The new policy was not without costs, however. Growing urban markets encouraged farmers and gave them profits to plough back, but the city- dwellers began to feel the effects of rising prices. As the decade progressed, domestic difficulties increased. Foreign debt had shot up and inflation was running at an annual rate of about 30 per cent by the end of the decade. There was anger over evidence of corruption, and divisions in the leadership (some following upon deaths and illness among the gerontocrats who dominated the CCP) were widely known to exist. Those believing that a reassertion of political control was needed began to gain ground, and there were signs that they were manoeuvring to win over Deng. Yet western observers and perhaps some Chinese had been led by the policy of economic liberalization to take unrealistic and over-optimistic views about the possibility of political relaxation. The exciting changes in eastern Europe stimulated further hopes of this. But the illusions suddenly crumbled.
As 1989 began, China’s city-dwellers were feeling the pressures both of the acute inflation and of an austerity programme that had been imposed to deal with it. This was the background to a new wave of student demands. Encouraged by the presence of sympathizers with liberalization in the governing oligarchy, they demanded that the Communist Party and government should open a dialogue with a newly formed and unofficial student union about corruption and reform. Posters and rallies began to champion calls for greater ‘democracy’. The regime’s leadership was alarmed, refusing to recognize the union, which, it was feared, might be the harbinger of a new Red Guards movement. As the seventieth anniversary of the May 4th Movement approached, activists invoked its memory so as to give a broad patriotic colour to their campaign. They were not able to arouse much support in the countryside, although there were sympathetic demonstrations in many cities, but, encouraged by the obviously benevolent attitude of the general secretary of the CCP, Zhao Ziyang, they began a mass hunger strike that won widespread popular sympathy and support in Beijing. It had started only shortly before Gorbachev arrived in the capital for a state visit; his visit, instead of providing further reassuring evidence of China’s international standing, only served to remind people of what was going on in the USSR as a result of policies of liberalization. This cut both ways, encouraging would-be reformers and frightening conservatives.
By this time the most senior members of the government, including Deng Xiaoping, seem to have become thoroughly alarmed. Widespread disorder might be in the offing; they believed China faced a major crisis. Some feared a new Cultural Revolution if things got out of control. On 20 May 1989 martial law was declared. There were signs for a moment that a divided government might not be able to impose its will, but the army’s reliability was soon assured. The repression that followed two weeks later was ruthless. The student leaders had moved the focus of their efforts to an encampment in Beijing in Tiananmen Square, where, forty years before, Mao had proclaimed the foundation of the People’s Republic, and they had been joined there by other dissidents. From one of the gates of the old Forbidden City a huge portrait of Mao looked down on the symbol of the protesters: a plaster figure of a ‘Goddess of Democracy’, deliberately evocative of New York’s Statue of Liberty.
On 2 June the first military units entered the suburbs of Beijing on their way to the square. There was resistance with extemporized weapons and barricades that they forced their way through. On 3 June the demonstrators were overcome by rifle-fire, tear-gas and a brutal crushing of the encampment under the treads of tanks that swept into the square. Killing went on for some days, mass arrests followed (perhaps as many as 10,000 in all). Much of what happened took place before the eyes of the world, thanks to the presence of foreign film-crews who had for days familiarized television audiences with the demonstrators’ encampment.