In New York last week for the opening of the United Nations General Assembly, Chinese Prime Minister Wen Jiabao gave a rare exclusive interview to NEWSWEEK's Fareed Zakaria. Wen, 66, is known for his openness and economic mastery, and has presided over some of the fastest growth in China's history. He began the conversation by pledging to "tell the truth" and invited Zakaria to interrupt him, since Wen "prefers dialogue to long-winded speeches." The two covered topics ranging from Tibet and Tiananmen Square to Darfur and human rights, from political philosophy to the U.S. elections, from the current financial crisis to the future of Chinese democracy. Excerpts:
ZAKARIA: What do you think of the financial crisis affecting the United States?
WEN: We should join hands and meet the crisis together. If the financial and economic system[s] in the United States go wrong, then the impact will be felt not only in this country, but also in China, in Asia and the world at large.
Regarding your own economy, many people now say there will be a significant slowdown. Do you think that will happen? And if it does, what do you think will be the consequences?
China's economy has been growing at an annual average rate of 9.6 percent for 30 years running. This is a miracle. And between 2003 and 2007, China enjoyed double-digit growth—yet the consumer price index grew less than 2 percent a year.
China has been proactive in adopting regulatory measures. Our previous concerns were to prevent a fast-growing economy from overheating and to prevent soaring prices from becoming inflation.
But things have changed very fast [because of] the subprime crisis in the United States and the serious turbulence that followed. We have seen a decline in external demand, and China's domestic demand cannot be significantly increased in a short period of time. [So] we do risk a slowdown. We must re-adjust macroeconomic policy.
Do you think you can continue to grow if the United States goes into a major recession?
Given the statistics for the first eight months of this year, we have managed to do that. [But] a U.S. recession would certainly have an impact on China's economy. Ten years ago, China–U.S. trade stood at only $102.6 billion. Today the figure has soared to $302 billion—a 1.5-fold increase. A shrinking of U.S. demand would certainly have an impact on China's exports. And U.S. finance is closely connected with Chinese finance. If anything goes wrong in the U.S. financial sector, we would be anxious about the security of Chinese capital.
China is the largest holder of U.S. Treasury bills — by some accounts, they ' re worth almost $1 trillion. Can you reassure [Americans] that China would never use this status as a weapon in some way?
We believe that the U.S. real economy is still solidly based, particularly the high-tech and basic industries. Something has gone wrong in the virtual economy, but if this problem is properly addressed, it is still possible to stabilize the economy. The Chinese government hopes to see sustained development in the United States, as that will benefit China. Of course, we are concerned about the safety and security of Chinese money here. But we believe that the United States is a credible country. And particularly at such difficult times, China has reached out to the United States. And actually we believe such a helping hand will help stabilize the entire global economy and finance and prevent major chaos from occurring ... I believe now that cooperation is everything.
Many people see China as a superpower already, and they wonder: why is it not being more active in political resolution of issues such as Darfur or Iran?
I need to correct some elements of your question. China is not a superpower. Although China has a population of 1.3 billion and although in recent years it has registered fairly fast economic and social development, China still has … 800 million farmers in rural areas and we still have dozens of millions of people living in poverty. We need to make committed and very earnest efforts to address these problems. That's why we need to focus on our own development and on our efforts to improve people's lives.
But surely the Chinese government could pressure the Sudanese government or the Iranian government or the government in Burma to be less repressive. You have relations with all three of them.
That brings me to your second question. China is a justice-upholding country. We never trade our principles. Take the Darfur issue that you raised just now, for example. China has always advocated a dual-track approach: China was among the first countries sending peacekeepers to Darfur. China was also the first country that gave assistance to Sudan, and we also keep [up] our efforts to engage the leaders in Sudan to try to seek a peaceful solution.
Do you think it would be dangerous for the world if Iran got nuclear weapons? And what do you think the world should do to try to prevent it?
We are not supportive of a nuclear rise for Iran. We believe that Iran has the right to develop a utilization of nuclear energy in a peaceful way. But such efforts should be subject to the safeguards of the IAEA, and Iran should not develop nuclear weapons … We hope that we can use peaceful talks to achieve the purpose, rather than resort to the willful use of force, or the intimidation of force. It's like a relationship between two individuals. If one individual tries to corner the other, the effect will be counterproductive. Our purpose is to resolve the problem, not to escalate tensions.
I have a question for you: don ' t you think that the efforts made by China in resolving the Korean nuclear issue have actually helped that situation? I know it will take time to [achieve] a complete solution to the Korean nuclear issue. But the model we have adopted has proved to be r ight in this direction.
China's efforts have been appreciated in the United States and around the world. And it makes people wish that China would be active in other areas in the same way.
We have gained a lot of experience and learned lessons from the years of negotiations. The progress made also had a lot to do with the close cooperation among the six parties in the talks.
The Dalai Lama says now he would accept China ' s rule in Tibet. Why don ' t you negotiate directly with him and solve this issue once and for all?
The Dalai Lama is a religious leader and enjoys certain influence in the Tibetan region. He is not an ordinary religious figure. The so-called government in exile founded by the Dalai Lama practices theocratic rule. And the purpose of this so-called government in exile is to separate Tibet from China. All over the world, the Dalai Lama keeps preaching about autonomy for the greater Tibetan region. He wants to separate the so-called greater Tibetan region from the motherland. Many people in the United States have no idea how big this region is; it covers Tibet, Sichuan, Yunnan, Qinghai and Gansu: a quarter of China's territory.
