Political longevity
Li Peng with Russian President Vladimir Putin in 2000
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 1989 protests. By keeping Li at the upper levels of the Party, China's leaders communicated to the world that the country remained stable and united.[3]
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.[17] Li directed a tight monetary policy, implementing price controls on many commodities, supporting higher interest rates, and cutting off state loans to private and cooperative sectors in attempts to reduce inflation.
Li suffered a heart attack in 1993, 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.[9] Perhaps realizing that opposition to the market reforms would be poorly received by Deng and other Party elders, Li publicly supported Deng's economic reforms. Li was reappointed Premier in 1993, despite a large protest vote for Zhu. Zhu Rongji eventually succeeded Li when Li's second term expired, in 1998.[3]
Li began two megaprojects when he was the Premier. He initiated the construction of the Three Gorges Dam on 14 December 1994, and later began preparations for the Shenzhou Manned Space Program. 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.[18][19]