Chinese Premier Wen Jiabao pledged progress on sustainable economic growth, currency reform and democracy on Tuesday but stressed change would be gradual rather than radical.

Premier Wen Jiabao meets visiting WTO Director-General Pascal Lamy at the Great Hall of the People in Beijing yesterday. [China Daily]

Wen also sought to flex China's diplomatic muscle by urging Iran to heed international concerns over its weapons programmes but said dialogue, not sanctions, was the proper means of securing solutions to the Iran and North Korean nuclear crises.

Wen, in a wide-ranging interview with Reuters and a small group of foreign media, stressed that resolving conflicts ranging from the economic to the diplomatic in a harmonious manner was critical to the sustainable development of the world's fourth-largest economy.

"We need peace, we need friends, and we need time," Wen said, closing a one-hour interview in the Purple Radiance Hall inside the Zhongnanhai compound ahead of a visit to Finland, Britain and Germany.

China's economy, which has grown 9 percent a year over the past three decades and more than 10 percent in the past three years, faced unbalanced development and environmental and energy constraints, but Wen was confident growth was far from over.

"We are in a position to ensure continued and fairly fast growth of China's economy for a considerable period of time to come, and we have full confidence in our ability to do so," he said when asked if China could orchestrate a soft landing.

NO SURPRISES

Wen, point man on economic policy and third ranked in the Communist Party Politburo Standing Committee that rules China's 1.3 billion people, promised in March there would be no surprises in currency policy and continued in that vein on Tuesday.

"We will continue to deepen the reform on the renminbi exchange rate setting mechanism," he said, using the formal name for China's yuan currency.

"This means that the floating of the renminbi exchange rate will be mainly determined by market supply and demand, and the floating band will be gradually expanded," Wen said. "So there will be no more 'surprise' adjustment to the renminbi exchange rate."

The premier's talks with German Chancellor Angela Merkel were expected to focus on concerns over piracy in China of everything from Hollywood blockbusters to designer bags. Here too, Wen said China needed time despite having set up a legal framework to protect copyrights, patents and trademarks.

China could come under pressure to do more to rein in Iran and North Korea at the meeting of Asian and European leaders in Helsinki at the start of his week-long tour, which begins on Saturday.

Wen urged Tehran to be responsive to global diplomatic efforts to resolve its nuclear crisis.

"We also hope Iran will heed the concerns of the international community and take constructive steps," he said.

At home, Wen acknowledged illegal land grabs and forced resettlements -- often by corrupt local officials -- had sparked social unrest in many Chinese communities.

"China is a large country with a vast population, weak economic foundation and unbalanced development in different regions," Wen said.

"The conditions are not yet ripe for conducting direct election at a higher level of government," he said, adding that he supported improvements to the system and that current experiments could provide a base for further political development.

"We are confident that when the people are capable of running a village through direct election, they will later be able to run a township, then a county and a province, true to the principle that our country is run by the people."