China is taking measures to maintain steady and relatively fast economic growth and prevent major ups and downs in development, Chinese Premier Wen Jiabao said in an interview with Reuters Wednesday.

Wen told Editor in Chief Geert Linnebank of Reuters that the Chinese government will take forceful and effective measures to address the existing problems in the economy, such as excessive growth in fixed asset investment, bank credits and money supply and growing inflationary pressure.

Wen said the government's macro-economic control will be resolute and decisive, as well as timely and appropriate, dealing with different issues in different ways.

He noted that the Chinese economy as a whole is in good shape, with fast growth, growing profits, improving agricultural production, expanding foreign trade, surging fiscal revenue and constantly rising incomes for residents.

In order to curb excessive fixed asset investment that drove up prices for capital goods and strained supply of coal, electricity, oil and transportation, the government will tighten the supply of money and land, step up control of construction projects and exercise economy in resources consumption.

Wen said China has twice raised the reserve requirement for banks. It will also issue new regulations on tightening land management and raise capital fund ratio in fixed asset investment for certain industries.

"We believe all these measures will take effect in a period of time, and that the economy will maintain stable, relatively fast growth without major ups and downs," Wen said.

He said China will unswervingly push forward reform of the investment system and the financial sector so as to uproot of the structural and institutional causes of the existing problems.

China prudential in reforming RMB exchange rates mechanism

Wen Jiabao said that China should be prudential on the method and timetable of there form on Renminbi (RMB) exchange rates mechanism, noting that China has not given up the reform.

Two directions will be followed in the reform, keeping the RMB exchange rates basically stable at a balanced, reasonable level and exploring a market-based exchange rates mechanism.

The reform will be based on the situations of the macro-economy and the banking system, he said, noting that some unexpected results might otherwise be possible.

China will listen to suggestions and advice from various sources on this "complex" issue, so as to guarantee the stability of the regional and world economy, said the premier.

"RMB exchange rate has never been frozen," said Wen in response to Linnebank's remark that RMB exchange rates were believed to be frozen by some people.

China follows a market-based, single and managed floating exchange rate system since 1994, Wen said. RMB appreciated 38 percent against US dollars between 1994 to 1997.

When the Asian financial crisis struck in 1997, China insisted that its currency not devalue and kept the RMB exchange rate stable in a responsible manner, and narrowed the floating scope of the RMB exchange rate since then, Wen said.