First of all, it should be noted that Deng himself was really a "centrist" within the Communist party in 1989: with conservatives on his left like Li Peng and Chun Yun who believed that economic and political reforms have gone to far, as well as "liberals" on this right: such as Zhao Ziyang who believed that the students had the legitimate right to protest. Deng was not so much a "dictator" like Mao. He was more "first among equals", powerful but not powerful enough to override the rest of the party elders when they went against him.

We don't know exactly to what extent Deng was responsible for the suppression relative to Li Peng (the leader of the hardliners) and we won't know for another decade or two at least until Chinese archives open up. But the decision to suppress the protests marked the victory of the conservative wing of the party over the liberals, with Deng himself being sidelined from power until 1993.

The party did try to resolve the protests peacefully. In fact, protests did not just take place in Beijing but in other cities as well and in many cases were diffused peacefully. A notable example is future premier Zhu Ronji who was able to peacefully diffuse the protests in Shanghai without resorting to violence. Unlike in Beijing where Li Peng feared talking to protesters, Zhu Ronji went out, talked to people, avoided incendiary rhetoric and promised to deal with their complaints.

In Beijing itself dialogues were held with demonstrators however, they were not successful in meeting enough student demands for all of them to leave the square.

In a memo circulated in the politburo on June 1st, justification were laid out for the suppression of the protests:

1. The TMN protesters were to be seen in the context of US attacks on "Socialist countries": the party believed that through calls for democracy and human rights across multiple presidential administrations from Carter to Reagan the US was attempting to use democratization as a means of dividing and forcing political changes in Socialist countries.

2. The US is attempting to cultivate "pro-American" forces within Chinese society and to "intensify conflicts". The memo accused the US seeking to exploit the death of Hu Yaobong and flooding the country with "rumors and propaganda". The memo accuses the US of using tools such as the Voice of America and journalists in Beijing to "mislead" the public and sabotaging negotiations between students and the government.

3. Accusations that the protests were directly instigated by the US, and that the US is using Chinese students in the US to ferment protests through usage of free long distance phone calls to China, and details alleged contacts between US citizens in China and students. As well as alleged support of institutions and organizations the party identifies as being behind or supporting the protests.

4. Accusations of meddling by agents from Taiwan and Hong Kong in instigating or aiding the student movements.

The memo reaches the conclusion that "reactionary and foreign forces" seek to "annihilate socialism". The Tienanmen square protests was, in other words, an existential threat to Communist party rule in China with foreign backing.

In meetings of party elders and the politburo before the crackdown: Li Peng stated much of the accusation from the memo, and proclaimed that the Tienanmen square protests were the "command center" for a "final showdown with the government and party". Party elder Li Xiannian stated that the US "wanted turmoil in the Soviet Union and eastern Europe" as well.

Deng himself replied:

Comrade Xiannian is correct. The causes of this incident have to do with the global context. The Western world, especially the United States, has thrown its entire propaganda machine into agitation work and has given a lot of encouragement and assistance to the so-called democrats or opposition in China — people who are in fact are the scum of the Chinese nation. This is the root of the chaotic situation we face today.

When the West stirs up turmoil in other countries, in fact it is playing power politics — hegemonism — and is only trying to control those other countries, to pull into its power sphere countries that were previously beyond its control. Once we're clear on this point, it's easier to see the essential nature of this issue and to sum up certain lessons. This turmoil has taught us a lesson the hard way, but at least we now understand better than before that the sovereignty and security of the state must always be the top priority. Some Western countries use things like "human rights," or like saying the socialist system is irrational or illegal, to criticize us, but what they're really after is our sovereignty. ...

He continues on the need for stability:

Two conditions are indispensable for our development goals: a stable environment at home and a peaceful environment abroad. We don't care what others say about us. The only thing we really care about is a good environment for developing ourselves. So long as history eventually proves the superiority of the Chinese socialist system, that's enough. We can't bother about the social systems of other countries.

Imagine for a moment what could happen if China falls into turmoil. If it happens now, it'd be far worse than the Cultural Revolution. Back then the prestige of leaders like Chairman Mao and Premier Zhou [Enlai] still loomed. We talked about "full-scale civil war," but actually no large-scale fighting took place, no true civil war ever happened.

Now it's different, though. If the turmoil keeps going, it could continue until Party and state authority are worn away. Then there would be civil war, one faction controlling parts of the army and another faction controlling others. If the so-called democracy fighters were in power, they'd fight among themselves. Once civil war got started, blood would flow like a river, and where would human rights be then? ...

Deng and the party elders saw the protests through the lens of the struggle between Capitalism and Socialism: and no matter China's reforms: the US is still trying to achieve dominance of capitalism over socialism of which China still represents. In the context of the fall of the East Bloc in wide spread public protests in the same year: they saw the US as having a hand in fermenting and supporting the protests. In other words, the Tienanmen Square protests was more than just a student demonstration, the majority of party leadership sincerely believed that it was a western backed plot to overthrow Communist party and an existential threat to China itself. Hence the usage of force was justified and necessary.

Source: The Tiananmen Papers: The Chinese Leadership's Decision to Use Force Against Their Own People - in Their Own Words edited by Andrew J. Nathan, Perry Link, Orville Schell

State-SocietyRelations and the 1989 Beijing Student Movement by Dingxin Zhao