China reduced its holdings of US government debt in June, according to data from the US Treasury.
China holds more US government debt than any other country and cut its holdings of US securities by $25bn, a fall of 3.1%. Japan and the UK - second and third largest holders of US debt - increased their holdings over the same period. The BBC's correspondent in Shanghai says that China is worried about inflation, and fears the stimulus efforts will fuel inflation in the US, reducing the value of the dollar.
In contract, in 2008, the Chinese increased their holdings in US debt by 52% over 12 months. "China has said it would like to establish an alternative to the US dollar as the world's favoured currency for foreign exchange reserves," said our correspondent.
"So far there is no evidence that there is a suitable alternative. But these figures suggest they are exploring ways to diversify their investments where they can."
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