Now we have carried out a managed floating exchange rate regime based on the demand of the market, with a reference to a basket of currencies. This regime is consistent with China's actual conditions and meets China's actual needs. I want to make very clear here that it's to maintain the basic stability of the renminbi on a reasonable and balanced level.

It's not only in the interests of China but also the world economy. It is in the interests of the efforts of the international community in overcoming the financial crisis. Many people have not come to see this point. If we have drastic fluctuations in the renminbi exchange rate it will only be a big disaster

If I understand you, Premier Wen, you are supporting ruling out the depreciation of the renminbi, as what the Chinese Government said 10 years ago?

I think I have made my point very clear. That is, we practise a managed floating exchange rate regime and we preserve the basic stability of the exchange rate on a reasonable and balanced level.

Everybody understands that the current financial crisis was manufactured, if you like, in America. It originated in America. There were many mistakes made in terms of managing risk and regulation. What do you say to those who believe that a part of the problem is the imbalance in the world economy, with China's $2 trillion of forex reserves?

I think such a view is ridiculous. I think the reason for this financial crisis is the imbalance of some economies themselves. They have for a long time had double deficits, and they keep up a high level of consumption on the basis of mass borrowing.

In those economies, financial institutions have not been put under effective regulation and financial institutions have reaped massive profits with a very high leverage ratio. Once such a bubble bursts, the whole world has been exposed to a big disaster.

China is a very big developing country, with a 1.3 billion population. The per-capita GDP of China is only one 16th of that of the UK. We do need a large pool of financial resources to achieve economic development and improve the people's livelihood.

I think that it is confusing right and wrong when people who have been overspending blame those who lent them the money. In China there is actually a proverb expressing this kind of situation, which means blaming those who have actually done you a favor for your own wrongdoing. When I shared this view with business leaders at Davos, they agreed with me on it.

Premier, you're still going to buy U.S. treasury bonds, I hope.

Well, this is indeed a very sensitive issue. We do have very big foreign exchange reserves, and these reserves must be well run. Buying foreign treasury bonds is one way of running these massive reserves. But as to whether we will continue to buy foreign treasury bonds and how many we are going to buy, I think we need to take into consideration China's own needs and also the need that we must maintain the safety and the good value of our foreign exchange reserves.

We want to see the turnaround, or the recovery of the U.S. economy. We believe that maintaining a stable international financial market is in the interest of shoring up market confidence, overcoming the financial crisis and facilitating early recovery of the international market.

Would China be prepared to support the calls in some quarters that some of the reserves are recycled through the International Monetary Fund (IMF) in return for the necessary award of greater votes for China in the IMF, so as to help to manage this global financial crisis?

We believe it is imperative that we should first undertake reform in international financial institutions, including the IMF. And through the reform, we should increase the voting share, the representation and the say of developing countries. At the same time, the oversight of how the capital at international financial institutions is used should be strengthened.

I asked the question because for 30 years some people have said capitalism will save China, but now maybe people are saying China must save capitalism.

Well, I don't see it this way. I still have a very clear mind on this particular point. China remains a big developing country with a 1.3 billion population. We do face arduous tasks, and our way ahead will be a long one.

If you have seen the Chinese cities in coastal areas, maybe you don't see big differences between those cities and London. But if you have ever been to China's rural areas, particularly the western areas of China, you will see a big gap.

I firmly believe that running our own affairs well is China's biggest contribution to the entire mankind. I think there are three must-dos. First, we must address both the symptoms and root causes of the problem. One should not only tend to the head when the head aches, or tend to the foot when the foot hurts. Second, we must enhance cooperation rather than entering into a confrontational relationship. And third, we must run our own affairs well respectively, instead of shifting troubles to others.

Premier Wen, did President Obama offer some assurances in this respect?

It has not been long since the inaugural speech of President Obama. We have been following closely the statements made by the new U.S. administration. We look forward to early contacts with the new U.S. Government, and we believe that maintaining cooperation between China and the United States serves the world peace, stability and prosperity.

With respect, Premier Wen, just to press you, so it's not correct-some reports said that President Obama has given a personal message reassuring China that the renminbi and other matters will not be used in an aggressive way. Will the United States be more accommodating?

In his telephone conversation with President Hu Jintao on January 30, President Obama expressed his readiness to enhance cooperation with China. Yet, at the same time, we do see there are different voices within the United States itself. I hope the Financial Times can convey a message of me to the U.S. side. We want to enhance cooperation with the United States to meet the financial crisis together, as it caters to demands of the general situation and serves fundamental interests of both countries.

Yes, the problem may be even more in Congress than in the administration. So do you have a message for the U.S. Congress?

We don't comment on the system of the United States. I think the U.S. Government has a decisive role to play in making right decisions. The U.S. Government should view U.S. relations with China from a long-term and strategic perspective, and under the current circumstances. The priority of the two countries should be working together to fight the financial crisis and promote the constructive and cooperative relations between China and the United States.

Just to return to the reserves very quickly. Is the Chinese Government going to use some of the reserves for spending programs at home to stimulate the economy?

Foreign exchange reserves reflect the economic strength of a country. We are now studying how we can make the best use of the foreign exchange reserves of China. On this particular topic, you are all experts. And for banks, I think foreign exchange reserves are liabilities of the central bank, and if a government wants to make use of the foreign exchange reserves, it has to issue government bonds to buy the foreign exchange reserves.