Li was the son of an early Communist revolutionary, but was orphaned as a child when his father was executed by the Kuomintang. After meeting Zhou Enlai in Sichuan Li was raised by Zhou and his wife, Deng Yingchao. Li was trained to be an engineer in the USSR and worked at an important national power company after he returned to China. He escaped the political turmoil of the 1950s, '60s, and '70s due to his political connections and his employment in the company. After Deng Xiaoping became China's leader in the late 1970s, Li took a number of increasingly important and powerful political positions, eventually leading to him becoming premier in 1987.
As Premier, Li was the most visible representative of China's government who backed the use of force to quell the Tiananmen Square protests of 1989. During the protests Li used his authority as premier to declare martial law; and, in cooperation with Deng Xiaoping, who was the Chairman of the Central Military Commission, he ordered the June 1989 military crackdown against student pro-democracy demonstrators in Tiananmen Square, Beijing. Li advocated a largely conservative approach to Chinese economic reform, which placed him at odds with General Secretary Zhao Ziyang, who fell out of favour in 1989. After Zhao was removed from office Li promoted a conservative socialist economic agenda, but lost influence to incoming vice-premier Zhu Rongji and was unable to prevent the increasing free-market liberalization of the Chinese economy. During his time in office he was at the helm of the controversial Three Gorges Dam project. He and his family managed a large Chinese power monopoly, which the Chinese government broke up after his term as premier expired.
Li was born as Li Yuanpeng (李遠芃; Lǐ Yuǎnpéng) in Shanghai, but with ancestral roots in Chengdu, the capital of Sichuan Province. He is the son of writer Li Shuoxun, one of the earliest CPC revolutionaries, who was the political commissar of the Twentieth Division during the Nanchang Uprising. In 1931 Li was orphaned at age three when his father was executed by the Kuomintang for treason and for support of armed splittism. It was generally believed that Li was adopted by Zhou Enlai and Deng Yingchao, but this was refuted by Li himself in 2014 in his own memoirs. According to Li, he met Deng in Chengdu in 1939, who then took him to Changchun to meet Zhou. Zhou was in the Communist base of Yan'an, and they did not meet until late 1940. In 1941, when Li was twelve, Zhou sent Li to Yan'an, where Li studied until 1945. As a seventeen-year-old, in 1945, Li joined the Communist Party of China.
Like other Communist Party cadres of the third generation, Li gained a technical background. In 1941 he began studying at the Institute of Natural Science (the former Beijing Institute of Technology) in Yan'an. In 1948 he was sent to study at the Moscow Power Engineering Institute, majoring in hydroelectric engineering. A year later, in 1949, Zhou Enlai became Premier of the newly declared People's Republic of China. Li graduated in 1954. During his time in the USSR, Li was the Chairman of the Chinese Students Association in the Soviet Union.
When Li returned to China in 1955, the country was firmly under the control of the Communist Party. From the time of his return until 1979, Li engineered and managed a number of major power projects across China, beginning his career in Manchuria. Li survived the upheavals of the Cultural Revolution unscathed, due largely to his placement as director and Party secretary of the powerful and influential Beijing Electric Power Administration (from 1966–1980), and due to his family contacts in powerful Communist circles.
Li advanced politically after the ascent of Deng Xiaoping, and served as the Vice-Minister and Minister of Power between 1979 and 1983. In 1982–1983 Li served as the vice-minister of Water Conservancy and Power. Much of Li's rapid political promotion was due to the support of Party elder Chen Yun.
Li joined the Central Committee at the Twelfth National Congress in 1982. In 1985 he was named minister of the State Education Commission, and was elected to the Politburo and the Party Secretariat. In 1987 Li became a member of the powerful Standing Committee.
In November 1987, after Premier Zhao Ziyang was promoted to General Secretary, Li became acting Premier. He was formally elected Premier in March 1988. Within a year of this promotion, Li would play a major role in ending Zhao's career, after Zhao publicly supported demonstrators in Tiananmen Square. At the time of his promotion, Li seemed like an unusual choice for Premier because he did not seem to share Deng's enthusiasm for introducing market reforms. Li was raised to the position of Premier thanks partially to the departure of Hu Yaobang, who was forced to resign as General Secretary after the Party blamed him for a series of student-led protests in 1987.
Throughout the 1980s, political dissent and social problems, including inflation, urban migration, and school overcrowding, became great problems in China. Despite these acute challenges, Li shifted his focus away from the day-to-day concerns of energy, communications, and raw materials allocation, and took a more active role in the ongoing intra-party debate on the pace of market reforms. Politically, Li opposed the modern economic reforms pioneered by Zhao Ziyang throughout Zhao's years of public service. While students and intellectuals urged greater reforms, some party elders increasingly feared that the instability opened up by any significant reforms would threaten to undermine the authority of the Communist Party, which Li had spent his career attempting to strengthen.
After Zhao became General Secretary of the Communist Party of China, his proposals in May 1988 to expand free enterprise led to popular complaints (which some suggest were politically inspired) about inflation fears. Public fears about the negative effects of market reforms gave conservatives (including Li Peng) the opening to call for greater centralization of economic controls and stricter prohibitions against Western influences, especially opposing further expansion of Zhao's more free enterprise-oriented approach. This precipitated a political debate, which grew more heated through the winter of 1988–1989.
