History of the People's Republic of China (1989–2002)
|1949–1976, The Mao Era|
|1976–1989, Era of Restructuring|
|1989–2002, A Rising Power|
|2002–present, China Today|
|Generations of leadership|
In the People's Republic of China, Deng Xiaoping formally retired after the Tiananmen Square protests of 1989, to be succeeded by former Shanghai mayor Jiang Zemin. The crackdown in 1989 led to great woes in China's reputation globally, and sanctions resulted. The situation, however, would eventually stabilize. Deng's idea of checks and balances in the political system also saw its demise with Jiang consolidating power in the party, state and military. The 1990s saw healthy economic development, but the closing of state-owned enterprises and increasing levels of corruption and unemployment, along with environmental challenges continued to plague China, as the country saw the rise to materialism, crime, and new-age spiritual-religious movements such as Falun Gong. The 1990s also saw the peaceful handover of Hong Kong and Macau to Chinese control under the formula of One Country, Two Systems. China also saw a new surge of nationalism when facing crises abroad.
The inflation trends of the years leading up to the Tiananmen Square protests of 1989 had subsided by the early 1990s, as Jiang Zemin and the new generation of leadership attempted to calm any economic influx. Political institutions have stabilized, owing to the institutionalized procedures of the Deng years and a generational shift from peasant revolutionaries to well-educated, professional technocrats. The majority of university graduates come from a sciences-oriented background, and many pursued life outside of China. For those who stayed, State-owned research firms and enterprises were a popular destination.
In the aftermath of the Tiananmen Square protests, China became an international pariah and the next three years were grim. Hardliners took over the government and began reigning in free enterprise. They also attempted to revive Maoist propaganda and ideological campaigns, but the public largely treated it with apathy. In practice, the changes of the last decade made it impossible to ever truly return to the ways of Mao's time. The CPC leadership was further embarrassed by the collapse of communism in Eastern Europe during 1989-1990, and especially by the fall of Romanian leader Nicolae Ceaușescu, as his fanatical regime was one they were certain would never fall. Despite retreating into its shell, China's government continued to state that it welcomed foreign business and investment. For all its weakness and unpopularity, the CPC nonetheless had no serious opposition, as most overseas dissident groups were divided, quarrelsome, and lacking a charismatic leader. In April 1990, Li Peng visited Moscow where he was faced with dozens of Soviet protesters denouncing him as a butcher. Li laid a wreath on Lenin's tomb, indicating his loyalty to a fading ideology. His ideas of reform did not extend beyond economic matters, and he flatly dismissed the idea that glasnost and perestroika were also applicable to China.
In the spring of 1992, Deng Xiaoping suddenly reappeared in public and embarked on a tour of southern China to restore faith in his reforms and stop the country's slide back into Maoism (on the trip, he criticized the CPC for its "continuing leftism"). The visit was not only Deng's last major public appearance, but also seen as a test for the direction of the new leadership. Deng's renewed push for a market-oriented economy received official sanction at the 14th Party Congress later in the year as a number of younger, reform-minded leaders began their rise to top positions. The congress also affirmed the position of Jiang Zemin, a former mayor of Shanghai, as the new "core of CPC leadership", paving the way of Jiang becoming the "Third-generation" leadership figure. Deng and his supporters argued that further reform was necessary to raise China's standard of living. After the visit, the Communist Party Politburo publicly issued an endorsement of Deng's policies of economic openness. Though not completely eschewing political reform, China has consistently placed overwhelming priority on the opening of its economy.
Although another massive protest is unlikely in the near future, social instability due to economic conflicts has become a greater challenge for the third and fourth generation of leaders. Politically, however, Deng's experiment separating the governance of Party, Government and Military have proven to be a failed strategy under the current political system. During the recovery period, Jiang Zemin took the office of CPC General Secretary, President of the PRC, and Chairman of the Central Military Commission, securing political stability, and centralizing power yet again.
Deng Xiaoping was one of only a few peasant revolutionaries to lead China, along with Mao Zedong and the founders of the Han and Ming dynasties. Deng's policies opened up the economy to foreign investment and market allocation within a socialist framework, and put into practice a daring and unprecedented system that allowed free enterprise and capitalist ideas to grow and compensate for each other under a single-party political system. Since his death, under Jiang's leadership, mainland China has sustained an average of 8% GDP growth annually, achieving one of the world's highest rates of per capita economic growth, and became the world's fastest growing major economy.
Also as mentioned, due in part to "socialist" measures and price/currency controls, the inflation characteristic of the years leading up to the Tiananmen protests had subsided. Political institutions have stabilized, due to the institutionalization of procedure of the Deng years and a generational shift from peasant revolutionaries to well-educated, professional technocrats. At the beginning of the 1990s it seemed that social problems have eased as well, as China rapidly became a more modern and prosperous nation. According to journalist Jim Rohwer, for example, "the Dengist reforms of 1979-1994 brought about probably the biggest single improvement in human welfare anywhere at any time." Deng's reforms lifted hundreds of millions of people out of poverty.
