Saturday, May 16, 2020

The Paradox of the Tiananmen Square

Paradoxically, a free market economy can be created by exterminating a popular pro-democracy movement. The rise of China as a global economic powerhouse is the consequence of the Chinese government’s decision in 1989 to send troops armed with assault rifles and tanks to the Tiananmen Square and massacre thousands of pro-democracy protestors who had gathered there. The Tiananmen Square massacre put an end to all opposition to the communist regime, and China became a politically stable country. Having implemented free market reforms in 1979, China was receiving foreign investments for a decade, but after the massacre there was a great leap in the investments coming into the country—the big corporations prefer to invest in countries which are politically stable and have a business friendly regulatory system. China, after 1989, offered political stability and a business-friendly regulatory system, and it saw such massive rise in investments and trade that, by 2010, it overtook Japan as the world’s second-largest economy.

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