Washington  - The United States sought to reassure other countries Friday that its long-term economic prospects remained strong amid grumblings from China over its US holdings and increasing divisions with Europe over how to manage the global economic crisis.

President Barack Obama, who held a key meeting with his economic advisors at the White House, said the US potential for growth is "undiminished" and the world's largest economy would recover in the coming years.

"We've got the most dynamic free market economy," Obama said, stressing that the US would have to go back to fundamentals and avoid the boom-and-bust mentality that led to its current predicament.

Chinese Premier Wen Jiabao earlier Friday said he was "concerned" about his country's vast holdings of US reserves and called on the Obama administration to put forward a credible long-term economic policy. China is the largest creditor to the US, holding more than 700 billion dollars in US Treasury securities.

The White House said it was committed to reducing the massive federal budget deficit as the economy recovers, pointing to Obama's 2010 budget outline, which pledged to halve the deficit in 4 years but has been strongly criticized by fiscal conservatives.

"There's no safer investment in the world than in the United States," White House spokesman Robert Gibbs said in reaction to China's fears.

Gibbs also said Obama was "pleased" by Wen's pledge to boost government spending to halt China's own sharp downturn. The US has been pushing hard for other countries, especially Europe and Japan, to take more aggressive steps to shore up their own economies.

The World Bank and others have forecast the global economy will contract this year for the first time since World War II. (dpa)