The reforms, however, have left a number of issues, mainly in the social and political arena, unresolved. As a result of his market reforms, it became obvious by the mid-1990s that many state-owned enterprises (owned by the central government, unlike TVEs publicly owned at the local level) were unprofitable and needed to be shut down to prevent them from being a permanent and unsustainable drain on the economy. As the pace of urbanization continued to increase, urban unemployment became a serious problem, and urban housing shortages caused the rise of low-income slums in major urban centres like Shanghai and Guangzhou. Furthermore, by the mid-1990s most of the benefits of Deng's reforms, particularly in agriculture, had run their course; rural incomes had become stagnant, leaving Deng's successors in search of new means to boost economic growth in rural areas, or else risk a massive social implosion.
Finally, Deng's policy of asserting the primacy of economic development, while maintaining the rule of the Communist Party, has raised questions about its legitimacy. Many observers both inside and outside of China question the degree to which a one-party system can indefinitely maintain control over an increasingly dynamic and prosperous Chinese society. Questions have also been raised about the amount of foreign enterprise within China, and the time it takes before the government will no longer be able to effectively control private enterprise to fit their standards.
Deng Xiaoping died on February 19, 1997. His successor Jiang Zemin delivered an official eulogy to the late revolutionary and Long March veteran stating, "The Chinese people love Comrade Deng Xiaoping, thank Comrade Deng Xiaoping, mourn for Comrade Deng Xiaoping, and cherish the memory of Comrade Deng Xiaoping because he devoted his life-long energies to the Chinese people, performed immortal feats for the independence and liberation of the Chinese nation." His ideology, Deng Xiaoping Theory, became an official "guiding ideology" in the national Constitution in the subsequent meeting of the National People's Congress.
Hong Kong was returned to PRC control after a 99-year-lease to Great Britain on July 1, 1997. The agreement reverting control had applied Deng's theory of One Country, Two Systems. Hong Kong was to maintain independence in all areas except for foreign affairs and defence, withholding any major changes for another fifty years. Macau reverted to Chinese control under a similar agreement with Portugal on December 20, 1999. The two former colonies kept separate legal systems. The return of the two colonies meant the installation of an unprecedented political system, and the legal matters involved thereof, especially those involving Hong Kong's Basic Law, became the subject of constant debate. The subject of the amount of control the Mainland has over the former colonies' political institutions had raised many questions both internally and abroad. Some debate ensued over the legitimacy of Hong Kong Chief Executive Tung Chee-hwa and the level of democracy in Hong Kong, as the colony is supposed to remain economically independent from the mainland for another fifty years. Hong Kong is also fighting against Shanghai to keep its status as the regional commercial hub.
Deng's health deteriorated in the years prior to his death in 1997. During that time, General secretary Jiang Zemin and other members of his generation gradually assumed control of the day-to-day functions of government. This "third generation" leadership governed collectively with Jiang at the "core". Jiang was initially seen as an unlikely candidate for the position of General secretary, and was believed to be simply a power transition figure. In reality, however, Jiang's era saw the return to complete, centralized leadership by 1998, after ousting rival party leader Qiao Shi and firmly taking the positions of the CPC General secretary, the President, and the Chairman of the Central Military Commission, becoming paramount leader of China's tripartite Party-State-Military functional structure.
With support from Jiang Zemin and Li Peng, then General secretary and Premier respectively, the government enacted tough macroeconomic control measures. The PRC began expunging low-tech, duplicated projects and sectors and projects in transport, energy, agriculture and sectors, averting violent market fluctuations. Attention has focused on strengthening agriculture, still the economic base of the developing country and on continuing a moderately tight monetary policy.
In March 1998, Jiang was re-elected President during the 9th National People's Congress. Premier Li Peng was constitutionally required to step down from that post. He was elected to the chairmanship of the National People's Congress. Vice Premier Zhu Rongji was nominated as premier of the State Council by President Jiang Zemin to replace Li and confirmed by the Ninth National People's Congress (NPC) on March 17, 1998 at the First NPC Session. He was reelected Standing Committee member of Political Bureau of 15th CPC Central Committee in September 1997. Zhu was believed to be a tougher and more charismatic leader compared to the generally unpopular Li Peng.
While the government under Jiang Zemin allowed further opening of the Chinese economy, a more liberal and materialistic environment gave way to the emergence of various schools of new-age social and religious thinking. Falun Gong (法轮功 lit. The Practice of the Wheel of Law) was a qigong practice founded by Li Hongzhi in 1992, and holds some similar beliefs to Buddhism and Taoism. In the next few years, under CPC supervision, Li published various books on the practice, and attracted an estimated 70 million followers in Mainland China alone, exceeding the number of Communist Party members. The practice of Falun Gong meditation exercises claimed to improve physical and mental health. There are conflicting ideas as to just how the spiritual movement spread so fast.
