After the Tiananmen Square protests and massacre in 1989, Deng Xiaoping, who was the paramount leader of China, formally retired and was succeeded by Jiang Zemin, the former Shanghai Secretary of the Communist Party of China. During this period, also known as "Jiangist China", the crackdown on the protests led to significant damage to China's reputation internationally and resulted in sanctions. However, the situation eventually stabilized. Under Jiang's leadership, the idea of checks and balances in the political system that Deng had advocated for was abandoned, as Jiang consolidated power in the party, state, and military.

In the 1990s, China saw healthy economic development, but the closing of state-owned enterprises and increasing levels of corruption and unemployment, along with environmental challenges continued to be a problem for the country. Consumerism, crime, and new-age spiritual-religious movements such as Falun Gong also emerged. The 1990s also saw the peaceful handover of Hong Kong and Macau to Chinese control under the "One Country, Two Systems" formula. China also saw a new surge of nationalism when facing crises abroad.