Wen frets on China assets in U.S., wants stable yuan

BEIJING (Reuters) - Chinese Premier Wen Jiabao held a news conference on Friday to mark the end of the annual session of parliament.

Following are the highlights.

FX RESERVES AND WORRIES ABOUT AMERICA

"We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets. To speak truthfully, I do indeed have some worries.

"So I hope through you to again call on the United States to maintain its creditworthiness, abide by its commitments and ensure the security of China's assets.

"We have already adopted a guiding management policy of diversifying our foreign exchange reserves, and at present our foreign exchange reserves are safe overall.

"Our first principle in managing foreign currency is averting risk. We have always adhered to the principles of foreign currency security, liquidity and maintaining value, and implemented a strategy of diversification.

"Our first priority in foreign exchange reserves is maintaining our national interest, but we also must pay attention to maintaining the stability of the international financial system, because the two are intertwined.

"Foreign exchange reserve holdings are in fact like bank loans. They are not fiscal funds."

YUAN

"As for your raising the depreciation of the renminbi, this does not accord with the facts. Since July 2005, when we initiated foreign exchange rate reform, the renminbi has appreciated 21 percent against the U.S. dollar, and especially in the past year ... because of the large depreciation of European and Asian currencies, the Renminbi has in fact been appreciating, and this is putting pressure on our exports.

"Our goal is to have a reasonable and balanced level and to maintain the basic stability of the renminbi ... No other country can put pressure on our country to depreciate or appreciate the renminbi."

STIMULUS PLANS

"We have prepared contingency plans to handle greater difficulties. We have prepared enough ammunition and we can launch new economic stimulus policies at any time."

"The most direct, powerful and effective way to deal with the current financial crisis is to increase fiscal spending -- the quicker the better."

He said the 1.18 trillion yuan to be invested by the central government, anchoring the 4 trillion yuan stimulus announced on November 9, is all new money, and 595 billion yuan of budget funds has already been allocated.

Some road and rail projects had already been identified in the current five-year plan but would now be speeded up.

"Otherwise, how can we start so many infrastructure projects within such a short period of time? All these projects have been assessed and details of all will be made public."

EIGHT PERCENT GDP GOAL

"I believe that there is indeed some difficulty in reaching this goal. But with effort it is possible.

"Firstly, we should consider its merit and possibility; secondly, it is a promise and commitment by the government; and thirdly, it shows our confidence and hope.

"If you look at the countryside, no matter how much investment goes there, it won't be enough."

CONFIDENCE IS KEY

"Confidence is more important than gold or money."

"First and foremost, we need very strong confidence. Only when we have confidence can we have courage and strength, and only when we have courage and strength can we overcome difficulties."

"In implementing this plan, the priority task remains to bolster confidence.

"After months of efforts, the hearts of Chinese people have started to warm up. I hope every Chinese will warm up the economy with his or her warm heart."

FISCAL DEFICIT

"Our fiscal deficit is still manageable, and the level of debt is still in the safety zone.

"Given China's economic development and growth in tax revenues, we now have more leeway to run a larger fiscal deficit and take on more debt."

FINANCIAL SYSTEM

"After a decade of reform, China's finance (system) is basically healthy and stable. This is providing strong and vigorous support for economic development.

REFORMS

"In responding to the financial crisis, not only can we not slow reform, we must accelerate reform.

"We must give full play to the allocation of resources by the market."

UNEMPLOYMENT

"The problem of unemployment is an extremely serious one.

"In addressing unemployment, the most important thing is to vigorously support the development of small and medium-sized enterprises.

"We will make expanding employment an important task for economic development and continue taking vigorous measures. Our government will take this a hundred times more seriously and never become complacent."

Wen said China remained stable despite the unemployment challenge.

INTERNATIONAL MONETARY FUND

"We must reform the internal governance of the IMF ... and implement the principle of a balance between powers and responsibilities and show more concern for the interests of developing countries.

"Increasing the IMF's funds is not a matter for any one country. We advocate that all member countries should share responsibility based on their quotas."

G20

The April 2 summit of the G20 must extend a helping hand to emerging economies, especially the least developed countries.

China would do its part by continuing to cancel the debts of the least developed states and to apply zero tariffs on 95 percent of their exports to China.

China would build more hospitals and schools in Africa and send more doctors and teachers to the continent.

HONG KONG

"Hong Kong and Macau have the experience of the Asian financial crisis, and we are totally confident that the leaders and people of the two administrative regions have the ability to cope with the financial crisis and overcome hardship."

TIBET

"The Dalai Lama is not an ordinary religious figure, but a political exile... The Dalai Lama runs around the world to various countries and can intoxicate some in the political world. Some western countries exploit him. "In regarding the Dalai Lama, not only do we have to look at what he says, but also at what he does.

"The peacefulness of Tibet and its ongoing progress have proved that the policies we have adopted are correct."

"The problems that have arisen between China and France arose mainly because the French leader met the Dalai Lama in a prominent way, and this not only involved the core interests of China, it also seriously harmed the feelings of the Chinese people."

NORTH KOREA

"At the moment, the most important thing is to resolve the key issues affecting the six-party talks. Only in this way can we ensure peace and stability on the peninsula and in the East Asian region."

"We hope that the parties involved can further build consensus, properly resolve differences, and not exacerbate contradictions."

TAIWAN

"In my government work report I made it clear that we will make fair and reasonable arrangements for Taiwan's participation in international organizations that concern Taiwan's interests through consultations. We are willing to have consultations and coordination on this."

(Reporting by Jason Subler, Zhou Xin, Chris Buckley, Langi Chiang, Ben Blanchard, Lucy Hornby and Simon Rabinovitch; Editing by Alan Wheatley and Nick Macfie)