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Nation seeking assurances over US investments

China is seeking assurances over the safety of its investment in United States Treasuries, Premier Wen Jiabao said yesterday.

"We have lent a huge amount of money to the US, so of course we are concerned about the safety of our assets. To tell the truth, I do in fact have some worries," he said.

He urged the US government to keep to its commitment and ensure the safety of Chinese assets in America.

China has invested its huge foreign exchange reserves in low-risk but low-yield assets, such as US government bonds, to play it safe.

"China is indeed the largest creditor of the United States, the world's biggest economy. We are extremely interested in developments in the US economy," said Wen, adding he was expecting the effect of the measures taken by US President Barack Obama's administration to counter the international financial crisis.

China holds the world's largest foreign-exchange reserves, which topped US$1.95 trillion at the end of last year. According to the US Treasury, China held US$681.9 billion worth of US government bonds as of last November.

Treasuries have dropped this year as Obama sells record amounts of debt to fund his US$787 billion economic stimulus package.

Wen reiterated that China's priorities in foreign reserves investment were "safety, liquidity and profitability."

The first priority was safeguarding the nation's the interest, Wen said. Meanwhile, China would also factor in the stability of the global financial system, because the two were linked.

"Currently, our reserves are generally safe," he said.

According to the premier, China's foreign reserves will be mainly used in overseas investment and trade, as the reserves were actually the liabilities of the central bank instead of the fiscal fund.

He said in its bid to explore both domestic and overseas markets and utilize resources in both, China would seek to make a better use of its reserves to support domestic undertakings and improve living standards.

Wen also said China was committed to keeping the yuan stable and would not bow to outside pressure.

"Our goal is to maintain a basically stable yuan at a balanced and reasonable level," he said. "It's our own say. No other countries can press us to appreciate or depreciate the yuan."

The Chinese currency has gained 21 percent against the US dollar since July 2005 when China depegged it from the US currency. The yuan has stayed almost flat since the middle of 2008. It has lost 0.2 percent this year against the dollar.

However, there had been a "drastic depreciation" in the euro and Asian currencies that had put pressure on exporters, Wen said.

China's exports slumped for the fourth consecutive month in February.


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