Don't politicize the Olympics, Wen says

BEIJING (Reuters) - Chinese Premier Wen Jiabao is holding his annual news conference following the closing session of the National People's Congress, or parliament.

Following are highlights:

OLYMPICS

"We need to respect the principles of the Olympics and the Olympic charter. That is, we should not politicize the Olympic Games."

On Tibetan protesters making a link to the Olympics: "By staging that incident, those people wanted to undermine the Olympic Games."

In preparing for the games, "it is inevitable that we might encounter problems of one sort or another."

TASKS FOR NEXT FIVE YEARS

On the fight against inflation: "This is not just a task for this year but for the next five years."

"We need to vigorously develop agriculture."

He said rural investment in particular must be expanded so farmers' incomes keep rising steadily. "We need to ensure that grain and other agricultural output will increase in a stable manner."

China needs to create 50 million jobs in the next five years: "We need to continue pursuing a proactive employment policy."

"We need to work very hard to attain the goals we set in the 11th five-year plan in terms of conservation of resources and energy and reduction of pollution and emissions so we can markedly improve the natural environment."

"We need to continue strengthening and improving macro controls."

TAIWAN

"We hope to resume peace talks across the Straits as soon as possible. Any questions can be addressed, including such major issues as ending the hostile state between the two sides.

"Anyone who wants to separate Taiwan from the motherland will not succeed and is doomed to fail."

NEED FOR GROWTH

"We must maintain economic growth at a certain pace to address employment pressures."

He said China needs to create 10 million jobs a year.

"We must strike a balance between economic development and curbing inflation."

"I've said before that I'm afraid this year will be the most troublesome year for China's economy."

Uncertainties inside and outside China "make it difficult to make decisions", he said.

"I have a very firm conviction that we should never shy away from the difficulties, take responsibility and stride ahead."

TIBET

"Turmoil, beating, smashing property and ransacking" took place in Lhasa.

"The incident has seriously damaged the normal social order in Lhasa and has brought great losses to people's property and lives.

"Violent rioters killed innocent people and used extremely cruel means."

"There is ample fact and plenty of evidence proving this incident was organized, premeditated, masterminded and incited by the Dalai clique.

"This has all the more revealed the consistent claims by the Dalai clique that they pursue not independence but peaceful dialogue are nothing but lies."

"Those claims that the Chinese government is engaged in cultural genocide are nothing but lies."

2008 INFLATION GOAL

"We have set a target of 4.8 percent CPI growth this year. To be honest with you, it's not easy to achieve this goal, especially given that we suffered very rare snowstorms in the first two months of this year.

"This brings us even greater pressure to curb prices.

"But we still haven't changed the goal. This is for two reasons. First, it shows the government's determination to make controlling price rises and curbing inflation the biggest priorities for us this year.

"Secondly, it can help stabilize residents' inflationary expectations. When prices rise fairly fast, inflationary expectations become more dangerous than price rises themselves.

"We also have reasons to set such an inflation target. Our current stock of grain reserves is between 150 million and 200 million tonnes; the situation of oversupply of major industrial products has not changed.

"So as long as we come up with appropriate policies and effective measures, we are fully confident that we can control the situation of excessive price rises."

GROWTH AND INFLATION

Wen said he was concerned with four main issues.

"First is to ensure stable and fairly fast economic growth in China while effectively controlling inflation. This requires us to resolve the problems of economic instability, lack of coordination and unsustainability.

"The biggest difficulty now is excessive price rises and the resulting inflationary pressures. This could bring some hidden risks of economic fluctuations. So we have to carefully tread the path between these two choices.

The other three issues he mentioned were needing breakthroughs in the reform of the political and economic systems, promoting social justice and equity and fostering the building of social ethics.

NEW POLITICAL THINKING

"We need to make new breakthroughs in advancing economic and political reforms. And this requires the freeing of our minds. To free our minds we need courage, determination and a spirit of dedication.

"Freeing our minds and reforms and innovation -- if we call the former the cause, the latter is the result.

"If developing the economy and improving people's lives are the duty of the government, then promoting social equity and justice is the conscience of the government."

(Reporting by Eadie Chen, Jason Subler, Lindsay Beck, Guo Shipeng and Langi Chiang; Editing by Alan Wheatley and Ken Wills)