The Tiananmen Square protests of 1989 began with the mass mourning over the death of former General secretary Hu Yaobang, widely perceived to have been purged for his support of political liberalization. On the eve of Hu's funeral, 100,000 people gathered at Tiananmen Square. Beijing students began the demonstrations to encourage continued economic reform and liberalization, and these demonstrations soon evolved into a mass movement for political reform. From Tiananmen Square, the protesters later expanded into the surrounding streets. Non-violent protests also occurred in cities throughout China, including Shanghai and Wuhan. Looting and rioting occurred in various locations throughout China, including Xi'an and Changsha.
The Tiananmen protests were partially protests against the affluence of the children of high-ranking Communist Party officials, and the perception that second-generation officials had received their fortunes through exploiting their parents' influence. Li, whose family has often been at the center of corruption allegations within the Chinese power industry, was vulnerable to these charges.
An editorial published in the People's Daily on 26 April and bearing the name of Deng Xiaoping, denounced the demonstrations as "premeditated and organized turmoil with anti-Party and anti-socialist motives". This article had the effect of worsening the demonstrations by angering its leaders, who then made their demands more extreme. Zhao Ziyang later wrote in his autobiography that, although Deng had stated many of these sentiments in a private conversation with Li Peng shortly before the editorial was written, Li had these comments disseminated to Party members and published as the editorial without Deng's knowledge or consent.
Li strictly refused to negotiate with the Tiananmen protesters out of principle, and became one of the officials most objected to by protesters. One of the protest's key leaders, Wang Dan, during a hunger strike, publicly scolded Li on National Television for ignoring the needs of the people. Some observers say that Wang's statements insulted Li personally, hardening his resolve to end the protest by violent means.
Among the other senior members of the central government, Li became the one who most strongly favored violence. After winning the support of most of his colleagues, apparently including Deng Xiaoping, Li officially declared martial law in Beijing on 20 May 1989 and the protests were crushed by the military on 3–4 June. Most estimates of the dead range from several hundred to several thousand people. Li later described the crackdown as a historic victory for Communism, and wrote that he feared the protests would be as potentially damaging to China as the Cultural Revolution (1966–1976) had been.
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.
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. 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. 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.
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.
Li remained premier until 1998, when he was constitutionally limited to two terms. After his second term expired, he became the chairman of the National People's Congress. Support for Li for the largely ceremonial position was low, as he only received less than 90% of the vote at the 1998 National People's Congress, where he was the only candidate. He spent much of his time monitoring what he considers his life's work, the Three Gorges Dam. Li's interest in the Dam reflects his earlier career as a hydraulic engineer, and he spent much of his career presiding over a vast and growing power industry while in office. He considers himself a builder and a modernizer.
After retiring, Li retained some influence in the Politburo Standing Committee. Luo Gan, who presided over law enforcement and national security between 2002 and 2007, was considered Li's protégé. Since the 17th Party Congress, Li's influence waned considerably. He was subject to frequent speculation over corruption issues that plague him and his family. In addition, perhaps more than any other leader, Li's public image had become inextricably associated with memory of the 1989 Tiananmen crackdown, and as a result he continues to be a widely despised figure among a substantial segment of the Chinese population well into the 21st century. He is generally unpopular in China, where he "has long been a figure of scorn and suspicion".
Li spent much of the 1990s expanding and managing an energy monopoly, State Power Corp. Because the company was staffed by Li's relatives, Li's management effectively transformed China's energy industry into a "family fiefdom". At its height, Li's power company controlled 72% of all energy-producing assets in China, and was ranked as the sixtieth-largest company in the world by Fortune magazine. After Li's departure from government, Li's energy monopoly was split into five smaller companies by the Chinese government.
In 2010, Li's autobiographical work, The Critical Moment – Li Peng Diaries, was published by New Century Press. The Critical Moment covered Li's activities during the period of the Tiananmen Square protests, and was published on the protests' twenty-first anniversary. The Critical Moment was characterized by reviewers as largely an attempt to minimize Li's culpability during the most egregious stages of the crackdown; some also say he attempted to shift blame to Deng.
Li Peng is married to Zhu Lin (朱琳), a deputy manager in "a large firm in the south of China". Li and Zhu have 3 children: Li's elder son, Li Xiaopeng; Li's daughter, Li Xiaolin; and, Li's younger son, Li Xiaoyong. Li Xiaoyong is married to Ye Xiaoyan, the daughter of Communist veteran Ye Ting's second son, Ye Zhengming.
Li's family benefited from Li's high position during the 1980s and 1990s. Two of Li's children, Li Xiaopeng and Li Xiaolin, inherited and ran two of China's electrical monopolies. State-run Chinese media have publicly questioned whether it is in China's long-term interest to preserve the "new class of monopoly state capitalists" that Li's family represents. Li Xiaopeng entered politics in Shanxi province and became its governor in 2012; in 2016 he became Minister of Transport. Li Xiaolin served as chief executive of China Power International Development, before being transferred out in 2016 to a minor executive post at a different power company.