First of all, I think it is perhaps mistaken to call Deng more "democratic", or to attribute his internal exile to him being more democratic than Mao. Deng's fall during the cultural revolution was officially because his policies during the preceding years (when Mao had temporarily lost power because of the failure of the Great Leap Forward) were that of a "capitalist roader", which meant in practice that he adhere more to pragmatic reality than leftist ideology. Less officially, it because Mao decided he was a political opponent and an obstacle to him reasserting himself as the leader of the party.

It is true that there was a period of political liberalization in China during the early-mid 1980s (after Deng took power), such as bringing back a functioning court system, denouncing Maoist excesses, allowing democratic ideas to spread on college campuses and promoting younger cadre members to important positions. Among them were many "liberals" such as Hu Yaobang (who had tactfully supported the democracy wall movement of 1978) and Zhao Ziyang. During the 1980s there was really a feeling in the west that China was heading towards democracy.

There was however, no real evidence that Deng, whatever his opinion on the viability of the state central planning as an economic system, ever questioned the legitimacy of the monopoly of the Communist party over Chinese politics.

The decisive moment came in 1989, during the Tienanmen square protests. When students occupied the square in central Beijing with the support of many Beijing residents and workers in a challenge to the legitimacy of Communist party rule. After several weeks of indecisive negotiations, the Chinese politburo called in reliable PLA units, sent them into the city and cleared the square at the cost of thousands of civilian death. The people's army had fired on the people they sworn to protect and serve.

While Chinese government secrecy means that its extremely difficult to determine the exact decision making process in who had ordered in the tanks, at the very -least- Deng had given the act his blessings. Very likely he had ordered the assault himself.

Deng Xiaoping had fought for the cause of the Communist party since he joined when he was 17. He had spend the first decades of his adult life fighting against the KMT and the Japanese as one of the Communist party's military leaders. He was no Democrat but thoroughly a party man. While he was pragmatic enough and visionary enough to realize the need for Capitalist economic reforms after the failure of Maoism, he was a first generation Communist revolutionary who never wavered on the idea that the Communist party was both the legitimate and best government for China.

Source: Deng Xiaoping and the Transformation of China by Ezra Vogel

Fall and Rise of China by Richard Baum