The year 1989 was not only the year of Tiananmen, but also the first since economic reform had begun in which farm incomes in China declined in real terms. Yet Deng Xiaoping soon appeared to re-establish his ascendancy inside the leadership. There came further removals of price controls, the beginnings of massive western investment in the country and, more alarmingly, steepening inflation, which provoked signs of official alarm, as did increases in organized crime, banditry and rural unrest. Deng’s death in February 1997 reminded the world, too, as the end of the century approached, that for all its economic success China had not been able to give institutional protection to what many saw in general terms as liberalizing policies. The country’s record of what was seen as the abuse of human rights came to attract more and more adverse criticism abroad, even when the general policy tendencies encouraged under Deng seemed still healthily alive and maintained under his successor, Jiang Zemin.

Technically, the collapse of the USSR had left the People’s Republic the only major communist power in the world. Although this was a less meaningful distinction than would have once been the case, immediately it must have transformed strategic reality; 4000 and more miles of shared frontier with the former USSR were now replaced for about half that distance by frontiers with the newly independent and much weaker states of Kazakhstan, Kyrgyzstan and Tajikistan. What that might portend was hard to see. Meanwhile, in the later 1990s, concern over Taiwan, the problem that had long tied together Chinese internal policy and foreign relations, was clearly as alive as ever after nearly five decades in which the seemingly fundamental nature of the original clash between the nationalist regime there and the People’s Republic had, in fact, been slightly blurred after the formal closure of American diplomatic relations with the Taiwanese nationalist regime and its subsequent exclusion from the United Nations. Yet in the 1990s, while Beijing still maintained its policy of reuniting Taiwan (like Hong Kong and Macao) to mainland China as a long-term goal, more began to be heard of alleged independence sentiment on the island. Beijing was evidently disturbed, alarm reaching its height during a visit by the president of the Taiwanese republic to the United States in 1995. The ambassador of the People’s Republic in Washington was withdrawn and an official newspaper proclaimed the issue of Taiwan as ‘explosive as a barrel of gunpowder’. It was clear that if Taiwan formally declared itself independent of the mainland an invasion of the island would probably follow.

Taiwan, moreover, was only one source of uncertainty and nervousness in East Asia. An increasing instability and volatility was apparent in the region after the Cold War ended. What the closing of that relatively well-defined and therefore clarifying struggle might mean was at first very hard to see. In Korea, for example, it changed very little, North Korea remaining obstinately locked in a confrontation with its southern neighbour by its rulers’ determination to maintain a command economy in virtual isolation. The roots of some of its quarrels with the South were very deep, going back well beyond 1939. But economic mismanagement, the ending of Soviet aid in 1991 and, it appeared, some straightforward dynastic exploitation of power by the ruling dictator, brought North Koreans to the edge of starvation by early 1998. The North’s problems remained unusually specific, detached somewhat from the regional trends, as South Korea could not be. As for that country, South Korea was by the mid-1990s one of several grappling with a growing economic malaise, blighting eventually all the former ‘tiger’ economies and even Japan.

The growth and prosperity of the early 1980s had begun to crumble when the original leader of the Asian resurgence, Japan, began to show severe symptoms of economic disorder and currency instability. Property speculation, and huge investment in non-productive activity or sectors generating very small returns, had encumbered its banks and financial institutions with unserviceable debts. The currency weakened sharply; speculation against it was immediate and crippling in a world of financial transactions more rapid than ever before. The prevailing business culture of Japan, firmly embedded as it was in official and financial networks that now proved unable to give decisive leadership, made solutions harder still to achieve as conditions worsened.

The consequences of this, it eventually appeared, could even spread worldwide. Many other economies in the Far East suffered like Japan, if on a smaller scale: investment booms were followed by exposure to international currency speculation, over-extended credit and endangered banking systems, and (more than in Japan) the migration of capital overseas. Authoritarian governments in some countries had exploited public resources in the interests of cronies of those in power and their families. The same governments proved inflexible and incapable of dealing with changing economic circumstances and terms of trade. First, Thailand lost its battle to support its currency in 1997, and then its devaluation was followed rapidly by the collapse of other currencies of the region. But the most dramatic political consequence came with an outburst of popular anger over growing economic hardship in Indonesia the following year. In May 1998, after the Indonesian economy had shrunk by more than 8 per cent since the beginning of the year, and the currency had lost four-fifths of its dollar value, riots drove the president from power. Thirty-two assured years of a firmly controlled, corrupt, but formally ‘democratic’ system came to an end. The successor government, though, looked much like the old one and there was a menacing potential for inter-community strife in a country divided as Indonesia was between a large Islamic majority and significant Hindu and Chinese communities. There was much mob violence, and attacks were made on Indonesian Christians.

Investors in the United States above all, but in European countries, too, had long been enjoying a stock market advance that, it seemed, might soon be in danger from what was colloquially summarized as an Asian ‘meltdown’. There were even worries that world conditions might lead to an American market crash, detonating something like the consequences of 1929, especially when the currency turbulence of 1998 forced the devaluation of the Russian rouble. By then, too, Latin America was beginning to be affected as, ominously, oil and commodity prices fell. Chile, as a Pacific country and one especially sensitive to a fall in the price of copper, was again troubled, and as the twenty-first century began, it appeared that the old devils cast out by careful governments - inflation and budgetary disorder - were back with a vengeance, above all in Argentina and even in Brazil.

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