As the movement spread to larger proportions, people began gathering in squares in united practice sessions, sitting for hours practicing meditation exercises. Owing to criticism of the practice by academics and certain inner party elements, beginning in 1999, practitioners resorted to group appeals or letter writing. Numerous letters were written to local party and government leadership in attempts to restrict what was considered "unfair" media criticism of Falun Gong. A newspaper article denouncing "teenagers practicing Qi Gong," with some parts specifically targeting Falun Gong, in Tianjin in April triggered a series of events which eventually led to over 10,000 practitioners silently protesting outside the Beijing Zhongnanhai Compound, near China's Central Appeals Office, to appeal for the release of detained practitioners. The unprecedented event had raised alarm bells for China's top leaders. Premier Zhu Rongji met with several Falun Gong representatives, coming to a compromise, agreeing to a few, but not all demands. This decision, however, reputedly resulted in a great rift in the Politburo, with Zhu holding moderate views, and Jiang Zemin personally alarmed by the seriousness of the situation, and in favour of a complete crackdown. Some political analysts have suggested that Jiang was using the situation to strengthen his own core of CPC leadership, while CPC supporters contend that Falun Gong's continual spread would result in unwanted political instability in a still fragile and growing economy.
On June 10, 1999 the government set up the "6-10 Office", an extra-constitutional organization in charge solely of the Falun Gong crackdown. China's state-controlled media vilified Falun Gong and denounced it as an unhealthy element in society. On July 22, CCTV's Xinwen Lianbo ("Continual News") at seven in the evening, as well as many provincial and municipal TV networks, labeled Falun Gong as an "evil cult", and was extended to three hours over the regular half-hour broadcast. Regular programming was in many cases disrupted for up to a week. On July 23, the People's Daily contained a full-page editorial 1 titled "Enhance Knowledge; See Clearly the Harm; Hold on to Policies; Maintain Stability", criticizing Falun Gong as "corrupting people's minds, creating chaos, and destroying society's stability." Officially after 1999, party organs claimed that Falun Gong, being an "evil cult," had used deception to manipulate and attack the psychology of the common people, and that its aims stretched into the political and economic realm. State run media was quick to show echoing commentary by scholars and "experts." The beginning of the crackdown saw state-controlled media repeatedly claim that Falun Gong was nothing more than a scheme to earn money, through the retailing of Falun Gong books and merchandise that was done through a complicated hierarchical sales system. The dominant view in the West regards these reports as largely falsified, reminiscent of similar Communist Party propaganda campaigns such as seen during the Cultural Revolution. The popularity and growth of Falun Gong is considered legitimate, with the assertion that it was no more than the healthy spread of certain religious beliefs to which people felt connected.
On July 22, 1999 Falun Gong founder Li Hongzhi, then in exile in the United States, published a statement entitled "A Brief Statement of Mine" in which he urged "all governments, international organizations, and people of goodwill worldwide to extend their support and assistance to us in order to resolve the present crisis that is taking place in China." and claimed that Falun Gong "does not have any particular organization, let alone any political objectives. We have never been involved in any anti-government activities." 
Falun Gong supporters and Human Rights organisations claim that thousands of practitioners have been tortured, beaten, subjected to psychiatric abuses, put in forced labour camps or experienced other forms of persecution, and that tens of thousands more have been imprisoned.  Falun Gong practitioners have continued to appeal for an end to the persecution and legalisation of the practice, including western Falun Gong practitioners travelling to China to protest.  Practitioners inside China have distributed leaflets and VCDs to counter what they see as the state controlled media's propaganda campaign against Falun Gong. They have also resorted to hacking into state run television to broadcast their views.  Such an incident in March 2002 in Changchun sparked a string of arrests with thousands of practitioners reportedly being detained, as well as reports of some being tortured or beaten to death. 
Amidst maintaining political stability, Premier Zhu Rongji kept things on track in the difficult years of the late 1990s, maintaining mainland China's averaged growth at 9.7% a year over the two decades to 2000. The ability of the PRC to chart an effective course through the recent Asian Financial crisis, which crippled Southeast and East Asian economies (including that of Hong Kong and Taiwan), was also rather noteworthy. Part of the survival was owed to the state's overall control of the economy. Against the backdrop of the Asian financial crisis and the catastrophic 1998 Yangtze River Floods, mainland China's GDP still grew by 7.9% in the first nine months of 2002, beating the government's 7% target despite a global economic slowdown. Active state intervention to stimulate demand through wage increases in the public sector and other measures showed certain strengths in the Chinese economic system in times of hardship.
