couldn't resist it (or failed to in multiple revolts against Soviet rule through the decades) until the dissolution of the Soviet Union proper. In East Asia, communism/socialism was largely self-imposed by local, nationalist Marxist movements. That, I believe, is a crucial difference.
Good point on no one with Mao’s charisma to unify the party. Maybe the Cultural Revolution era left and right wing struggle of the party elite will manifest itself anyway. Important people are going to get purged, but odds favor Liu/Deng and Peng Dehuai if their united front holds.
Not sure if Peng Dehuai was actually ever interested in politics: at the very least, he held to his dying day he held to his loyalty to Mao, and by all accounts his letter to Mao as well as relationship seems to suggest to corroborate that. His only crime in Lushan was being honest about the failings of the Great Leap Forward and lacking any real political sense, which Mao seized upon to put Liu Shaoqi in his place, hence why he and all the other Politburo members quickly sided with Mao to prevent themselves from being denounced, with Liu being the most ingratiating of them all; Deng Xiaoping made the choice to excuse himself from the conference by citing a "broken leg he sustained during table tennis".
That being said, I'm not sure if factionalism would leak out of the highest levels of the party; it was fairly committed to "open" debate within the party elite, with all agreeing to never be public about opposition to a policy. Once the party agrees to a policy, everyone agrees to it too. That meant open debate, if only among the Politburo. Mao was the one to break that norm, so very hard, with the Lushan Conference, and later with the Cultural Revolution, with the purge of Peng himself.
Finally on Taiwan. I once read Chiang Kai-shek seriously thought about offering an olive branch to Beijing but changed his mind when the mainland took a radical turn with the Cultural Revolution. If his old nemesis died in the 50’s that changes things. A deal could have been struck with something like a One Country Two Systems model without expiration date.
Never heard of this before, do you know where you read it? Want to understand how the context for this.