China's holdings of US Treasury debt slashed

    Why?  Now this leaves Japan the biggest holder...........

Massive US deficit spending and near-zero interest rates would also further erode the value of US bonds, said Cao Honghui, director of financial market research at CASS.

The White House released a budget plan on Feb 1 that predicted the deficit for this year would total a record $1.56 trillion, surpassing last year's $1.4 trillion, which re-ignited China's concern about its dollar assets.

As one of the US' biggest creditors, China has sought to diversify its portfolio of foreign exchange reserves over the past year as the share of US dollar-dominated assets is too large.

Premier Wen Jiabao said in March last year he was "worried" about the Treasury holdings and wanted assurances his country's US investments were safe, while Zhou Xiaochuan, governor of the People's Bank of China, proposed a new global currency to reduce reliance on the US dollar.

The net sales of US Treasuries in past months by China might carry a subtle economic and political message to the US, according to Eswar Prasad, a trade policy professor at Cornell University and former head of the International Monetary Fund's China division.