While foreign direct investment (FDI) worldwide halved in 2000, the flow of capital into mainland China rose 10%. As global firms scramble to avoid missing the China boom; FDI in China has risen 22.6% in 2002. While global trade stagnated, growing by one percent in 2002, mainland China's trade soared by 18% in the first nine months of 2002, with exports outstripping imports.
Zhu tackled deep-seated structural problems which more conservative leaders were afraid of letting go. Uneven development was a major issuse, as was the remaining state-owned enterprises. In addition, inefficient state firms and a banking system mired in bad loans and lost funds to foreign countries. Substantial disagreements over economic policy resulted in the party leadership, as the tensions focused on the pace of change. Zhu was long known to have been involved in a divisive relationship with President Jiang.
The PRC leadership was also struggling to modernize and privatize State-owned enterprises (SOEs) without inducing massive urban unemployment. A generation of people that suffered due to the Cultural Revolution that lacked the proper education or applicable skills has found it increasingly difficult to find a stable place in the increasingly privatized workforce. As millions lost their jobs as state firms closed, Zhu demanded financial safety nets for unemployed workers. While mainland China will need 100 million new urban jobs in the next five years to absorb laid off workers and rural migrants; so far they have been achieving this aim due to high per capita GDP growth. Under the auspices of Zhu and Wen Jiabao, his top deputy and successor, the state has been alleviating unemployment while promoting efficiency by pumping tax revenues into the economy and maintaining consumer demand.
Critics have charged that there is an oversupply of manufactured goods, driving down prices and profits while increasing the level of bad debt in the banking system. But demand for Chinese goods, domestically and abroad, is high enough to put those concerns to rest in the time being. Consumer spending is growing, boosted, in large part, due to longer workers' holidays.
Zhu's right-hand man, then Vice-Premier Wen Jiabao oversaw regulations for the stock market, campaigned to develop poorer inland provinces to stem migration and regional resentment. Zhu and Wen have been setting tax limits for peasants to protect them from high levies by corrupt officials. Well respected by ordinary Chinese citizens, Zhu also holds the respect of Western political and business leaders, who found him reassuring and credit him with clinching China's market-opening World Trade Organization (WTO) deal, which has brought foreign capital pouring into the country. Zhu remained as Premier until the National People's Congress met in March 2003, when it approved his struggle to clinch trusted deputy Wen Jiabao as his successor. Like his fourth-generation colleague Hu Jintao, Wen's personal opinions are difficult to discern since he sticks very closely to his script. Unlike the frank strong-willed Zhu, Wen, who has earned a reputation as an equally competent manager, is known for his suppleness and discretion.
In May 1999, NATO forces undergoing bombing operations in Yugoslavia during the Kosovo War bombed the Chinese embassy in Belgrade. The event resulted in the death of three Chinese journalists, as well as a strong wave of Anti-American sentiment, gaining strength daily from mass denunciations in the Chinese media on the event. Many ordinary citizens saw the attack as one on Chinese patriotism, therefore national unity was variably strengthened. People with no regular affiliation with the CPC came out and spoke against American hegemony. The Americans officially declared the incident an accident, but the apologies and other official statements seemed unconvincing to the vast majority of the Chinese public, and some military analysts and journalists. Various anti-American protests followed on a nationwide scale, with the most concentrated in Beijing near the American Embassy.
The Chinese government officially condemned the action and demanded a full apology. In an official statement, then-Vice-President Hu Jintao declared the action as "barbaric" and behind the basic principle of ignorant "American hegemony". In the same statement he raised traditional slogans regarding the strength of the Chinese people, to rally behind the government and Jiang's leadership a huge portion of the populace. As protests escalated, the Central Government began changing its tone in an attempt to calm the outpouring wave of nationalism. Russia was largely on side.
Around the start of the 21st century, although China had a relatively healthy economy with increased foreign investment, it faced a more precarious position on the global scale. Human rights became the concern for many western governments, and most leaders of western powers mention the issue every time on an official state visit. Pro-Taiwan Independence forces of the Democratic Progressive Party won the elections in Taiwan for the first time, limiting talks of Chinese reunification. Li Teng-hui published his "Two Countries Statement", the first of its kind labelling Taiwan as an independent entity separate from China. And then, in April 2001, a collision occurred between a US spy-plane and a Chinese military jet near the island of Hainan, straining China-US relations even further.
Meanwhile, in July 2001, the PRC and Russia signed the twenty-year Treaty of Friendship and Cooperation, aimed at increasing Sino-Russian cooperation and mutual assistance in various areas, covering economic, military, diplomatic (including Taiwan), energy and ecological fronts. The move was seen as another step towards balancing out US dominance in global affairs. China and Russia had also agreed upon a complete border treaty between the two countries.