‘We Should Join Hands’

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.