China urged to cut US Treasury holdings

China must systematically decrease its holdings of US Treasuries due to low interest rates and the potential risks over America's growing net debt overseas, a top mainland economist says.

Yu Yongding, a Chinese Academy of Social Sciences academician, said the ratio of US national debt to gross domestic product will persistently increase, signifying a continuous deterioration of the country's overseas net debt over time.

The ongoing interest rate hikes by the US Federal Reserve may also accelerate the deterioration of the country's overseas net debt, he added.

China, said Yu, must accelerate the adjustment of its overseas asset structure and enhance returns on overseas net assets. To achieve this, it should reduce the proportion of foreign exchange reserves in its overseas assets, he said.