Throughout the s, political dissent and social problems, including inflation, urban migration, and school overcrowding, became great problems in China.
Despite these acute challenges, Li shifted his focus away from the day-to-day concerns of energy, communications, and raw materials allocation, and took a more active role in the ongoing intra-party debate on the pace of market reforms. Politically, Li opposed the modern economic reforms pioneered by Zhao Ziyang throughout Zhao's years of public service. While students and intellectuals urged greater reforms, some party elders increasingly feared that the instability opened up by any significant reforms would threaten to undermine the authority of the Communist Party, which Li had spent his career attempting to strengthen.
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After Zhao became General Secretary of the Communist Party of China , his proposals in May to expand free enterprise led to popular complaints which some suggest were politically inspired about inflation fears. Public fears about the negative effects of market reforms gave conservatives including Li Peng the opening to call for greater centralization of economic controls and stricter prohibitions against Western influences, especially opposing further expansion of Zhao's more free enterprise-oriented approach.
This precipitated a political debate, which grew more heated through the winter of — The Tiananmen Square protests of began with the mass mourning over the death of former General secretary Hu Yaobang , widely perceived to have been purged for his support of political liberalization.
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Non-violent protests also occurred in cities throughout China, including Shanghai and Wuhan. Rioting occurred in Xi'an and Changsha. The Tiananmen protests were partially protests against the affluence of the children of high-ranking Communist Party officials, and the perception that second-generation officials had received their fortunes through exploiting their parents' influence. Li, whose family has often been at the center of corruption allegations within the Chinese power industry, was vulnerable to these charges.
An editorial published in the People's Daily on 26 April and bearing the name of Deng Xiaoping, denounced the demonstrations as "premeditated and organized turmoil with anti-Party and anti-socialist motives". This article had the effect of worsening the demonstrations by angering its leaders, who then made their demands more extreme. Zhao Ziyang later wrote in his autobiography that, although Deng had stated many of these sentiments in a private conversation with Li Peng shortly before the editorial was written, Li had these comments disseminated to Party members and published as the editorial without Deng's knowledge or consent.
Li strictly refused to negotiate with the Tiananmen protesters out of principle, and became one of the officials most objected to by protesters. Some observers say that Wang's statements insulted Li personally, hardening his resolve to end the protest by violent means.. Among the other senior members of the central government, Li became the one who most strongly favored violence and known as the "Butcher of Beijing" for his role in the crackdown. Most estimates of the dead range from several hundred to several thousand people. Li later described the crackdown as a historic victory for Communism,  and wrote that he feared the protests would be as potentially damaging to China as the Cultural Revolution — had been.
Although the Tiananmen crackdown was an "international public relations disaster for China", it ensured that Li would have a long and productive career. He remained powerful, even though he had been one of the main targets of protesters, partially because the leadership believed that limiting Li's career would be the same as admitting that they had made mistakes by suppressing the protests.
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By keeping Li at the upper levels of the Party, China's leaders communicated to the world that the country remained stable and united. In the immediate aftermath of the Tiananmen protests, Li took a leading role in a national austerity program, intended to slow economic growth and inflation and re-centralize the economy.
Li worked to increase taxes on agriculture and export-industries, and increased salaries to less-efficient industries owned by the government.
Li suffered a heart attack in , and began to lose influence within the Party to vice-premier Zhu Rongji , a strong advocate for economic liberalization. In that year, when Li made his annual work report to the Politburo, he was forced to make over seventy changes in order to make the plans acceptable to Deng.
Li was reappointed Premier in , despite a large protest vote for Zhu.
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Zhu Rongji eventually succeeded Li when Li's second term expired, in Li began two megaprojects when he was the Premier. Both programs were subject to much controversy within China and abroad. The Shenzhou program was especially criticized due to its extraordinary cost tens of billions of dollars in a country that sometimes referred to itself as a Third World nation.
Many economists and humanitarians suggested that those billions in capital might be better invested in helping the Chinese population deal with economic hardships and improvement in the China's education, health services, and legal system.
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Li remained premier until , when he was constitutionally limited to two terms. After his second term expired, he became the chairman of the National People's Congress. Li's interest in the Dam reflected his earlier career as a hydraulic engineer, and he spent much of his career while in office presiding over a vast and growing power industry. At this time Li Peng considered himself to be a builder and a modernizer. After retiring, Li retained some influence in the Politburo Standing Committee.
He was subject to frequent speculation over corruption issues that plague him and his family.
In addition, perhaps more than any other leader, Li's public image had become inextricably associated with memory of the Tiananmen crackdown, and as a result he continued to be a widely despised figure among a substantial segment of the Chinese population well into the 21st century. Li spent much of the s expanding and managing an energy monopoly, State Power Corporation of China. Because the company was staffed by Li's relatives, Li was accused of turning China's energy industry into a "family fiefdom".
After Li's departure from government, Li's energy monopoly was split into five smaller companies by the Chinese government. The Critical Moment covered Li's activities during the period of the Tiananmen Square protests , and was published on the protests' twenty-first anniversary. The Critical Moment was characterized by reviewers as largely an attempt to minimize Li's culpability during the most egregious stages of the crackdown; some also say he attempted to shift blame to Deng.
Li died on 22 July at the age of He had been receiving medical treatment in a hospital in Beijing at the time of his death. Li's family benefited from Li's high position during the s and s.
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