Beijing reduced its Treasury holdings in May
by $32.5 billion to $867.7 billion, but it actually bought a net $3
billion in long-term Treasuries and remained the largest single holder
of U.S. government debt, the Treasury reported on Friday.
Yu Yongding, a former academic adviser to
the central bank and now a professor with the Chinese Academy of Social
Sciences, said Beijing should invest in assets denominated in other
currencies as well as other financial instruments and real goods.
"Although assets in other currencies and
forms are not an ideal replacement for U.S. Treasury bonds,
diversification should be a basic principle," Yu wrote in the China
for U.S. Treasury securities is strong, it's a rare opportunity for us
to gradually pull back. That way, it will not have a big impact on
prices and China will not suffer too much," he said.
Zhang Monan, a researcher with the State
Information Center, a think tank under the powerful National Development
and Reform Commission, told the paper that China should invest more of
its $2.5 trillion of foreign exchange reserves, the world's largest
stockpile, in hard assets such as gold.