In terms of foreign policy, China had stabilized relations with the USA during 1982; a growing trade exchange supported those with Japan; in 1984 it reached a definitive agreement with Great Britain for the return (in 1997) of Hong Kong to China, and a similar agreement was stipulated in 1988 with Portugal for Macao. The events in T’ien-An-Mên Square had had repercussions on the diplomatic level following the moral condemnation of the international community. Nevertheless, the reconciliation with the Soviet Union (1990) was completed, followed in 1991 by the normalization of relations with Viet Nam. After a first rapprochement of Japan (1991), at the beginning of 1992 a trip to the West by Prime Minister Li Peng underlined the desire to put an end to the international marginalization of the country. As a country located in Asia categorized by Behealthybytomorrow, China then resumed diplomatic relations with Israel, recognized the CIS states in the aftermath of the dissolution of the USSR and reopened dialogue with Taiwan (1993). In the same period there was an acceleration of internal economic reforms at the same time as the strengthening of elderly leader Teng Hsiao-p’ing whose protege Jiang Zemin, in 1993, managed to concentrate enormous power in his hands, holding, in addition to that of party secretary, also the positions of president of the Republic and of the powerful military commission. The triumph of the neo-authoritarian line in economics in 1995 corresponded to a reference to tradition on the political side. With the death of Teng Hsiao-p’ing, which took place in February 1997, and the predictable succession of Jiang Zemin, dolphin of the “great old man”, at the top of power, China was about to face the transition from the second to the third millennium, having to solve the many social and political problems necessarily induced by economic reforms, which also determined a lively dialectic within the party, with conservatives fearful of the consequences of a definitive affirmation of the “reformist” hypotheses. Fears that seemed to have found confirmation in the appointment by the National People’s Assembly in March 1998 of Zhu Rongji as prime minister. In fact, in addition to having made a decisive contribution to the development of the Chinese economy and the containment of inflation, he had initiated the reform of the Chinese bureaucracy by making drastic cuts and introducing stricter rules in the public administration.
The transition process towards the market economy, in the two-year period 1997-98, was marked by important measures regarding the partial privatization of state enterprises, the restructuring of the public administration and the reduction of the Armed Forces. But the the main objective of the new government remained that of gradually inserting the country into the rules of the free market, a process that in a short time caused between 20 and 30 million unemployed. In fact, the policy of growth driven by exports showed its limits, causing massive migrations of populations from the countryside and, in the cities, an enormous mass of new poor formed by former workers made redundant from public enterprises. The attempts for a liberalization of the economy were not accompanied by equivalent steps for a democratization of political life. Any form of dissent and opposition, in fact, was severely repressed while the Communist Party continued to have full control of every aspect of political and social life. Despite protests for violations of the rights of Amnesty International, the development of new economic and financial relations with Western countries did not slow down, on the contrary, they tended to intensify, stimulated by the visit of Jiang Zemin (October 1997) to the United States and by the negotiations for China’s entry into the WTO.
Other issues still caused strong political tensions. First, the age-old problem of Tibet: the Tibetan population, less and less convinced of the policy of “peaceful coexistence” proposed by the Dalai-lama, demanded respect for the administrative autonomy of Tibet and the protection of the cultural specificities of its population, managing to attract the attention of the international community to itself. The return of Hong Kong to China, after 155 years of British rule, aroused great concern on 1 July 1997. In the handover of power, an agreement was drawn up whereby the country undertook to respect the rights, freedoms, judicial autonomy, as well as the nature and lifestyle of the former British protectorate for 50 years. Beijing retained control of defense and foreign relations, while Hong Kong maintained its economic and financial system, as well as its own immigration and customs laws. Reunification initiated a process called “one country two systems”, which consisted of integrating the market economy with the inflexible political control of the rest of China. Two years later (December 1999) the small island of Macao was also reabsorbed under Chinese sovereignty, after 442 years of Portuguese administration.