For decades, our policy [has been that] as long as the Dalai Lama is willing to recognize that Tibet is an inalienable part of China's territory, and as long as the Dalai Lama gives up his separatist activities, we're willing to have contact and talks with him or his representatives. Now, sincerity holds the key to producing results out of the talks.
What action would you like to see from the Dalai Lama that would show sincerity?
His sincerity can be demonstrated in giving up separatist activities. … Of course, talks may continue, and in light of the progress in the talks, we may also consider raising the level of the talks.
Premier Wen, your country has grown, as you pointed out, 9.5 percent for 30 years — the fastest growth rate of any country in history. What is the key to your success? What is the model?
[The answer is] the reforms and opening-up policy we introduced in 1978. We emancipated productivity in China. We had one important thought: that socialism can practice market economy.
People think that ' s a contradiction. How do you make both work?
Give full play to the basic role of market forces in allocating resources under the macroeconomic guidance and regulation of the government. Ensure that both the visible hand and the invisible hand are given full play. If you are familiar with Adam Smith, you will know that there are two famous works of his. "The Wealth of Nations" deals with the invisible hand: market forces. The other book deals with social equity and justice. In the other book, he stressed the importance of the regulatory role of the government to distribute wealth among the people. If most of the wealth in a country is concentrated in the hands of the few, this country can hardly [have] harmony and stability.
Some Americans and Europeans, particularly human-rights observers, say that China has cracked down on human rights over the last few years. They say they had hoped that the Olympics would lead to an opening, but there has been more repression. How would you respond?
By hosting the Olympics, China has become more open. Anyone without biases will see that. Freedom of speech and of media coverage are guaranteed in China. The Chinese government attaches importance to, and protects, human rights. We have incorporated these into the Chinese Constitution, and we also implement [them] in earnest. We don't think that we are impeccable in terms of human rights—it is true that in some places and in some areas, we have problems. Nonetheless, we are continuing to make improvements.
When I go to China and I ' m in a hotel and I type the words " Tiananmen Square " into my computer, I get a firewall, what some people call the Great Firewall of China. Can you be an advanced society if you don ' t have freedom of information?
China now has over 200 million Internet users and the freedom of the Internet in China is recognized by many, even in the West. To uphold state security, China, like many countries in the world, has also imposed some proper restrictions. On the Internet in China, you can have access to a lot of postings that are quite critical about the government. It is exactly through reading these critical opinions on the Internet that we try to locate problems and further improve our work. I don't think a system or a government should fear critical opinions or views.
What are your favorite sites?
I've browsed a lot of Web sites.
There is a photograph of you at Tiananmen Square in 1989. What lesson did you take from your experiences in dealing with that problem? Did you feel it was necessary to stop political reform? Do you think in 25 years there will be national elections in w hich there will be competition?
I believe that while moving ahead with economic reforms, we also need to advance political reforms, as our development is comprehensive in nature, our reform should also be comprehensive. I think the core of your question is about the development of democracy in China. When it comes to the development of democracy in China, we can talk about progress in three areas. No. 1: we need to gradually improve the democratic election system so that state power will truly belong to the people and state power will be used to serve the people. No. 2: we need to improve the legal system, run the country according to law, and [have] an independent and just judicial system. No. 3: government should be subject to oversight by the people. That will [require] us to increase transparency in government affairs. It is also necessary for government to accept oversight by the news media and other parties.
We need to take into account China's national conditions and we need to introduce a system that suits China's special features and we need to introduce a gradual approach.
It's hard for me to predict what will happen in 25 years. This being said, I have this conviction: that China's democracy will continue to grow. In 20 to 30 years, Chinese society will be more democratic and fairer and the legal system will be improved. Socialism as we see it will further mature and improve.
People say you ' re studying the Japanese system because there ' s democracy, but only one party seems to win elections. Is that the model you see for China?
There are multiple forms of democracy in the world. What is important is whether it really represents the interests of the people. Socialism as I understand it is a system of democracy. And such a democracy first and foremost should serve to ensure the people's right to democratic elections, oversight and decision making. Such a democracy should also help people to develop themselves in an all-around way in an environment featuring freedom and equality. And such a democracy should be based on a full-fledged legal system.
You ' ve said that you ' ve read the works of Marcus Aurelius a hundred times. He is a famous Stoic philosopher. My reading of him says that one should not be involved in the self, and in any kind of pursuits that are self-interested, but should be more for the community as a w hole. When I go to China these days, I am struck by how much individualism there is, how much consumerism there is. Are you trying to send a signal to the Chinese people to think less about themselves and more about the community?
It is true I read the meditations of Marcus Aurelius on many occasions, and I was very deeply impressed by the words that he wrote. I very much value morality and do believe that entrepreneurs, economists and statesmen alike should pay much more attention to morality and ethics. In my mind, the highest standard to measure ethics and morality is justice. When we think about the economy, we think more about companies, capital, markets, technology, and so on. We might forget about elements like conviction and morality. Only when we combine these two kinds of factors can we [have] a full picture of the DNA of the economy. It is true that in the course of China's economic development, some companies have pursued profits at the expense of morality. We will never allow such things to happen, because such an approach simply cannot be sustained. That's why we advocate corporate, occupational and social ethics.
Let me ask you a final question. You must have been watching the American election. What is your reaction to this strange race?
The presidential election of the United States should be decided by the American people. What I follow very closely is [what] the relationship between China and the United States [will be like] after the election. In recent years, there has been sound growth in China-U.S. relations. We hope that whoever is elected president, he will continue to grow the relationship with China. And China hopes to continue to improve its relationship with the United States no matter who takes office.