"Long Live Chairman Mao, the Great Leader" Flag.
This is a small red cotton pennant of the type routinely seen carried by members of the Red Guards during the Cultural Revolution in China. Printed in Chinese Characters are the words "Long Live Chairman Mao, the Great Leader."
The Great Proletarian Cultural Revolution in the Peoples Republic of China (PRC) had its origins in the 1966 internal power struggle for control of the Chinese Communist Party (CCP). Lasting until 1976 it eventually manifested itself into almost every facet of Chinese society, affecting economic, administrative, cultural, educational, political and military decisions.
Mao Zedong used the Socialist Education Movement to indoctrinate young people, especially in rural areas, with his ideas. Groups of young people eventually became known as Red Guards and were readily identifiable by their red armbands; the Mao's ubiquitous "Little Red Book" and they often chanted slogans waving flags like this example.
This flag is likely a vernacular flag made by the Red Guards. The entire nation was brought to the brink of civil war before it diminished after Mao's death in 1976.
The long-term damages caused by the decade of Cultural Revolution are still being assessed, but it is generally accepted as an absolute disaster for China.
ZFC Important Flag
Sources:
Chinese Cultural Revolution-1966-1976, Campus Communications, May 29, 2012, From: http://phobos.ramapo.edu/~theed/Cold_War/d_Brezhnev_Era/c_1968/ff_Wuhan.html
The Great Proletarian Cultural Revolution, May 29, 2012, From: http://proletarianculturalrevolution.blogspot.com/
The Development of Modern Chinese Acupuncture and Why It Matters to Us in the West, Golden Needle, May 29, 2012, From: http://www.goldenneedleonline.com/library/2011/06/09/the-development-of-modern-chinese-acupuncture-and-why-it-matters-to-us-in-the-west/