Though he was an illiterate peasant, he became a member of the Politburo of the Chinese Communist Party and Vice Premier of China because of Mao Zedong's recognition of Chen's leadership, during the Cultural Revolution, in turning Dazhai into a model for socialist agriculture.

[3][4] After Deng Xiaoping initiated the Reforms and Opening up of China in the late 1970s, Chen gradually lost power and resigned in September 1980.

[citation needed] In 1942, as fighting against communist guerrilla increased in Shanxi Province, where Xiyang County encompassing Dazhai is located, the Japanese tightened their grip on local villages and Chen Yonggui was elected Dazhai representative in the puppet Rejuvenating Asia Society, but resigned and left the village after barely surviving a one-year detention in a concentration camp in 1943–1944.

This progress was brutally halted by a series of natural disasters in 1963, which destroyed 180 acres of arable land and some of the production brigade's buildings.

[8] During a meeting with Zhou Enlai, Chen Yonggui was encouraged to create Dazhai's own Red Guard organization, which was later established under the name "Jinzhong Field Army".

Being in charge of agricultural policy, he suggested that Gansu Province adopt the same method employed by Dazhai, but this didn't produce the expected results.

[citation needed] Chen Yonggui was re-elected to the CCP Politburo in 1977 and vice premier in 1978 (in the same year he visited Democratic Kampuchea).

His refusal to approve private plots and carry out the "Seeking truths from facts" campaign (aimed at repudiating the Cultural Revolution) in Dazhai cost him his posts in the party leadership in Jinzhong and Xiyang in 1979; he was dismissed from the State Council in 1980 in a government reshuffle (when Hua Guofeng lost the premiership) and was not reelected as a Central Committee member in 1982.