Mr Li said: ''It is inevitable that different views of this or that kind exist between the central and regional governments and there is a gap of pace of development among different regions.

''As a matter of fact the gap between the eastern and western regions has widened. But the western parts are developing as well and the living standard of people there is growing.

''The party and the Government are fully aware of the problem and taking steps to solve it,'' said Mr Li in an interview with the official Xinhua (New China News Agency) yesterday.

Some Western analysts have warned of the danger of China's disintegration as the regions, whose economic if not political power is increasing, would challenge the authority of the central leadership.

Mr Li said he found it ''hard to understand'' the ''China disintegration'' theory, just as the so-called ''China threat'' theory which suggested that the socialist country would become a military threat to the world after it becomes an economic giant.

The premier said the two extreme views reflected the ''ignorance'' of people over the practical situation in China.

''Look at other parts of the world, imbalanced development is a common trend.

''If [some people] are worried about the outbreak of conflicts in China as a result of unbalanced development and conflicts between central Government and the regions out of their good intentions, such worries are understandable.

''But if some people who are hostile to China hope and assert categorically that the unbalanced development will lead to China's 'disintegration' and hope that internal disputes will crop up in the mainland, such thinking is doomed to fail,'' Mr Li said.

The premier maintained that the world had begun to ''understand afresh'' China last year because of the economic success of the country.

''Our confidence in the future of the country has never been so strong,'' Mr Li asserted.

On this year's reforms, the premier, known for his conservative view on the economy, argued that ''major reforms'' should be introduced steadily and gradually.

The central leadership will also take on board the impact of reforms on the state, enterprises and the people, he assured.

''If the steps we have taken are too large, it is bound to adversely affect the cost of production of enterprises and the livelihood of the people,'' Mr Li said.

He maintained that the new tax-sharing formula would not increase the tax burden on enterprises and was in the interest of all parties concerned.

Although the new tax system would boost the financial strength of the central Government, Mr Li insisted that the bulk of the additional revenue ''would return to regions in various forms''.

There would also be a transitional period for the convergence of the old and new systems, he said, adding that the ability of regions and enterprises to bear the consequences of the new system had also been taken into account.

''During this period, the present system will remain. The revenue of the central Government will only be increased gradually following the growth of tax revenue in the future,'' Mr Li said.

The central Government plans to boost its share of national tax revenue up to 60 per cent under the tax revamp. But it is understood that the state allows a period of at least three years for the transition to alleviate the burden on regions.

Declaring that ''major steps'' on reform would be taken this year, Mr Li stressed that every step would be made in a ''cautious and appropriate'' manner.

In the face of the existing constraints posed by such ''bottlenecks'' as transport and energy resources which have been strained further after two years of high-speed growth, he said the State Council had initially fixed an annual growth rate of nine percent this year.

Mr Li struck another cautious note on price reform, saying the state would impose macro-control at an appropriate time to protect the interest of the people.

''As the development of our market system is yet to mature, it remains a weakness that people might act blindly or rashly,'' he said.

Referring to the recent hefty rises of grain prices nationwide, Mr Li said the lesson to learn was that governments at all levels should not take their hands off prices.

He noted that control over prices of 90 per cent of commodities had already been lifted, adding the remaining one-tenth were related to basic industries such as petroleum.

Admitted that the degree of difficulty faced by the full price deregulation drive was enormous, Mr Li said the lifting of fixed prices on petroleum would push up prices of all related products.

On foreign relations, the premier was confident that there would be ''new development'' in Sino-US relations following the summit between President Jiang Zemin and his US counterpart Bill Clinton last year.

He said there would also be ''remarkable development'' of China's links with the Europe Community countries.

''China and Western countries have had common interests. This is the basis for the further development of relations between them,'' said Mr Li.