Meet with one of the most powerful men on earth, Wen Jiabao, the prime minister of China.

The first thing you should know about Wen Jiabao is that he is quite different from other Chinese leaders of the modern era. In China, his people have a nickname for him - Grandpa Wen.

After this year's disastrous earthquake in Sichuan, he flew immediately to the devastated area, went out among the people to comfort them and met with many individually. He's more like an American politician than a Chinese apparatchik.

He is also, of course, an agile politician inside the labyrinthine ranks of his own party. A geologist by training, he manages to push reform through without alienating this conservative opponents.

There were some conditions to my interview with Premier Wen. My condition was that I be allowed to ask any questions I wished, which the Chinese accepted. One of theirs was that I not comment on or characterize the substance of the interview. So I won't - except to say that I thought it was the most open and frank conversation I had ever seen or read with a Chinese leader.

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WEN JIABAO, PREMIER OF CHINA (voice of interpreter): Before we begin, I'd like to let you know that I will use the words from the bottom of my heart to answer your question, which means that I will tell the truth to all your questions.

ZAKARIA: I look forward to the chance for this dialogue. And I begin by thanking you for giving us the opportunity and the honor.

The first thing I have to ask you I think is on many people's minds. What do you think of the current financial crisis affecting the United States? And does it make you think that the American model has many flaws in it that we are just recognizing now?

WEN (voice of interpreter): The crisis that occurred in the United States may have an impact that will affect the whole world.

Nonetheless, in face of such a crisis, we must also be aware that today's world is different from the world that people lived in back in the 1930s.

So this time, we should join hands and meet the crisis together. If the financial and economic systems in the United States go wrong, then the impact will be felt not only in this country, but also in China, in Asia and in the world at large.

I have noted the host of policies and measures adopted by the U.S. government to prevent an isolated crisis from becoming a systematic one. And I hope that measures and steps that they have adopted will pay off.

ZAKARIA: Do you think you can continue to grow, if the United States goes into a major recession?

WEN (voice of interpreter): A possible U.S. economic recession will certainly have an impact on the Chinese economy, because we know that 10 years ago the China-U.S. trade volume stood at only US$102.6 billion, while today, the figure soared to US$302 billion - actually representing an increase of 1.5-fold. A shrinking of U.S. demand will certainly have an impact on China's export.

And U.S. finance is closely connected with the Chinese finance. If anything goes wrong in the U.S. financial sector, we are anxious about the safety and security of Chinese capital.

That's why at the very beginning, I have made it clear that financial problems in this country not only concerns the interest of the United States, but also that of China and the world at large.

ZAKARIA: There is another sense in which we are interdependent. China is the largest holder of U.S. Treasury bills. By some accounts, you hold almost $1 trillion of it. It makes Americans - some Americans - uneasy. Can you reassure them that China would never use this status as a weapon in some form?

WEN (voice of interpreter): As I said, we believe that the U.S. real economy is still solidly based, particularly in the high-tech industries and the basic industries.

Now, something has gone wrong in the virtual economy. But if this problem is properly addressed, then it is still possible to stabilize the economy in this country.

The Chinese government hopes very much that the U.S. side will be able to stabilize its economy and finance as quickly as possible. And we also hope 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 to prevent major chaos from occurring in the global economic and financial system. I believe now, cooperation is everything.

ZAKARIA: Premier, when your country has grown, as you pointed out, 9.5 percent for 30 years - the fastest growth rate of any country in history - if people come to you and say to you, what is the Chinese model of succeeding as a developing country, what would you say the - what is the key to your success? What is the model?

WEN (voice of interpreter): By introducing reform and opening up, we have greatly emancipated productivity in China.

We have one important thought, that socialism can also practice market economy.

ZAKARIA: People think that's a contradiction. You have the market economy where the market allocates resources. In socialism it's all central planning.

How do you make both work?

WEN (voice of interpreter): The complete formulation of our economic policy is to give full play to the basic role of market forces in allocating resources under the macroeconomic guidance and regulation of the government.

We have one important piece of experience of the past 30 years, that is to ensure that both the visible hand and invisible hand are given pull play in regulating the market forces.

If you are familiar with the classical works of Adam Smith, you know that there are two famous works of his. One is "The Wealth of Nations." The other is the book on the morality and ethics. And "The Wealth of Nations" deals more with the invisible hand, that is, there are the market forces. And the other book deals with social equity and justice. And in the other book he wrote, he stressed the importance of playing the regulatory role of the government to fairly distribute the wealth among the people.

