1989 Tiananmen Square protests and massacre
Economy

After the Tiananmen Square protests, many business analysts downgraded their outlook for China's economic future. The violent response to the protests was one of the factors that led to a delay in China's acceptance in the World Trade Organization, which was not completed until twelve years later, in 2001. Furthermore, bilateral aid to China decreased from $3.4 billion in 1988 to $700 million in 1990. Loans to China were suspended by the World Bank, Asian Development Bank, and foreign governments; China's credit rating was lowered; tourism revenue decreased from US$2.2 billion to US$1.8 billion; and foreign direct investment commitments were canceled. However, there was a rise in government defense spending from 8.6% in 1986, to 15.5% in 1990, reversing a previous 10-year decline.

In the aftermath of the protests, the government sought again to centralize control over the economy, though the changes were short-lived. Sensing that conservative policies had again taken a foothold within the party, Deng, now retired from all of his official positions, launched his southern tour in 1992, visiting various cities in the country's most prosperous regions while advocating for further economic reforms. Partly in response to Deng, by the mid-1990s the country was again pursuing market liberalization on a scale even greater than those seen in the initial stages of the reforms in the 1980s. Although political liberals were purged from within the party, many of those who were economically liberal remained. The economic shocks caused by the events of 1989, in retrospect, had only a minor and temporary effect on China's economic growth. Indeed, with many previously aggrieved groups now regarding political liberalization as a lost cause, more of their energy was spent on economic activities. The economy would quickly regain momentum into the 1990s.
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