If in a country most of the wealth is concentrated in the hands of the few, then this country can hardly witness harmony and stability.

The same approach also applies to the current U.S. economy. To address the current economic and financial problems in this country, we need to apply not only the visible hand, but also the invisible hand.

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ZAKARIA: Coming up, Premier Wen Jiabao on Iran and North Korea.

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ZAKARIA: China's onward rise has taken many forms - economic, cultural and political. Naturally, it has had an increasingly active foreign policy - so far, somewhat narrowly focused on securing China's interests. I spoke to Premier Wen about China's larger world role.

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ZAKARIA: 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 the issue of Darfur, or the issue of Iran and its nuclear ambitions.

There's a hope that China will play a role as a responsible stakeholder - to use Robert Zoellick's phrase when he was deputy secretary of state - and that China will be more active in managing the political problems in the world, and that so far, it has not been active.

How would you react to that?

WEN (voice of interpreter): To answer this question, I need to correct some of the elements in your question. First, China is not a superpower.

Although China has a population of 1.3 billion, and although in recent years China has registered fairly fast economic and social development since reform and opening up, China still has this problem of unbalanced development between different regions and between China's urban and rural areas. China remains a developing country.

We still have 800 million farmers in rural areas, and we still dozens of million people living in poverty. To address our own problems, we need to do a great deal. China is not a superpower.

That's why we need to focus on our own development and on our efforts to improve people's lives.

ZAKARIA: But surely, the Chinese government could pressure the Sudanese government, or the Iranian government, or the government in Burma to ease - to be less repressive. You have relations with all three of them.

WEN (voice of interpreter): That brings me to your second question. Actually, in the international community, 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 that we need to adopt a dual-track approach to seek a solution to the Darfur issue.

China was among the first countries that sent - sending peacekeepers to Darfur. China was also the first country that gave assistance to Sudan. And we also keep our efforts to engage the leaders in Sudan, to try to seek a peaceful solution to the issue as quickly as possible.

ZAKARIA: 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 stop that possibility?

WEN (voice of interpreter): We are not supportive of a nuclearized Iran. We believe that Iran has the right to develop the 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. As far as the Iranian nuclear issue is concerned, China's stand is clear-cut.

Nevertheless, 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 treating the relationship between two individuals. If one individual tries to corner the other, then the effect will be counterproductive. That will do nothing in helping resolve the problem. Our purpose is to resolve the problem, not to escalate tensions.

And I also have a question for you. Don't you think that the efforts made by China in resolving the Korean nuclear issue and the position we have adopted in this regard have actually helped the situation on the Korean Peninsula move for the better, day by day?

And of course, I know that it still takes time to see a thorough and a complete solution to the Korean nuclear issue and, on that basis, to help put in place security and stability in Northeast Asia. But what I would like to stress is that the model that we have adopted, and the efforts we have made, proved to be right in this direction.

ZAKARIA: Since you honored me by asking the question, I will say to you, Premier, that China's efforts in North Korea have been appreciated in the United States and around the world. And, of course, it makes people wish that China would be active in other areas in just the same productive way that it was in North Korea, because we see that it produces results.

WEN (voice of interpreter): We have gained a lot of experience and learned lessons from years of negotiations concerning the Six- Party Talks. And the progress made in the Six-Party Talks also has a lot to do with the close cooperation among the six parties.

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ZAKARIA: Up next, Premier Wen Jiabao addresses tough issues - the Dalai Lama and Tiananmen Square.



ZAKARIA: In my conversation with Wen Jiabao, China's premier, one of the most complex and controversial subjects was the discussion of democracy.

Wen has deep experience with the issue. In 1989, he was one of the Communist Party officials who went to Tiananmen Square to talk to the protestors.

I asked him whether that experience had made him want to slow down or stop political reform. Listen to what he had to say.

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ZAKARIA: I will take advantage of your kindness and ask a question that many people around the world wonder about.

There is a very famous photograph of you at Tiananmen Square in 1989. What lesson did you take from your experiences in dealing with that problem in 1989?

WEN (voice of interpreter): I believe that, while moving ahead with the 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. I believe, when it comes to the development of democracy in China, we talk about progress to be made in three areas.

Number one, 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.

Number two, we need to improve the legal system, run the country according to law and establish the country under the rule of law. And we need to build an independent and just judicial system.

Number three, government should be subject to oversight by the people, and if (ph) you ask us, call on us to increase transparency in government affairs. And particularly, it is also necessary for government to accept oversight by the news media and other parties. ZAKARIA: When I go to China and I'm in the hotel, and if I type in the words "Tiananmen Square" in 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, to find out information on the Internet?

WEN (voice of interpreter): China now has over 200 million Internet users. And the freedom of Internet in China is recognized by many, even from the West.

Nonetheless, to uphold state security, China, like many countries in the world, has also imposed some proper restrictions. And that is for the safety - that is for the overall safety of the country and for the freedom of the majority of the people.

I can also tell you, on the Internet in China, you can have access to a lot of postings that are quite critical about the government. I frequently browse the Internet.

ZAKARIA: What are your favorite sites?

WEN (voice of interpreter): I browsed a lot of Internet web sites.

ZAKARIA: May I ask you about another set of possible talks? The Dalai Lama has said, now, it appears that he would accept China's rule in Tibet. He accepts the socialist system in Tibet. And what he asks for is cultural autonomy and a certain degree of political autonomy.

The talks apparently are stuck at a lower level between the Tibetans and the Chinese government. Why don't you, given your power and your negotiating skills, take the issue yourself, and you or President Hu Jintao were to negotiate directly with the Dalai Lama and solve this issue once and for all, for the benefit of the Chinese people and, of course, the Tibetan people who are also in China?

WEN (voice of interpreter): In many places all over the world, the Dalai Lama keeps preaching about the idea of the so-called autonomy in the greater Tibetan region. And actually, the so-called autonomy that he pursues is actually to use religion to intervene in politics. And they want to separate the so-called "greater Tibetan region" from the motherland.

And many people in the United States have no idea how big is the so-called "greater Tibetan region." The so-called "greater Tibetan region," preached by the Dalai Lama, actually covers Tibet, Sichuan, Yunnan, Qinghai and Gansu - altogether, five provinces. And the area covered by this so-called "greater Tibetan region" accounts for a quarter of China's territory.

For decades, our policy towards the Dalai Lama remains unchanged. That is, 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 are willing to have contact and talks with him or his representatives. Now, sincerity holds the key to producing results out of the talks.

ZAKARIA: What action would you like to see from the Dalai Lama that would show sincerity?

WEN (voice of interpreter): Actually, I already made it clear that, when we observe any individual, the Dalai Lama included, we should not only watch what - we should not only observe what he says, but also watch what he does.

His sincerity can be demonstrated in giving up separatist activities. But then, everything depends on the development of the situation.

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ZAKARIA: In a moment, some philosophy from Wen Jiabao.

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ZAKARIA: China's premier, Wen Jiabao, is a reading man a poet, and I asked him about something he was reading.

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ZAKARIA: You have said that you have read the works of Marcus Aurelius 100 times. Marcus Aurelius 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 whole.

When I go to China these days, I'm 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?

WEN (voice of interpreter): It is true. I did read the "Meditations" written by Marcus Aurelius Antonio many occasions. And I was very deeply impressed by the words that he wrote in the book to the effect that, where are those people who were great for a time? They are all gone, living only a story, or some even just half a story.

So, I draw the conclusion that only people are in the position to create history and to write history.

I very much value morality. And I 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 the ethics and morality is justice.

It is true, in the course of China's economic development, some companies have actually pursued their profits at the expense of morality. And we will never allow such things to happen.

We will not allow economic growth at the expense of the loss of morality, because such an approach simply cannot be sustained. That's why we advocate corporate, occupational and social ethics.

ZAKARIA: You've talked about elections many times. Do you think in 25 years there will be national elections in which there will be a competition, there will be perhaps two parties running for the positions such as your own?

WEN (voice of interpreter): It's hard for me to predict what will happen in 25 years' time.

This being said, I have this conviction that China's democracy will continue to grow.

In 20 to 30 years' time, the whole Chinese society will be more democratic and fairer, and the legal system in China will further be improved. Socialism, as we see it, will further mature and improve.

ZAKARIA: On that happy note, I thank you, Your Excellency. I'm sure your people are worried that we've taken a little bit extra time. And I thank you in advance for your kindness and your frankness.

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